Unpublished Disposition, 931 F.2d 896 (9th Cir. 1991)

MEMORANDUM

Alaska Miners Association (Miners) petitions for review of a decision by the Environmental Protection Agency (EPA) declining to modify its effluent regulations for gold placer mines. We have jurisdiction over this petition pursuant to 33 U.S.C. § 1369(b) (1) (E). We deny the petition.

The EPA's decision not to modify its regulations may be set aside if "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2) (A). This deferential standard requires us to determine whether the EPA " 'has considered the relevant factors and articulated a rational connection between the facts found and the choice made.' " Rybachek v. United States Environmental Protection Agency, 904 F.2d 1276, 1284 (9th Cir. 1990) (Rybachek), quoting Baltimore Gas & Electric Co. v. Natural Resources Defense Council, Inc., 462 U.S. 87, 105 (1983).

The EPA must adopt regulations that are economically achievable, as well as technologically available. Rybachek, 904 F.2d at 1289 (determination of best practicable technology must be made in light of cost-benefit analysis), 1290 (determination of best available technology must be "economically achievable"). To measure the economic effect of its regulations, the EPA first estimated the baseline costs and profitability of gold placer mines and then added the estimated costs of regulatory compliance. The model is complex. It requires a myriad of assumptions and estimates regarding mine profitability and the costs of labor, energy, supplies, transportation, maintenance, debt service, depreciation, and amortization, among other things. The estimate of mine profitability relies on the price and availability of gold. The latter estimate relies, in turn, on an estimate of ore grade. The EPA estimated ore grade at 0.02 ounces of gold per cubic yard of ore mined. The data supporting this estimate were collected by the EPA from field interviews and scientific literature.

Miners contends the EPA overestimated the ore grade, and consequently, overestimated mine profitability and underestimated the impact of compliance costs. Miners' contention relies on an alternative estimate prepared by the Bureau. The Bureau estimated ore grade at 0.015 ounces of gold per cubic yard of ore mined, based on data from the EPA field interviews, a survey by the State of Alaska, and selected Bureau patent reports.

Mandatory interagency deference was rejected by Rybachek, 904 F.2d at 1296 ("The prospect of various agencies contending in court, each claiming that another must defer to it in some particular area, is not a happy one."). Thus, we consider the Bureau's estimate solely on its merits, and not on any supposed interagency deference.

The EPA carefully considered the Bureau's alternative estimate and rejected it for specific reasons articulated in the record. First, accepting arguendo the Bureau's estimate as accurate, the EPA incorporated it into the economic model. The EPA determined that if the Bureau's estimate were accurate, sixty-five percent of all currently operating gold placer mines would be operating at a loss, even before compliance costs. Since this outcome diverges from reality, the EPA concluded the Bureau's estimate was too low.

Second, the EPA considered the Bureau's suggestion to exclude data from the older scientific literature. Accepting arguendo the Bureau's suggestion, the EPA prepared an ore grade estimate without this data. This estimate was equal to or higher than the EPA's initial estimate, depending on the precise choice of methodology.

Third, the EPA questioned the validity of both Alaska's and the Bureau's additional data. Alaska's data was compiled from a survey, about which the EPA had several reservations. Alaska could only partially respond to these reservations, as confidentiality prevented it from providing raw data to the EPA. The EPA rejected the Bureau's patent reports data, since the Bureau did not use all of its patent reports and would not divulge its selection criteria.

Finally, the EPA rejected the Bureau's suggestion that the EPA's overall ore grade estimate was based on unacceptable underlying estimates and insufficient data. The EPA's overall ore grade estimate was based on the weighted average of six regional estimates. Two of these regions, the northern and southeastern, have fewer mines and hence, fewer data from which to estimate ore grade. These regional estimates are likely less accurate than the other regional estimates. The EPA responds, however, that it did the best it could, and moreover, since the overall estimate is weighted to reflect the number of mines in each region, the impact of any potential inaccuracy is slight.

If we were required to do so, we might have difficulty choosing between the estimates prepared by the Bureau and the EPA. But of course that is not the question presented. Rather, we must decide whether the EPA made a rational choice among reasonable alternatives or whether the EPA acted arbitrarily or capriciously. Given the careful manner in which the EPA considered the Bureau's estimate and the lack of an unanswerable criticism of the EPA's estimate, we hold the EPA's reliance on its original ore grade data was neither arbitrary nor capricious.

Miners also contends the EPA arbitrarily and capriciously excluded from its economic model the costs of patenting mining claims. Miners argues that everyone should patent their claims, to avoid the later possibility that a quiet title action will become necessary.

EPA contends the issue is precluded by Rybachek. Issue preclusion prevents the relitigation of discrete issues of fact or law that were actually litigated and necessarily decided. Robi v. Five Platters, Inc., 838 F.2d 318, 322 (9th Cir. 1988). The existence of issue preclusion presents a question of law, although the decision to apply it, once it is adjudged to exist, is discretionary. Id. at 321.

Miners raised the issue of patenting costs in Rybachek, and Rybachek necessarily decided it in denying the petition. See Rybachek, 904 F.2d at 1301 n. 28. Miners contends, however, that documents submitted during the additional comment period alter the issue previously litigated. These comments consist of an estimate of patenting costs and the assertion that everyone should patent their mines. Since Miners raised this issue in Rybachek, the necessity assertion cannot be new. The costs estimate misses the point, since the EPA determined that the costs need not be incurred at all. Thus, it appears the additional information does not alter the issue previously litigated, so Miners should be precluded from litigating it anew.

In addition, given the deferential standard of review, and the level of detail at which Miners attacks the EPA's economic model, a decision to include or exclude an arguable cost might always fall within the EPA's discretion. In this instance at least, given Miners' lack of hard evidence and the EPA's reasoned response, the exclusion of patenting costs was neither arbitrary nor capricious.

PETITION DENIED.

O'SCANNLAIN, Circuit Judge, concurring:

I concur in the denial of the petition for review. I would dispose of the patent mining costs claim on the merits, however, rather than rely upon the doctrine of issue preclusion.

In Rybachek v. United States Environmental Protection Agency, 904 F.2d 1276 (9th Cir. 1990), we expressly declined to consider the additional documentation submitted during the special comment period in upholding the EPA's regulations. See id. at 1296 n. 25. Our implied rejection of the patent mining costs claim posed in that case cannot be construed as a ruling on the reasonableness or arbitrariness of the EPA's refusal to reconsider the issue in light of the additional materials. I agree with the court that these documents do not add much substance to the original patent mining costs claim, but would reject petitioner's contention on the merits.