EPA actions at mine could hurt $220 billion in investments

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Michael Bastasch DCNF Managing Editor
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The Environmental Protection Agency’s (EPA) preemptive assessment of the Pebble Mine in Alaska could have a “chilling effect” on $220 billion in investments, according to the Brattle Group, an economic and financial consulting firm.

In May, the EPA released its watershed assessment of large-scale mining by Pebble LP at Bristol Bay, which could be one of the largest copper and gold mines in the world, and expressed concerns over impact the mine would have on local salmon habitats and surrounding wetlands.

Under the Clean Water Act, operations that dump “dredge or fill materials” into wetlands, rivers, lakes, or streams are required to obtain a Section 404 permit from the U.S. Army Corps of Engineers. The EPA can revoke this permit if there are “unacceptable adverse impacts on municipal water supplies, shellfish beds and fishery areas, wildlife, or recreational areas.”

However, the watershed assessment did not evaluate any actual plans for the Pebble Mine, as none have been put forward, instead it evaluates a hypothetical mine. Independent scientists have also expressed concerns over this approach and have said the assessment was rushed.

“It has a chilling effect over all these kinds of investments. Everybody in every project knows that there’s a process, and it’s a challenge, a serious one, to comply with that process,” Dan McGroarty, president of the nonpartisan American Resources Policy Network, told The Daily Caller News Foundation.

“To be stopped before the process begins and subject it to a hypothetical is a new wrinkle, and that can chill capital, that can chill investment, and the jobs, in this particular economy, that we want to see,” he continued. “It’s going to have a very negative effect on the manufacturing process in the U.S.”

The EPA has never blocked a mining project after a preliminary watershed assessment was completed, and companies behind the Pebble mining project worry that doing so would make it easier for environmental groups to stop other projects.

“The EPA is flexing its administrative muscle and seeing how far forward it can reach and how far after the fact can it reach,” said McGroarty.

Congressional Republicans criticized the EPA’s tactis and California Republican Rep. Darrell Issa called the actions “unprecedented and legally questionable.”

“EPA’s assertion of pre-emptive veto power appears to undermine the permitting process as outlined by Congress when it passed the [Clean Water Act],” Issa wrote in letter.

This is not the first time the EPA has looked to test the limits of its Section 404 authority. In June, a federal court ruled against the EPA’s use of Section 404 to revoke a permit for Mingo Logan Coal Company in West Virginia — four years after the permit had originally been issued the Army Corps of Engineers.

The judge wrote that the EPA’s interpretation of the law was “illogical and unreasonable” and relied on “magical thinking.”

“It is further unreasonable to sow a lack of certainty into a system that was expressly intended to provide finality,” said the opinion.

According to McGroarty, more than $220 billion in U.S. investment goes through Section 404 Clean Water Act permits spanning many industries, including farming, manufacturing, building, energy, water treatment, and resource extraction projects.

“Just imagine the reaction of the rest of the industry, that they might be pulled into a process before they’ve put a project in place,” he said. “These projects commit capital in the hundreds of millions, in the billions, and they do it for years before the first shovel goes into the ground and they can begin to get a return.”

If the EPA can block a project before any permits or plans are put forward, it would send many mining projects and jobs overseas.

“If we don’t exploit and develop what we have in the United States, which is considerable,” he said, “we are simply going to underscore our foreign dependence.”

“It’s going to have a very negative effect on the manufacturing process in the U.S. I couldn’t even estimate,” he concluded. “$200 billion of investment, I couldn’t even estimate how many jobs that would be. Honestly, is this going to be something we just accept because an agency defines its role in role in a different way?”

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