The state should not defer Powertech regulation
Powertech is a Canadian-owned business which has applied for licenses and permits for the Dewey-Burdock in situ uranium mining project to be located in the southern Black Hills. The mining project is also commonly called the Powertech project and has been in process since 2009.
Powertech expects to install approximately 1,461 injection wells and 869 production wells over the life of the project as well as an undetermined small number of disposal wells. Powertech anticipates it will take six years of decommissioning wellfields as each wellfield is restored, then decommissioned in sequence. The project involves the use of 3 aquifers. The company recently obtained various permits and a license to proceed from federal agencies.
This authorization is currently subject to several unresolved appeals. If Powertech is successful in the appeals and completion of any appeal-related requirements, the project would be further subject to final consideration and approval by the state of South Dakota and its boards. In 2013 the state issued a stay, that is a hold, on state hearings to allow Powertech to focus on necessary permits and licenses from federal agencies who have jurisdiction over parts of the mining project.
Powertech understandably wants to now restart the state portion of permit applications even though appeals are pending. The state has argued that the process should wait until the federal agency issues are resolved. In the event federal issues are resolved, the state is the last stop for Powertech on the way to an approved project. Sooner or later, more likely sooner, the application will be back in front of South Dakota government for its decisions on permitting issues within the state’s control.
The state in the Powertech matter has displayed a preference for deferring much of the decision making to federal agencies. This is a mistake. In 2013 one of the state boards said that the federal government has preempted the state’s ability to regulate nuclear materials. That is not the whole picture. The lead federal agencies in this process – The Nuclear Regulatory Commission (NRC) and the Environmental Protection Agency (EPA) – do not have authority to displace the state’s jurisdiction to apply state law to land within South Dakota and apply state law to its surface and groundwater.
South Dakota law declares that the state will determine in what way the water of the state, both surface and underground, should be developed for the greatest public benefit. The South Dakota Supreme Court has ruled, “The people of the State own the waters themselves, and that the State, not as a proprietor, but as a trustee, controls the water for the benefit of the public.” Such a trustee must perform its duties whatever might be the influence or reputation of large federal agencies.
Deference between government agencies means yielding responsibility for action to the judgment of another agency. Because of the fragmented multiple-agency oversight in this project, I am concerned the state may limit its existing and established legal authority.
The NRC has legal oversight of nuclear materials and activities related to radiation hazards. Even if a state enters into a jurisdictional agreement with the NRC, or if state law limits South Dakota’s oversight responsibility concerning an in situ mine, the state still retains authority to regulate many non-radiation issues arising out of a uranium mining operation. Consider that the federal Atomic Energy Act states, “Nothing in this section shall be construed to affect the authority of any State or local agency to regulate activities for purposes other than protection against radiation hazards.”
In 2019 the U S Supreme Court further clarified the role of two governments with oversight over a project. The Court in a uranium mining case upheld state mining law and ruled that federal law does not preempt state mining law. In Virginia Uranium, Inc. v. Warren, the Court determined that state law could prohibit uranium mining on private land notwithstanding federal regulations controlling other aspects of the uranium industry. One of the Justices in the majority wrote, “Invoking some brooding federal interest or appealing to a judicial policy preference should never be enough to win preemption of a state law . . .” it is erroneous to argue that the NRC and EPA have preemptive or close to exclusive authority over the permitting of mines on non-government lands. As shown, these agencies do not have preemptive authority over relevant state laws on mining and water.
South Dakota is not a secondary player in the oversight of the proposed project. The mine will exist on land within the state. The water which is owned by the people of the state is managed by state government as the trustee. As a decision maker concerned with the authorization of a mining application, even one involving federal law, the state DANR (formerly the DENR) and the state boards each have a duty of independent judgment.
To date the state has issued two conditional approvals to Powertech. One conditional approval covers the large-scale mining permit. The other covers water permit applications. Neither of these are a final approval but their terms and conditions are meant to establish material positions of the state concerning the applications. In neither conditional approval is environmental liability insurance coverage or general liability insurance coverage required for the project, its construction, and operations.
The state’s initial recommendation for the large scale mine permit states, “At the time of this recommendation, it is the intention of the [the state] to enter into a Memorandum of Understanding (MOU) with the NRC regarding bonding for the entire mine site, subject to approval by the board. . . . the NRC will hold the state’s portion of the bond and that the parties to the agreement jointly manage the bond in terms of adjusting it as site conditions change through the mine life. . .” The NRC’s surety estimates for these subjects were not established by South Dakota. The proposed agreement includes the following covered matters established by the NRC as an initial surety cost estimate for the project: the costs of reclaiming the land; facility decommissioning; groundwater restoration; and certain well plugging. On these issues and several others at the NRC’s request the state reviewed the NRC’s analysis of the initial cost estimate for a surety. The state provided no comments. South Dakota in its conditional approval on ground water restoration and other issues also asserted, “These elements will be regulated by the U.S. EPA and the federal Nuclear Regulatory Commission.”
The filings in this project do not reflect where, or how, South Dakota did its own financial analysis of the proposed agreement with the NRC. And no written analysis on the issue of financial assurance is provided in the two conditional approvals. As general matter financial assurance policies require companies to commit funds or some form of surety against the costs of mine remediation and decommissioning. In 2012 Powertech provided a preliminary estimate of the total cost of reclamation at approximately $27.1 million and estimated the financial assurance amount to be approximately $8.0 million for the deep disposal well option.
Several federal reports in recent years have been critical of whether even federal agencies have sufficient competency to set correct financial assurance terms in the permitting process. On this question, in a prior opinion piece a couple of years ago, I provided five examples of state and federal agencies which had imposed inadequate financial requirements meant to cover decommissioning costs.
In May of 2012, the federal General Accountability Office issued a report on the NRC regarding the NRC’s oversight of nuclear power reactors’ decommissioning funds. The report was critical of the NRC’s competency in calculating financial issues on the costs of decommissioning nuclear reactor facilities. Among its findings the GAO stated, “. . . the agency’s ability to ensure that licensees provide reasonable assurance that they will have adequate funds at the time of decommissioning may be limited by several remaining weaknesses in [the NRC’s] oversight.” In another finding the GAO reported that the NRC had not reviewed licensees’ compliance with the investment standards the agency has set for decommissioning trust funds.
The question of financial responsibility for a new project, any required bonds, sureties, financial assurance cost estimates, and the effects of a project on the land and environment are not the most interesting aspects of a proposed project. The size of a proposed new project, the creation of new jobs, the final product whether it is gold, uranium, energy, as well as the money a project brings into a community are more newsworthy. Yet the financial status of the applicant and project are relevant issues to be considered by the state.
South Dakota law directs the state to consider whether there is a significant risk of pollution, contamination, or degradation to the environment which is not covered by other financial assurance agreements or bonds. And if it is determined they are not adequately covered South Dakota can require, as a condition of a permit, appropriate coverage by an applicant.
