The state finds itself in a 'damned if you do, damned if you don't" situation,' Alaska Attorney General Michael Geraghty wrote in a April 17 letter to U.S. Environmental Protection Agency Region 10 Administrator Dennis McLerran.

The letter is the third in a series of correspondence between Geraghty and McLerran regarding the EPA's authority to conduct an assessment of the potential risks that large-scale development projects may pose to the Bristol Bay Watershed of Southwest Alaska and the world-class salmon fishery found there.

"If we do cooperate, we are 'participating' in the process, and our position is misrepresented. If we choose to ignore an assessment which is not lawfully grounded, it is argued we have forfeited our right to complain," the attorney general penned.

The EPA announced plans to undertake the Bristol Bay Watershed Assessment in February 2011 in response to concerns from Alaska Native groups, including the Bristol Bay Native Corp., and others who petitioned the environmental agency to exercise its authority under section 404 of the Clean Water Act to pre-emptively deny the Pebble Limited Partnership discharge permits that would be needed to build a mine at the enormous Pebble copper-gold-molybdenum deposit located in the study area.

Alaska contends that the assessment is beyond the authority of the federal environmental agency.

"We believe that EPA's actions in using the watershed assessment to address the pending petition are unlawfully pre-emptive, premature, arbitrary, capricious, and vague," Geraghty wrote in a March 9 letter asking EPA to cease the assessment.

Geraghty also outlined the rationale behind the major points that he articulated supporting the Parnell administration's view that the federal agency's Bristol Bay Watershed Assessment lacks credibility, infringes on states' rights and goes beyond the bounds of EPA authority.

Premature assessment - The state contends that EPA's watershed assessment and the agency's potential exercise of 404(c) veto authority in the absence of an actual section 404 permit application are premature and unprecedented. Once a permit for the Pebble project is submitted, state and federal agencies - including the U.S. Army Corps of Engineers which is the agency authorized to issue 404 dredge and fill permits - will be afforded the opportunity to review the application and exercise proper authorities.

Lack of EPA authority - Geraghty said EPA's watershed assessment process is neither delineated in the Section 404 statute, nor is it set forth in the agency's implementing regulations. He pointed out that the Army Corps, the agency that is charged with issuing 404 permits, has not been enlisted to assist in the assessment.

Conflict with federal and state law - The attorney general believes the watershed assessment and a pre-emptive 404(c) determination by EPA conflict with other laws, including the Alaska Statehood Act, the CWA, and the National Environmental Policy Act.

Reliance on draft guidance - Geraghty said the watershed assessment appears to inappropriately rely on draft guidance released by the EPA and Army Corps in 2011 relating to the delineation of "waters of the U.S." Alaska, among others, has argued that the draft guidance illegally expands the scope of the CWA jurisdiction.

Lack of scientific credibility - The state has advised EPA that the federal agency may not have sufficient scientifically vetted water quality and hydrological data from the Bristol Bay region to conduct the review it proposes for its watershed assessment.

Use of hypothetical "large-scale development" projects - Geraghty said the assessment contemplates potential adverse impacts from hypothetical projects that could result in the EPA placing unnecessary or inappropriate Section 404(c) limits on future development.

Disregard of federal and state laws - Any assessment and consideration undertaken under section 404(c) must consider the permitting framework that is designed to protect waters, wetlands, fish, wildlife, fisheries, subsistence, and public uses of the Bristol Bay watershed.

Limited review time -Noting the multiyear NEPA process required for a single project, Geraghty said the timeframe for conducting the Bristol Bay Watershed Assessment - which covers roughly 15 million acres, comparable to the size of West Virginia - is brief.

Disregard of potential benefits - EPA indicates that the watershed assessment will not consider any potential benefits of large-scale development to water quality or to human health, safety, and welfare. Geraghty said this would provide for a biased assessment that focuses on potential negative impacts and does not consider any possible benefits of development.

Alaska's rights - The attorney general said EPA's exercise of its 404(c) authority has the potential to extinguish both the State of Alaska's mineral rights under the Statehood Compact and the mineral interests held by locators and lessees. Pointing to legal precedent, Geraghty said the federal government cannot prohibit development rights without being held liable and responsible for the payment of damages if rights to ownership and the development of those same rights have already vested.

"The state asks that EPA cease its work on the Bristol Bay Watershed Assessment. We also ask that EPA refrain from exercising its Section 404(c) authority until a Section 404 permit application has been submitted and other applicable regulatory reviews are conducted," Geraghty wrote in conclusion.

Though avoiding most of the legal and technical concerns raised by Geraghty in an April 5 response, McLerran reiterated the reason EPA chose to do the assessment and addressed the environmental agency's authority to do so.

The region 10 administrator said that - in addition to the petitions by Alaska Native groups, fishermen and others to initiate the CWA Section 404 process - the environmental agency received requests from tribal entities, the Pebble Partnership and Alaska Gov. Sean Parnell not to take such drastic measures and instead use the standard permitting and environmental review processes to evaluate proposed mining operations.

"In order to give due consideration to these conflicting requests, the EPA decided to collect and evaluate available scientific information on Bristol Bay fisheries and their vulnerability to large-scale mining development," McLerran wrote. "The watershed assessment will provide important data that will help inform future decision-making with respect to Bristol Bay - whether it be use of our authority under Section 404(c) or another action - as we work with the state and others to ensure the sustainability of the fisheries."

McLerran further contended, "The Watershed Assessment clearly falls within the obligations and authorities provided in CWA Section 104."

Geraghty argued that the segments of section 104 referred to by the EPA falls short of giving the federal agency the authority to conduct the Bristol Bay study.

"However, when read in context, the state believes that section 104 does not justify EPA's expansive interpretation, which usurps and undermines the regulatory authorities of other state and federal agencies," the attorney general wrote in an April 17 response to McLerran.

"As I stated in my March 9 letter, the cited section pertains to the establishment of national programs, not site or region-specific endeavors that would dramatically impact the regulatory and property rights of individual states because - and I hope we can be candid with each other about this - the EPA's assessment is essentially directed at the Pebble Mine Project," he continued.

"It is very important to me, personally, and to the agency as a whole, that the EPA work with the State on the Bristol Bay Watershed Assessment and understand your concerns," McLerran wrote to Geraghty. "From the beginning of the draft assessment process, the EPA has reached out to the State to discuss our approach to better understanding the Bristol Bay resource and to seek your input and involvement at every step along the way. We understand how important this resource is to Alaska, the people of Alaska, and to the cultural, commercial, industrial, recreational and environmental interests associated with Bristol Bay."

The EPA administrator said the technical questions concerning the study itself could be taken up while EPA officials are in Alaska in June to hold public meetings on the draft Bristol Bay Watershed Assessment due for public release in early May.

McLerran emphasized that the watershed assessment is an exercise without legal or regulatory consequence, making it too early to take up the legal ramifications associated with such action. The administrator said that if EPA decides to initiate section 404 action all stakeholders, including the state, would have multiple opportunities to raise its concerns during the process.

In an April 24 email, Ruth Hamilton Heese, Alaska senior assistant attorney general, environmental section, told Mining News that a meeting had yet been scheduled to take up the technical issues brought up by Geraghty.

Iterating the state's view that its involvement in the process is a "damned if you do, damned if you don't situation," Geraghty wrote, "It is unfortunate the EPA has chosen to equivocate on this threshold issue regarding the source of its authority for the action under consideration."

Heese said, "The state continues to deliberate on all of its options" in regards to the legal issues raised by the Attorney General.

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