Presentation to: The SRBC’s New Regulations and Their Impact on the Mining Industry PRESENTED BY: Joel R. Burcat, Esq. Saul Ewing LLP

What is a Compact? A compact is an agreement between the states (and the Federal government) and is governed by the United States Constitution.

A compact is essentially a law that establishes the parameters of the authority of the signatories. It provides the powers and duties of the Commission. Regulations and policies of the Commission are derived from the authority granted by the compact and, presumably, can explain or elucidate the terms of the compact, but not expand the terms of the compact.

The Federal government and the states often attach “reservations” to compacts which are statements by that party which attempt to limit the provisions of the compact. Such reservations are of questionable authority, since the reservations have not been agreed to by all of the parties.

SRBC The SRBC was established in 1970 as a compact between the United States, Pennsylvania, New York and Maryland. It covers the Susquehanna River, its tributaries to Havre de Grace, MD, at the northern end of the Chesapeake Bay.

Primary Purposes of SRBC: Control diversions Allocate water between the states Flood control Water supply

Secondary Purposes of SRBC: Pollution control Watershed Management Recreation Hydroelectric power

Primary or Secondary Importance? Regulation of withdrawals

Diversions “The transfer of water into or from the basin.” Projects requiring approval: any diversion of water.

Withdrawals “A taking or removal of water from any source within the basin for use within the basin.” Projects requiring approval: withdrawal in excess of an average of 100,000 gpd for any consecutive 30-day period from a ground water (including pumped quarries) or surface water source.

Consumptive Use “The loss of water transferred through a manmade conveyance system or any integral part thereof (including such water that is purveyed through a public water supply or wastewater system), due to transpiration by vegetation, incorporation into products during their manufacture, evaporation, injection of water or wastewater into a subsurface formation from which it would not reasonably be available for future use in the basin, diversion from the basin, or any other process by which the water is not returned to the waters of the basin undiminished.” Projects requiring approval: consumptive use of water exceeding an average of 20,000 gpd for any consecutive thirty-day period. 18 C.F.R. § 806.4(a).

MOU – SRBC and DEP On June 18, 1999, the SRBC and DEP entered into a Memorandum of Understanding (“MOU”) relating to, inter alia, water withdrawals from mines and quarries. Memorandum of Understanding Between the Susquehanna River Basin Comm. and the Pennsylvania Dept. of Environmental Protection Regarding Coordination of Project Review Functions (June 18, 1999).

MOU DEP may issue NPDES permits that allow mines and quarries to discharge more than 100,000 gallons per day over 30 days.

MOU If the SRBC does not object to the permit within 30 days of receipt of notice of the permit, then DEP’s approval “shall be considered as adequate to meet the requirement of SRBC Regulations and no separate approval will be required by the Commission.” MOU states that “such projects shall be considered approved by the Commission.” If the SRBC files an “objection to the proposed operation within 30 days of receipt of the notification,” however, then the applicant must apply directly to the SRBC for SRBC approval of the water withdrawal.

New SRBC Regulations – Effective Date and Litigation In 2006, SRBC proposed a new set of regulations governing the SRBC. Wholesale change to old regulatory package.

New SRBC Regulations – Effective Date and Litigation New regulations were approved and adopted by the Commission on December 5, The new regulations were set to go into effect on January 1, On December 22, 2006, Pennsy Supply filed a Complaint along with an Application for a Temporary Restraining Order (TRO) and Motion for Preliminary Injunction.

New SRBC Regulations – Effective Date and Litigation On December 29, 2006, Federal District Judge William W. Caldwell granted the TRO ordering the SRBC to refrain from enforcing the new regulations until further order of court.

NEW SRBC Regulations – Effective Date and Litigation Following a hearing, Judge Caldwell denied the request for a preliminary injunction. The new regulations went into effect on February 20, Subsequently, Pennsy withdrew the appeal.

New Regulations - Substance In many instances the new regulations: 1. Clarify the old regulations. 2. Codify SRBC policies that for years were a part of the regulatory regime. 3. Reorganize the regulations so that concepts are found in one place, not scattered throughout the regulations.

SRBC’s New Regulations: 1. Limits on Transferability of Project Approvals Prior to the implementation of the new regulations project approvals could be transferred with changes of ownership. The new regulations define “change of ownership” in a way that limits the transferability of project approvals. Section 806.6(b) lists scenarios in which approvals may be transferred, including but not limited to corporate reorganization involving the transfer of 80% of the stock to the transferor, reorganization that is a change in name only, and transfer to a spouse or lineal descendant. New approvals must be obtained for changes of ownership that do not fall within this inconsistent and incomprehensibly vague definition.

SRBC’s New Regulations: 2. Increased Regulation of Water Withdrawals Section of the new regulations subjects water withdrawals from ground or surface waters that are part of a consumptive water use project to review and approval by SRBC. Section of the new regulations grants the SRBC authority to require the sponsor of a project involving regulated water withdrawals to seek alternative water supplies, pursue mitigation measures, and maintain special monitoring.

SRBC’s New Regulations: 3. Annual Charges by SRBC for Consumptive Use Section (b) allows the SRBC to charge an annual fee to users in the basin for mitigation of consumptive use.

SRBC’s New Regulations: 4. Reduced Duration of Project approvals Section of the new regulations reduces the duration of project approvals from 25 to 15 years unless an “alternate period” is determined by the SRBC. The regulations offer no guidance on what criteria would be relevant to the determination of an “alternate period.” Section also provides that project approvals expire if the project is not implemented within three years of approval. This is reduced from the five-year expiration period which was provided for by the old regulations.

SRBC’s New Regulations: 5. Requirements Related to Constant Rate Aquifer Testing Section places costly requirements for constant rate aquifer testing on project sponsors.

SRBC’s New Regulations: 6. Expansion of the SRBC’s Administrative Powers Section 808.3(b)(8) gives the SRBC the power to issue subpoenas. Section give the SRBC the power to issue orders.

Practical Tips for Mine Operators: Planning for a mining activity that involves a withdrawal or consumptive use of a significant amount of water requires a permit from the SRBC. Start application process early! Approval by a state of an NPDES or other permit may not be adequate for SRBC purposes. Failure to obtain a permit may subject mine operator to civil penalties.

Any Questions?

Contact Information Joel R. Burcat, Esq. 2 North Second Street 7 th Floor Harrisburg, PA Phone: Fax: Web:

Saul Ewing’s Office Locations Baltimore, Maryland 100 S. Charles Street Baltimore, MD fax: Chesterbrook, Pennsylvania 1200 Liberty Ridge Drive, Suite 200 Wayne, PA fax: Harrisburg, Pennsylvania Penn National Insurance Tower Two North Second Street, 7th Floor Harrisburg, PA fax: Newark, New Jersey One Riverfront Plaza Newark, NJ fax: Philadelphia, Pennsylvania Centre Square West 1500 Market Street, 38th Floor Philadelphia, PA fax: Princeton, New Jersey 750 College Road East Princeton, NJ fax: Wilmington, Delaware 222 Delaware Avenue, Suite 1200 Wilmington, DE fax: Washington, D.C Thomas Jefferson Street, N.W. Suite 425W Washington, D.C fax: