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Two Pacific Northwest Coal Terminal Proposals Founder on Shoals of Tribal Fishing Rights

June 9, 2016

In a decision issued on May 9, the U.S. Army Corps of Engineers (“Corps”) denied permit applications for a coal export terminal on Puget Sound in Washington state, determining that the proposal would have more than a de minimis impact on treaty fishing rights and, therefore, could not be approved without Congressional authorization.[1]

The decision by the Corps to deny permit applications under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act for the Gateway Pacific Terminal (GPT) mirrors in some important respects a decision by the Oregon Department of State Lands (ODSL) in 2014. In that decision, ODSL denied a permit for removal/fill in waters of the state for a Columbia River coal terminal, part of the Morrow Pacific Project.[2] ODSL’s decision was based in part on a determination that “the project would unreasonably interfere with a small but important and long-standing fishery in the state’s waters at the project site.” The ODSL determination, however, was not based expressly on the existence of treaty rights, but was based on testimony regarding fishing by tribal members.

Both projects would provide facilities for exporting coal from the Powder River Basin to Asian nations and both have been highly controversial due in large measure to concerns about the impacts of transporting coal by train and the potential for expanded coal exports to contribute to climate change. Those concerns, however, played no explicit role in either decision.

This article describes the two projects, examines how tribal fishing rights became central to the fate of both, and reviews the current status of the controversies.

The Morrow Pacific Project

Ambre Energy North America (Ambre) proposed the Morrow Pacific project solely for export of coal. Ambre estimated the project initially would handle 3.5 million metric tons of coal per year, potentially rising to a full permitted capacity of 8 million metric tons per year.

The project would receive coal by rail at a new barge terminal – the Coyote Island Terminal — at the Port of Morrow, on the Columbia River near Boardman, Oregon. In order to avoid transporting coal by rail through the Columbia River Gorge and the heavily populated Portland-Vancouver metropolitan area, the coal would be offloaded and stored in an enclosed facility, and transferred via enclosed conveyors to covered barges designed specifically for transporting coal. The barges would travel over 200 miles downriver to the Port Westward Industrial Park, owned by the Port of St. Helens, where coal would be transloaded to ocean-going vessels at an existing dock – again using an enclosed system.

With the transloading operation at Port Westward taking advantage of existing dock facilities, the critical “in water” work would occur at the new Coyote Island Terminal. That terminal would be located at River Mile (RM) 271, within the John Day Pool created by the impoundment of the Columbia River behind the Corps’ John Day Dam.

In February 2012, Ambre’s subsidiary, Coyote Island Terminal, LLC, filed a Joint Permit Application (JPA) with the Corps and ODSL. The JPA is a form by which applicants seek approval from the Corps under Section 404 of the Clean Water Act and authorization from ODSL under Oregon’s statute and rules governing “removal/fill” in waters of the state.[3] After more than two years of providing supplemental information, eight extensions of the 120-day deadline for a decision by ODSL, three public comment periods and approximately 20,000 comments,[4] the applicant submitted a revised and consolidated application on August 1, 2014 in anticipation of a decision by ODSL no later than August 18, 2014.[5]

The application states that the purpose of the Morrow Pacific Project “is to develop and successfully operate the first environmentally responsible coal export facility in the Pacific Northwest for export of low-sulfur intermountain coal to U.S. trade allies in Asia.“ The project would involve 572 cubic yards of permanent fill below the line of ordinary high water of the Columbia River, and 256.5 cubic yards of temporary fill.[6] The fill includes the installation of dolphins and piles for an over-water walkway, conveyor and dock.

The Gateway Pacific Terminal

The GPT is summarized in the Corps decision. GPT would be:

a multi-modal marine terminal for export of multiple bulk commodities, including a deep-draft wharf with access trestle and other associated upland facilities. GPT would be developed at Cherry Point in Whatcom County on approximately 283 acres of the 1,520 acre project site and would consist of a three-berth, deep-water wharf, rail facilities, commodity storage areas, material handling equipment, and other required bulk handling infrastructure.

* * *

The new wharf is proposed to be 3,000 feet long and 107 feet wide built on 730 48-inch steel piling, with access provided by a 1,285-foot long by 50-foot wide trestle built on 64 piles, 24 to 30 inches in diameter.[7]

The applicant for the GPT is Pacific International Terminals, LLC (PIT), a joint venture between SSA Marine and Cloud Peak Energy.[8] The project would export up to 54 million dry metric tons of bulk materials per year, mostly coal.[9] Unlike the Morrow Pacific Project, however, GPT would not be limited to handling and transporting coal for export:

GPT’s initial targeted commodity is coal from Powder River Basin sources for export to Asian markets. Other bulk commodities include, but are not limited to, grains, potash, calcined petroleum coke, and ores originating from sources in the Pacific Northwest.[10]

Cherry Point is located in the northern portion of Puget Sound. Critical to the outcome of the GPT application, Cherry Point is approximately 12 miles from the reservation lands of the Lummi Nation. As the Corps noted:

The Lummi are signatories to the Point Elliott Treaty and have adjudicated U&A [usual and accustomed] treaty fishing right to include “the marine areas of Northern Puget Sound from the Fraser River south to the present environs of Seattle, and particularly Bellingham Bay …” U.S. v. Washington, 384 F. Supp. 312, 360-61 (W.D. Wash. 1974). The proposed GPT is located within the Tribe’s adjudicated U&A fishing area.[11]

The Oregon Department of State Lands Decision

The decision denying a removal-fill permit for the Morrow Pacific Project’s Coyote Island Terminal, issued on August 18, 2014 was based on two distinct determinations. First, ODSL concluded that the applicant had failed to address the availability of an alternative with less impact to the waters of the state. In rejecting Morrow Pacific’s conclusion that Class I rail service was not available to Port Westward,[12] ODSL pointed to information in a separate application from the Port of St. Helens. That application contained information regarding available rail service to Port Westward, the downriver destination for the barge traffic from the proposed Coyote Island Terminal. The applicant, in ODSL’s estimation, also failed to address the availability of rail loop service at Port Westward or to explain why a rail loop could not be constructed at Port Westward to serve a coal storage and loading facility such as the one proposed at the Port of Morrow.[13]

Second, ODSL determined that there was persuasive evidence of a “small but important long-standing fishery at the project site”:

Through public comments and the Department’s requests for clarifying information, several tribal interests provided comment and affidavits containing historical information, descriptions, mapping, photographs and a video that support that there is important commercial, subsistence and cultural fishing uses by tribal fishers of Waters of the State.

* * *

The Department finds and concludes that the evidence supporting that there is a small but important long-standing fishery at the project site is more persuasive than the evidence submitted by the applicant regarding fishing at the project site.[14]

Although the applicant had proffered a range of possible mitigation measures, ODSL noted that “the applicant did not commit to any specific action or set of actions.”[15]

ODSL’s decision does not expressly rest on treaty rights. Rather, ODSL relied on its own standards for issuance of removal-fill permits. In light of what appeared to be an available alternative — transporting coal by train to Port Westward – and the impact to tribal fishing, ODSL could not make the required finding that the removal-fill “Is consistent with the protection, conservation and best use of the water resources of this state as specified in ORS 196.600 to 196.990.”[16]

As an alternative basis for denial, ODSL also concluded the proposed project “would unreasonably interfere with the paramount policy of this state to preserve the use of its waters for navigation, fishing and public recreation”[17] due to the impact on the fishery at the project site.

The Morrow Pacific project is now enmeshed in a protracted contested case proceeding – essentially an administrative trial – brought by the applicant and the Port of Morrow to challenge the denial of the removal-fill permit before a State of Oregon administrative law judge. The proceeding (technically two contested cases – one brought by the applicant and the other by the Port) also involves numerous “limited parties”: tribes (Confederated Tribes of the Umatilla Indian Reservation, ​Confederated Tribes of the Warm Springs, Nez Perce Tribe and ​Yakama Nation), environmental groups (Columbia Riverkeeper, Sierra Club and Friends of the Columbia Gorge) and two states (Montana and Wyoming).

“Limited party” status in this context means that the parties are limited to addressing the issues raised by the applicant and the Port in their Requests for Hearing. A detailed examination of the issues raised for hearing is beyond the scope of this article. It is noteworthy, however, that the applicant and the Port challenge not only the factual findings and legal interpretations by ODSL, they also contend that ODSL’s decision “violates the Commerce Clause of the United States Constitution by impermissibly restricting interstate commerce.”[18]

Under the most recent schedule for the contested case proceeding, the actual hearing will occur in late September and early October, 2016.[19] Under the Oregon Administrative Procedures Act, the decision in the contested case proceeding is subject to judicial review before the Oregon Court of Appeals.[20]

The Army Corps of Engineers Decision

In contrast to ODSL’s decision for Morrow Pacific’s Coyote Island Terminal, the Corps decision denying Section 404 and Section 10 permits for GPT is based entirely on treaty rights. Those rights have a long history.

The Lummi entered into the Treaty of Port Elliott in 1855.[21] Article 5 of the treaty secures fishing rights:

The right of taking fish at usual and accustomed grounds and stations is further secured to said Indians in common with all citizens of the Territory …. Provided, however, that they shall not take shell-fish from any beds staked or cultivated by citizens.

That “right of taking fish at usual and accustomed grounds and stations” is not a right granted by the United States. Rather, it is a right reserved by the tribes when ceding lands to the United States, as the Supreme Court has made clear in the context of other treaties with Indian tribes:

The right to resort to the fishing places in controversy was a part of the larger rights possessed by the Indians, upon the exercise of which there was not a shadow of impediment. … [T]he treaty was not a grant of rights to the Indians but a grant of rights from them – a reservation of those not granted.[22]

The treaty fishing rights of the Lummi and other Washington tribes were adjudicated in United States v. Washington,[23] the so-called “Boldt I” decision. As summarized by the Corps:

Senior Judge Boldt adjudicated the nature and extent of the Tribes’ off-reservation fishing rights with respect to anadromous fish. This decision established the locations of the Tribes U&A grounds and stations and found the tribes were entitled to take fifty percent of the harvestable fish from those grounds and stations. The Lummi have adjudicated U&A grounds and stations … within, near and around the Cherry Point area. Productive fishing locations change over time as fish populations and environmental conditions change. The tribes have the right to follow the fish to any place within the Boldt I boundaries. Therefore, any place within the boundaries set forth by Boldt I where tribal members have fished in the past, currently fish, or may fish in the future, is a “usual and accustomed” place. A tribe’s treaty right to fish at its U&A fishing grounds necessarily includes a right of access to those grounds, which is at issue with the GPT project.[24]

The Corps noted that it has a “fiduciary duty to take treaty rights into consideration in making its permit decision.”[25] Citing a prior unpublished U.S. District Court decision involving plans by the Corps to dredge in Bellingham Bay near Cherry Point, the Corps identified the relevant standard as whether there is a “greater than de minimis” impact to either the U&A treaty right to access fishing areas or the right to take fish: “If the impact to either is greater than de minimis, in other words the impact is legally significant, the Corps would be required to deny the permit because only Congress can abrogate a treaty right.”[26]

The Corps concluded that the GPT facility would violate the Lummi’s U&A treaty rights in three respects:[27]

  • “Impairing and eliminating part of their U&A treaty fishing and crabbing area.” The Corps noted that “the project will include a trestle, wharf, three ship berths, and new vessel approach lane covering 122 acres and handling 487 total annual vessel calls, one vessel arrival or departure every 18 hours.”[28] The Corps rejected arguments by the applicant that the area was not a productive fishery and that the area of impact was proportionately small in comparison to the Lummi’s total U&A fishing area in the Puget Sound.[29]
  • “Impairing and eliminating the time and manner in which the Tribe can fish in their U&A.” The Corps concluded that the applicant’s proposal to mitigate impacts to treaty rights would impair treaty rights. The mitigation proposals, the Corps stated,

    are regulations on the time and manner of when and how the Lummi should fish and crab with the project in place and operating.

    * * *

    [T]his proposed regulation on the time and manner of fishing at the U&A fishing ground is an impairment or limitation that is only appropriate by an act of Congress or for the conservation of the fishery resource.[30]

  • “Impairing and eliminating potential future herring fishing at the site”: Although fishing for herring has not been allowed at Cherry Point since 1996, the Corps observed that the Boldt I decision “requires analysis of tribal treaty rights to include those areas where the tribes may fish in the future.”[31] The Corps determined the impact to potential herring fishing to be greater than de minimis: “Considering took into consideration s ongoing recovery effort and the stated intent of the Lummi [to resume fishing for herring in the Cherry Point area] in the event the fishery is restored, the Corps does not need to disregard the Lummi’s statements regarding fishing for herring in the future.”[32]

The applicant had suspended environmental review of the GPT at the beginning of April, citing

the extended timing of the US Army Corps of Engineers’ consideration of the Lummi Tribe’s claims under the 1855 Treaty of Point Elliott and a desire to ensure all processes in the EIS are in synch, so facts and science generated by the different reviewing agencies continue to follow in line with the EIS process.[33]

According to a press release issued by the Corps contemporaneous with the Corps decision, the Corps had informed the applicant that the GPT project “as currently planned is not permittable” and the applicant then requested a decision on the application.[34] According to the press release from the Corps, the denial of the Section 404 and Section 10 permits is “without prejudice.”

Barring an agreement with the Lummi or alterations to the project to reduce impacts to treaty fishing rights below de minimis levels, the applicant’s options may be limited to seeking judicial review. Although the Corps has an administrative appeal process,[35] an appealable “permit denial” includes only a denial with prejudice.[36]

An agreement with the Lummi — or success in court – would not necessarily clear the obstacles to obtaining permits for the GPT. The Corps press release indicates that the GPT project would face other treaty rights hurdles:

If in the future the Lummi Nation withdraws its objections to the proposal, the proponent could reinitiate processing of the application. A number of other tribes have expressed concern about effects of the proposal on their treaty rights, so if processing of the application resumes, consultation with those tribes would occur as needed to collect information and make decisions with respect to effects of the proposal on their rights.[37]

Another Pacific Northwest Coal Terminal Proposal Is Pending: Millennium Bulk Terminals (MBT)

A third coal terminal proposal, by Millennium Bulk Terminals – Longview, LLC, would convert a former Reynolds Aluminum smelter on the Columbia River in Longview, Washington for use as a coal export terminal handling up to 44 million metric tons of coal annually. That proposal is undergoing NEPA review with the Corps of Engineers as the lead agency and review under Washington’s State Environmental Policy Act (SEPA) with the Washington Department of Ecology and Cowlitz County as co-lead agencies.

A draft EIS under SEPA has been issued, with a public comment period extending through June 13, 2016.[38] Not surprisingly, the Department of Ecology and Cowlitz County have issued an explanation regarding how impacts on tribal resources were evaluated.[39] A separate draft EIS from the Corps is expected this year.

Conclusion

U.S. coal producers – faced with no prospects for a reversal in the decline of domestic demand – are seeking international markets. As the decisions from the Oregon Department of State Lands and the U.S. Army Corps of Engineers discussed in this article demonstrate, tribal fishing and treaty rights can be added to the substantial list of obstacles for companies seeking to export coal from the Pacific Northwest.

For more information please contact Richard Allan in Marten Law’s Portland office.

[1] U.S. Army Corps of Engineers, Memorandum for Record, Application NEW-2008-260 (May 9, 2014)(hereafter “Corps Memorandum”).

[2] Oregon Department of State Lands, Findings and Order, Application No. 49123-RF (Aug. 18, 2014) (hereafter, “ODSL Order”).

[3] ORS 196.800 through 196.990; OAR Ch. 141, Div. 85.

[4] Oregon Department of State Lands, Fact Sheet, Coyote Island Terminal Project (Port of Morrow) Removal-Fill Permit Application No. APP0049123 (rev. Nov. 23, 2015).

[5] Removal-Fill Application No. 49123-RF (hereafter “Coyote Island Application”).

[6] Coyote Island Application at 2.

[7] Corps Memorandum at 5.

[8] http://gatewaypacificterminal.com/the-project/

[9] http://www.ecy.wa.gov/geographic/gatewaypacific/

[10] Corps Memorandum at 5-6.

[11] Id. at 6.

[12] ODSL Order at 15.

[13] Id.

[14] Id. at 16.

[15] Id.

[16] OAR 141-085-0565(3)(b).

[17] See OAR 141-085-0565(3)(c).

[18] Request for Hearing by Coyote Island Terminal, LLC, In the matter of Coyote Island Terminal, Application No. 49123-RF (Sept. 8, 2014) at 3.

[19] Order Revising Case Schedule, In the matter of Coyote Island Terminal, OAH Case Nos. 1403883 and 1403884 (Sept. 25, 2015).

[20] ORS 183.482.

[21] Treaty of Point Elliott, January 22, 1855, ratified March 8, 1859, and proclaimed April 11, 1859, 12 Stat. 927. See http://www.goia.wa.gov/treaties/treaties/pointelliot.htm

[22] United States v. Winans, 198 U.S. 371, 380-81 (1905).

[23] 384 F. Supp. 312 (W.D. Wash. 1974), aff'd, 520 F.2d 676 (9th Cir. 1975), cert. denied, 423 U.S. 1086 (1976).

[24] Corps Memorandum at 19 (citations omitted).

[25] Id. at 20, citing Northwest Sea Farms, Inc. v. United States, 931 F. Supp. 1515 (W.D. Wa. 1996).

[26] Id., citing Lummi Indian Nation v. Cunningham, No. C92-1023C (W.D. Wa. Sept. 1, 1992).

[27] Id. at 31-32.

[28] Id. at 28.

[29] Id. at 25-27.

[30] Id. at 30-31.

[31] Id. at 27.

[32] Id.

[33] Letter from Bob Watters, Pacific International Terminals, April 1, 2016.

[34] http://www.nws.usace.army.mil/Media/NewsReleases/tabid/2408/Article/754951/army-corps-halts-gateway-pacific-terminal-permitting-process.aspx

[35] See 33 C.F.R. Part 331.

[36] 33 C.F.R. § 331.2 (defining “permit denial” as “a written denial with prejudice … of an individual permit application”).

[37] Id.

[38] http://www.millenniumbulkeiswa.gov/

[39] http://www.millenniumbulkeiswa.gov/assets/4.-tribal-fact-sheet.pdf

 

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