20080868 Ver 2_Public Comments_20080709

SOUTHERN ENVIRONMENTAL LAW CENTER
Telephone [phone]
Facsimile 919-929-9421
[e-mail]
200 WEST FRANKLIN STREET, SUITE 330
CHAPEL HILL, NC 27516-2559
Via Electronic Mail and U.S. Mail
Mr. John Dorney
N.C. Division of Water Quality
1650 Mail Service Center
Raleigh, N.C. 27699-1650
July 7, 2008
Charlottesville, VA
Chapel Hill, NC
Atlanta, GA
Asheville, NC
Sewanee,TN
R r-= (- __3 ?0
JUL 9 2008
DENR - WATER QUALITY
WETLANDS AND STORMWATER BRANCH
Re: Section 401 Clean Water Act Certification for the PCS Phosphate Mine
Continuation: Aurora, North Carolina
Dear Mr. Dorney:
Please accept the following comments on Potash Corporation of Saskatchewan's
("PCS") Clean Water Act Section 401 certification application related to their Section
404 permit request to mine 4,135 acres of waters of the U.S. under Alternative L as
described in the Final Environmental Impact Statement ("FEIS"). The Southern
Environmental Law Center ("SELC") submits these comments on behalf of the Pamlico-
Tar River Foundation ("PTRF"). PTRF is a private, non-profit organization that has been
dedicated to protecting, preserving, and promoting the Tar-Pamlico River and its
watershed since 1981. PTRF is a member of the Review Team for this project. SELC is
a private, non-profit legal organization that seeks to protect and preserve the Southeastern
environment.
Because the Section 401 certification is a component of PCS's CWA Section 404
permit request and will rely substantially on the documentation prepared to comply with
NEPA as part of that request, we have included our comments on the Draft
Environmental Impact Statement ("DEIS"), the Supplemental DEIS ("SDEIS"), and the
FEIS related to the project. As discussed in these comment letters, and highlighted
below, the FEIS is substantially inadequate and fails to make the necessary showings to
comply with 15A N.C.A.C. 2H.0506 (b) and (c) concerning 401 certifications for surface
waters and wetlands, respectively. Therefore, the Division of Water Quality should deny
PCS's Section 401 certification request.
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I. PCS Has Not Met the Requirements for a Section 401 Certification and the
Division of Water Quality Should Reject Their Application.
PCS has not demonstrated that no practicable alternatives exist or that it has
minimized stream or wetland impacts.
The FEIS economic practicability analysis relies on in inappropriate cost model,
is inconsistent, is internally contradictory, and consequently fails to consider multiple
potentially practicable alternatives that would impact substantially fewer acres of
wetlands, linear feet of streams, and acres of buffers.' Therefore, PCS has not
demonstrated that no practical alternative exists or that it has minimized adverse impacts
to surface waters or wetlands.
Alternative L will result in the degradation of groundwaters or surface waters.
State and federal resource agencies, as well as independent scientists, have
concluded that substantial mining in the NCPC tract, as would occur under Alternative L,
will cause "significant negative adverse impacts to estuarine fisheries resources, fish
habitats, water quality, and public trust waters in the Pamlico River system." 2 That fact is
further demonstrated by PCS's inability to mitigate for buffer impacts as discussed
below. Therefore, PCS has not demonstrated that mining according to Alternative L will
not result in the degradation of groundwaters and surface waters.
Alternative L will result in cumulative impacts that have not been addressed.
The FEIS does not discuss the cumulative impacts of Alternative L. PCS has
maintained that it intends to mine all available reserves, including those beneath the
Pamlico River and South Creek. Those cumulative impacts are foreseeable and could
have important water quality impacts, but are not addressed in the FEIS.3
PCS has not proposed adequate mitigation for stream and wetland impacts.
The FEIS only proposes mitigation for the first 12-15 years of impacts and does
not propose specific mitigation for more than 500 acres of wetland, 14,000 linear feet of
streams, and 20 acres of buffer impacts.4 Therefore, it does not provide for "replacement
of existing uses through mitigation."5
1 See Southern Environmental Law Center Comments on Final Environmental Impact Statement at 2-4
(July 7, 2007) ("FEIS Comments").
2 Memorandum from McKenna to McGee of July 27, 2008 at 1. See also Letter from Deaton, N.C.
Wildlife Resources Commission, to McGee of July 1, 2008 at 2-4; Letter from Benjamin, FWS, to Walker,
Corps, of Dec. 20, 2006 at 2-6; see enerall Letter from Jacobs, Pamlico-Tar River Foundation, to U.S.
Army Corps of Engineers of Feb. 8, 2007 (citing numerous flaws in PCS environmental analysis and the
myriad threats that mining in NCPC poses).
3 FEIS Comments at 12-13.
4 FEIS Comments at 13-15.
5 15A N.C. ADMIN. CODE 2H.0506(b)(6) and (c)(6).
2
II. PCS's Flexible Buffer Mitigation Plan is Inadequate, Unlawful, and Will
Degrade Water Quality.
The Tar-Pamlico Estuary is a nutrient sensitive water that has experienced
numerous and significant water quality problems associated with excessive nutrient
inputs. In 2002, the Environmental Management Commission ("EMC") enacted a
nutrient sensitive management strategy for the Tar-Pamlico River basin. Central to this
strategy is protection of riparian buffers to maintain nutrient removal functions and
restoration of buffers if impacts are unavoidable. The riparian buffer mitigation strategy
and implementing rules include detailed requirements for mitigation of buffers resulting
from unavoidable impacts.6 PCS (dba Texas Gulf) was fully operational and doing
business in the basin at the time the rules were adopted.
PCS has proposed a woefully deficient plan to address the substantial destruction
of buffers associated with its mining advance. Rather than complying with the rules, PCS
proposes an "anything goes" (i.e. "flexible") approach to addressing the massive
destruction of buffers. PCS's plan presumptively assumes that a variance will be granted
by the EMC. Because PCS's mining plan and resulting destruction of riparian buffers
fail to comply with the buffer mitigation regulations, the 401 Certification must be
denied. In addition, because PCS's circumstances fail to meet the standards for granting
a variance, no variance can be granted.
PCS identifies a need during the first 15 years of mining to mitigate 76.7 acres of
buffer to replace 31.9 acres that will be destroyed by the mining operation. An additional
23.1 acres of buffer will be destroyed in ensuing years if a permit is issued authorizing
Alternative L requiring 52.2 acres of mitigation. In total, PCS is seeking authorization to
destroy 55 acres of riparian buffer; an impact that will require 128.9 acres of mitigation.
PCS's mitigation plan identifies only 26.6 acres of potential buffer restoration only one-
fifth of the required restoration. This failure to meet the explicit requirement of the
buffer mitigation regulation requires denial of the 401 Certification. Moreover, buffer
mitigation "shall be located the same distance from the Pamlico River Estuary as the
proposed impact, or closer to the estuary than the impact, and as close to the location of
the impact as feasible." 7 Most of PCS's proposed buffer mitigation sites are located
farther from the estuary than the location of the impact and are misplaced and
inappropriate.
PCS's presumption that a variance from the buffer rules will be granted is also
misplaced because the EMC cannot issue a variance to PCS under the criteria in 15A
N.C.A.C. 2B .0259(9). Destruction of buffers requires mitigation in accordance with the
rules, and if this mitigation is not provided "persons who wish to undertake uses
designated as prohibited may pursue a variance." 8 The process for granting variances to
the buffer rules includes specific requirements that must be met. First, an applicant for a
variance must demonstrate that there are practical difficulties or unnecessary hardships
6 15A N.C. ADMIN. CODE 2B.0260.
' 15A N.C. ADMIN. CODE 2B .0260(4).
8 15A N.C. ADMIN. CODE 2B.0259.
that prevent compliance with the strict letter of the riparian buffer protection
requirements.9 An applicant must demonstrate that "he/she can secure no reasonable
return from, nor make reasonable use of, his/her property."10 Here, PCS has multiple
reasonable alternative uses of the property. In addition, "merely proving that the variance
would permit a greater profit from the property shall not be considered adequate
justification for a variance."" PCS must demonstrate, which it has not, that avoiding the
buffer areas would not allow it to continue to mine at all, not merely reduce the expected
profit it hopes to maximize. In addition, PCS must show that its claimed hardship "is due
to the physical nature of the applicant's property, such as its size, shape, or topography,
which is different from that of neighboring property." 12 PCS cannot make this required
showing. Finally, PCS must demonstrate that the hardship "is unique to the applicant's
property, rather than the result of conditions that are widespread. If other properties are
equally subject to the hardship created in the restriction, then granting a variance would
be a special privilege denied to others, and would not promote equal justice." 13 There are
no unique conditions on PCS's property and under these principles of equal justice PCS
should not be granted privilege denied others.
Second, the EMC may not grant a variance unless it is in harmony with the
general purpose and intent of the state's riparian buffer protection requirements. The
purpose of the riparian buffer rule is clearly stated: "The purpose of this rule shall be to
protect and preserve existing riparian buffers, to maintain their nutrient removal
functions, in the entire Tar-Pamlico River basin." 14 PCS's anything goes conceptual
mitigation plan does precisely the opposite: it destroys riparian buffers in the Tar-
Pamlico River basin with minimal misplaced restoration and a huge net loss of riparian
buffers and their nutrient removal functions.
Third, the EMC may grant a variance only if "water quality has been protected,
and substantial justice has been done."15 The mere fact that PCS cannot find adequate
restoration of buffers within the impacted Pamlico watershed, but for a small fraction of
its riparian buffer destruction, demonstrates PCS's mine advance will have significant
long term adverse impacts on water quality. For all these reasons, any request for a
variance by PCS must be denied.
9 15A N.C. ADMIN. CODE 2B .0259(a)(i).
10 15A N.C. ADMIN. CODE 2B .0259 (a)(i)(A).
11 Id.
12 15A N.C. ADMIN. CODE 2B.0259 (a)(i)(C).
13 15A N.C. ADMIN. CODE 2B .0259(a)(i)(F).
14 15A N.C. ADMIN. CODE 2B.0259(l).
15 15A N.C. ADMIN. CODE 2B.0259(9)(a)(iii).
4
Please do not hesitate to contact us at [phone] if we can provide any
additional information related to these comments.
Sincerely,

Derb S. Carter, Jr.
Senior Attorney/Carolinas Office Director
Southern Environmental Law Center

Geoffrey R. Gisler
Associate Attorney
Southern Environmental Law Center
Attachments to
SELC PTRF
401 Certification
Comment Letter
07/07/2008
Attachment 1
SELC PTRF
401 Certification Comment Letter
07/07/2008
SOUTHERN ENVIRONMENTAL LAW CENTER
200 WEST FRANKLIN STREET, SUITE 330
CHAPEL HILL, NC 27516-2559
Telephone [phone]
Facsimile 919-929-9421
[e-mail]
July 7, 2008
Via U.S. Mail and Electronic Mail
Mr. Tom Walker
U.S. Army Corps of Engineers
Wilmington District
Regulatory Division
ATTN: File Number 2001-10096
P.O. Box 1890
Wilmington, NC 28402-1890
Re. Final Environmental Impact Statement for the PCS Phosphate Mine
Continuation: Aurora, North Carolina
Dear Mr. Walker:
Charlottesville, VA
Chapel Hill, NC
Atlanta, GA
Asheville, NC
Sewanee, TN
Please accept the following comments on the Final Environmental Impact
Statement ("FEIS") for the PCS Phosphate Mine Continuation in Aurora, North Carolina.
The Southern Environmental Law Center ("SELC") submits these comments on behalf of
the Pamlico-Tar River Foundation ("PTRF"). PTRF is a private, non-profit organization
that has been dedicated to protecting, preserving, and promoting the Tar-Pamlico River
and its watershed since 1981. PTRF is a member of the Review Team for this project.
SELC is a private, non-profit legal organization that seeks to protect and preserve the
Southeastern environment.
Unfortunately, the FEIS continues many of the deficiencies of the Draft
Environmental Impact Statement ("DEIS") and the Supplemental DEIS ("SDEIS"). It
relies on an inappropriate, inconsistent economic analysis and fails to fully account for
the impacts of the proposed project or provide adequate mitigation. Further, it fails to
adequately address significant comments on the DEIS and SDEIS and is internally
contradictory in response to others. Because of these deficiencies, the FEIS violates the
National Environmental Policy Act ("NEPA") and cannot serve as the decisional
document for the Corps' Clean Water Act ("CWA") § 404(b)(1) Guidelines analysis.'
' By restricting this discussion to these deficiencies, we do not concede that the FEIS has satisfactorily
addressed our comments on the DEIS and/or the SDEIS. We incorporate those comments by reference and
focus these comments on new information presented in the FEIS.
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I. The FEIS Economic Analysis Does Not Overcome the Presumption that Less
Environmentally Damaging Practicable Alternatives Exist and Cannot
Support a § 404 Permit for Alternative L.
The applicant must, but has not, overcome the presumption that no less
environmentally damaging practicable alternative exists and therefore the FEIS does not
support issuing a permit for Alternative L under the Clean Water Act § 404(b)(1)
Guidelines.2 The FEIS must comply with the "hard look" at environmental impacts and
assessment of reasonable alternatives required by NEPA and provide the information
necessary to satisfy the § 404(b)(1) Guidelines. The alternatives analysis - specifically
the economic analysis - is central to complying with those laws. The alternatives that
must be analyzed under NEPA and the Clean Water Act differ. NEPA only requires the
Corps to consider a reasonable range of alternatives, But the CWA requires something
more: "No discharge of dredged or fill material shall be permitted if there is a practicable
alternative to the proposed discharge which would have less adverse impact on the
aquatic ecosystem. A Because of this requirement, "under the CWA, it is not sufficient
for the Corps to consider a range of alternatives to the project: the Corps must rebut the
presumption that there are practicable alternatives with less adverse environmental
impact. "5
Because the economic practicability analysis is fundamentally flawed, the FEIS
does not successfully rebut the regulatory presumption that less damaging alternatives
exist. In our comments on the SDEIS, we stated that the SDEIS similarly failed to rebut
this presumption and that it did not demonstrate that no practicable alternatives with less
adverse environmental impacts existed, but that it only potentially identified the less
environmentally damaging alternatives of those evaluated.6 The Corps responded that
"[a]n adequate range of reasonable alternatives -has been evaluated in the EIS process,"
suggesting a misunderstanding of the distinction between the alternatives analyses of
NEPA and the CWA. To comply with the CWA § 404(b)(1) Guidelines, the applicant -
and therefore the FEIS - must rebut the presumption that less environmentally damaging
practicable alternatives exist, including alternatives that have not been evaluated. The
FEIS fails to rebut this presumption because it relies on an internally inconsistent
economic analysis and excludes consideration of less environmentally damaging
potentially practicable alternatives without analysis.
2 This discussion centers on the economic analysis as presented in the FEIS. This analysis, as discussed in
Section IIA, is a hybrid of the DEIS Marston cost model and the SDEIS Marston cash-cost model. We do
not, by focusing on the shortcomings of the analysis here, accept that it is the proper analysis or that its
development and use are defensible. Rather, the Corps is obligated to evaluate the net present value
analysis presented by Dr. Doug Wakeman in his December 28, 2007 comment letter on the SDEIS. That
analysis not only corrects the flaws of the DEIS and SDEIS models, it shows that SCRA, SCRB, SJAB,
and potentially DLIB are practicable.
s 40 C.F.R. § 1502.14.
4 40 C.F.R. § 230.10(a).
5 Greater Yellowstone Coalition v. Flowers, 321 F.3d 1250, 1262 n.12 (10th Cir, 2003).
6 FEIS Appendix ("App.") J-V.B.2.C63.
2
The FEIS economic analysis turns on the inconsistent treatment of the
practicability of mining the southern portion of the south of highway 33 tract ("S33").
The development of the long-term alternatives that have been evaluated in the DEIS,
SDEIS, and FEIS relied on an assumption that mining in the southern portion of S33
would become practicable; the FEIS's economic analysis relies on a contradictory
assumption regarding those same mining costs. The FEIS mine alternatives include
mining in the southern section of the S33 tract based on the premise that though not
currently practicable, mining those tracts will become practicable. It states that "[t]he
applicant has also indicated that it believes the market will eventually become favorable;
a reasonable position based on USGS information regarding the rate of depletion of
domestic production capacity and the applicant's future shift to higher margin products.
The Corps has determined that it is therefore appropriate to include [the southern portion
of S33] in the evaluation." 7 The FEIS re-affirms that "[t]he applicant has indicated .. .
[that] it expects [the southern section of S33] will become practicable at some point in the
future."8 Said another way, mine plan alternatives that include mining in the southern
portion of the S33 tract9 were included for evaluation from the DEIS through the FEIS on
the expectation - promoted by the applicant, "reasonable" based on USGS information,
and agreed to by the Corps - that the combination of more favorable market conditions
and a shift in products would make mining in that area practicable.
Yet the FEIS reverses the assumption underlying the alternatives to eliminate all
alternatives that provide less than 15 years of mining in the NCPC and Bonnerton tracts -
all but the AP, EAP, M, and L alternatives - from consideration. The FEIS states that to
be practicable an alternative must "provide the applicant with the certainty of practicable
costs for at least 15 years"10 and further states that "higher costs" - presumably meaning
impracticable costs - are not experienced under the SJAB, SCRB, and SCRA alternatives
"within the initial 15 years."" If the assumption that the areas in the southern section of
S33 will become practicable were maintained, there is no basis for declaring these
alternatives impracticable since they provide at least 15 years of practicable mining costs.
But the FEIS concludes that "[t]he Corps finds that SCRA, SCRB, and SJAB are not
practicable alternatives due to the required commitment to the higher mining costs within
the initial 10-12 years of the plan without the expectation of fully recovering these
development costs." 12 This finding contradicts the very assumption used to include the
southern section of S33 in each of the mine plans. Those areas were included precisely
because PCS, the USGS, and the Corps expect that those predicted higher costs will be
practicable in the future and that the company will fully recover the development costs
required to open the S33 mine pit. In other words, in the FEIS, the assumption that the
southern section of S33 will be practicable applies to include those areas in proposed
FEIS at 2-26.
B The FEIS includes the caveat that the costs may become practicable "many years in the future." FEIS at
2-29. This "analysis" is inadequate. If costs are expected to be practicable in the future, it is critical to
know if they are expected to be practicable in 15 years, 20 years, 30 years, etc. and how the difference
affects the practicability of mining S33.
9 All alternatives in the FEIS include mining in the S33 tract.
HIS at 2-29.
" FEIS at 2-30.
12 Id.
3
alternatives, but does not apply when determining the economic practicability of those
alternatives.
The result of this shift is critical and biases the economic analysis in favor of
more-extractive, more-destructive mine plans, consequently obscuring the least
environmentally damaging practicable alternative. The Corps included the southern
portion of S33 for consideration on the advice from PCS and the USGS that the market
and product shifts would make those areas practicable in the time frame under
consideration. Because of that support, each of the alternatives include long-term mine
plans that are substantially longer than that required by the company for logistical
planning. The Corps and PCS's reversal regarding the future practicability of the
southern stretch of S33 - despite recent booms in the fertilizer market - means that less
environmentally damaging alternatives have been deemed impracticable. The end result
is that the Corps considers the southern portion of S33 practicable for the purpose of
including that land in any permit issued, but considers it impracticable when considering
the practicability of less environmentally destructive alternatives. That the company has
reversed its position in a manner that benefits it is unsurprising. But the Corps'
acceptance of this practicability assessment invalidates the economic analysis and
prevents the FEIS from overcoming the presumption that practicable alternatives exist
that are less environmentally damaging than Alternative L.13
This error is compounded by the FEIS's flippant dismissal of anything less than a
full-length, 32-year SCRA mine plan. As the Corps is aware, "[t]he level of
documentation [in the NEPA process] should reflect the significance and complexity of
the discharge activity." 14 The difference between Alternative L and a shorter SCRA mine
plan is substantial. In comparison to Alternative L, the full-length SCRA avoids 622.12
acres of terrestrial wetlands 15 and 14,928 linear feet of creeks. 16 Depending on how a
shorter SCRA mine plan is drawn, it may avoid more wetlands and creeks. By any
measure, these are substantial impacts that should not be overlooked without
documentation. But rather than evaluating how shortening the SCRA mine plan affects
the cost of that mine plan, the FEIS concludes that "[r]educing the amount of mining on
the S33 Tract will not solve this dilemma since that would then push more of the
relocation costs into the initial years, thereby driving that cost Up.,, 17 The FEIS fails to
identify any cost estimates describing how much shortening SCRA by any number of
years would affect the cost of mining in the initial years of S33. The Corps, by all
appearances, has "eyeballed" it, an approach that fails to "reflect the significance" of the
variation of impacts between the L and SCRA alternatives. Therefore, the FEIS does not
take the requisite "hard look" at a potentially practicable alternative that would
dramatically reduce the environmental impact of the proposed.
13 See Hughes River Watershed Conservancy v. Glickman, 81 F3d 437, 446 (4th Cir. 1996) ("For an EIS
to serve [its purpose), it is essential that the EIS not be based on misleading economic assumptions.").
14 40 CFR 230.6(b).
"FEIS at 6-76.
16 HIS at 6-59.
17 HIS at 2-30.
4
II. The FEIS Violates NEPA and is Inadequate for the § 404(b)(1) Guidelines
Analysis Because it Fails to Adequately Respond to Substantive Comments.
Under NEPA, the Corps is required to respond to substantive comments on the
DEIS and SDEIS.18 That response may vary, and may be based on an explanation "why
the comments do not warrant further agency response, citing the sources, authorities, or
reasons which support the agency's position."19 The Council on Environmental Quality
("CEQ") has clarified that regulation regarding comments on methodology, stating that
"agencies must respond to comments, however brief, which are specific in their criticism
20
of agency methodology.'.'
Providing example, the CEQ mandated that where a
commenter criticized agency analysis "because of its use of a certain computational
technique" then the "agency would have to respond in a substantive and meaningful way
to such a comment."21 The Fourth Circuit Court of Appeals has applied this standard,
requiring that an agency "must ... reasonably respond to those comments that raise
significant problems."22 In addition, the Corps' public interest review requires that full
consideration be given to all expert comments. 23 Here, the Corps has failed to respond to
at least two critical comments: Dr. Douglas Wakeman's comments criticizing the
economic analysis and Pamlico-Tar River Foundation's comments identifying significant
impacts from mining on the NCPC tract.
A. The FEIS violates NEPA because it fails to substantively respond to the
comments of Dr. Douglas Wakeman regarding the economic analysis.
Dr. Douglas Wakeman provided detailed comments on the appropriateness of the
Corps economic analysis - or "its use of a certain computational technique" - in his
December 28, 2007 comment letter on the SDEIS. Dr. Wakeman points out that the
DEIS Marston cost model "suffered from three important shortcomings," including
truncating the model at 15 years, applying accounting principles, and failing to use
discounted values. 24 The SDEIS cash-cost model "corrects only one of these errors, by
shifting from accounting costs to predicted cash costs."25 To correct the remaining two
errors, Dr. Wakeman - using information obtained pursuant to a November 20, 2007
Freedom of Information Act ("FOIA") request - calculated the net present value of each
of the alternatives. 26
The results of that analysis were telling. Under "a full-length, appropriately-
discounted cash flow basis ... these alternatives appear far more similar in cost than is
"40 C.F.R. § 1503.4(a).
19 Id.
20 46 Fed. Reg. 18026, 18034 (March 23, 1981).
21 Id.
22 North Carolina v. Federal Aviation Admin., 957 F.2d 1125, 1 135 (4th Cir. 1992).
23 33 C.F.R. 320.4(a)(3).
24 App. J-V.13.2 P. 1 (Letter from Wakeman to Corps of Dec. 28, 2007)
25 Id.
26 Id. at 2. Dr. Wakeman was still unable to calculate net present value for each of the alternatives, since
the necessary data was not released in the DEIS, SDEIS, or in response to the FOIA request.
5
readily apparent using either the prior `full-cost' analysis, or the arbitrarily-truncated,
non-discounted versions of the cash cost analysis."27 The net present value analysis
revealed that "[a]lternatives L, SCRA, SJAA are essentially indistinguishable in terms of
discounted cash cost; if any one of these is economically practicable, then all three of
them are economically practicable. "28 The analysis also suggests that even the DLIB
alternative may be practicable due to its similarity in cost.
Based on this result, Dr. Wakeman's criticism of the "computational technique"
used by the Corps to determine economic practicability of alternatives - the Marston cost
models - was not only substantive, it fundamentally challenged a central tenet of the
Corps analysis and an essential ingredient in applying the § 404(b)(1) Guidelines to the
applicant's request. Consequently, under governing NEPA regulations, it necessitates a
"substantive and meaningful" response.
But the FEIS does not provide that response. The FEIS's response to Dr.
Wakeman's comments does not assess the weaknesses of the DEIS Marston cost model
or the merits of the net present value analysis of the alternatives. It avoids discussion of
Dr. Wakeman's criticisms on two grounds: that the DEIS Marston cost model was
previously approved by professional economists, including Dr. Wakeman '29 and that that
same model has been consistently applied through the DEIS, SDEIS, and FEIS. Neither
of these bases relieves the Corps of its obligation to respond to Dr. Wakeman's analysis
in a "substantive and meaningful" manner.
That Dr. Wakeman did not raise the net present value analysis earlier in the
NEPA process for this project cannot justify the FEIS's failure to respond to his
comments. 30 First, as noted in the comment letter presenting the net present value
analysis, the data necessary to perform the analysis was not disclosed to the public in the
DEIS and was only made publicly available pursuant to a FOIA request submitted on
November 20, 2007. Prior to the response to that request, it was not clear that the data
necessary to calculate the analysis existed, and those data were not publicly available. It
was only after the November 6, 2007 release of the SDEIS - which included the
applicant's new cash-cost model - and the subsequent FOIA response that it was clear
that such data existed. Second, the FEIS does not apply the same treatment to the
applicant's objections to the DEIS Marston cost model. On February 7, 2007, PCS
submitted a letter to the Corps criticizing the DEIS Marston cost model .31 Despite
contracting with Marston to provide the DEIS cost model and providing the data
necessary for its preparation, on February 7, 2007 - after the release of the DEIS and only
27 Id.
28 Id.
29 In making this argument, the Corps misrepresents Dr. Wakeman's statements. The Corps implies that
Dr. Wakeman stated that "Absent compelling evidence to the contrary" that the DEIS Marston cost model
was sound. His letter actually says that "Absent compelling evidence to the contrary," the conclusion that
SCRB, SCRA, and SJAB are practicable is economically sound. HIS App. J-V.A.S. But he challenges
the conclusion that those alternatives that were deemed impracticable by that model actually are
impracticable - foreshadowing the criticisms contained in his comments on the SDEIS.
30 See Natural Res. Def. Council v. Tenn. Valley Authority, 267 F. Supp. 128 (E.D. Tenn. 1973).
" App. J-VII.A.1.
6
nine months prior to Dr. Wakeman's comments - PCS argued that "[a] `Cash Cost' basis
evaluation more accurately portrays the timing of major expenditures associated with
development capital and receding face write-off and demonstrates more clearly the point
at which the applicant must commit to relocations. "32 Rather than pointing to PCS's
prior opportunity to object to the DEIS Marston cost model - as it does with Dr.
Wakeman - the FEIS states that "[t]he Corps recognizes this point and has incorporated it
into the economic practicability evaluation found in Section 2.7 of the FEIS." 33 The
FEIS's response to Dr. Wakeman's comments - refusal to consider his proposed cost
model calculations - cannot be considered "substantive and meaningful" when its
response to PCS's analogous comments is contradictory.
These inconsistent responses to criticisms of the DEIS Marston cost model
similarly undermine the FEIS's alternate justification for failing to substantively respond
to Dr. Wakeman's comments - that the Corps has consistently applied the DEIS Marston
cost model through the DEIS, SDEIS, and FEIS. In response to Dr. Wakeman's analysis,
the Corps claims that "[t]he cost model as applied in the FEIS and the Corps' approach to
determining practicability have remained consistent throughout the DEIS, the SDEIS and
the FEIS."34 To clarify its argument that it has not altered the DEIS Marston cost model
or the economic practicability analysis, the FEIS states that "[t]he Corps finds the use of
the `cash-cost' model data to be, at best, uninformative in determining alternative
practicability" and that it "has not used the cash cost analysis in its approach to
determining alternative practicability. "35 It is based on this claimed complete rejection of
the cash-cost model that the FEIS justifies its failure to respond to Dr. Wakeman's
analysis. "[Dr. Wakeman's] comment letter contains several manipulations of cost data
using the cash cost and discounting techniques. The Corps has not used the cash cost
analysis in its approach to determining alternative practicability therefore, we do i.ot
attempt to justify, clarify or defend its use."36 As a result, only "[c]omments relevant to
the overall approach and NEPA/CWA process are addressed" in the FEIS response to Dr.
Wakeman. 37
But the Corps has not consistently applied the DEIS Marston cost model and has
incorporated the cash-cost model into its practicability analysis. The FEIS refutes this
point on multiple occasions in response to both our comments and Dr. Wakeman's
comments. 38 Repetition does not render the statement that "[t]he cost model as applied in
the FEIS and the Corps' approach to determining practicability have remained consistent
throughout the DEIS, the SDEIS and the FEIS" accurate.39 First, consistent application
of the same practicability analysis to the same alternatives with the same cost estimates
must yield the same result. That has not occurred here. In the DEIS, the SCRA, SCRB,
32 App J-VII.A.I.C7.
33 App. J-VII.A.1.R7.
34 App. J-V.B.2.R.1.
" App. J-V.B.2.R.5.
36 App. J-V.B.2.R.1.
37 Id.
"App. J-V.B.2.R.1, R.5; App. J-V.B.2.R.33, R.49, R.50, R.66.
39 App. J-V.B.2.R.1.
7
and SJAB alternatives were considered practicable.40 In response to this determination,
on February 07, 2007 PCS sent a letter to the Corps in which it introduced a cash-cost
analysis to argue against the practicability of these three alternatives specifically. 41 The
mine plans and cost estimates of these alternatives remained unchanged in the SDEIS, so
did their practicability. 42 But in the FEIS, the Corps has determined "that SCRA, SCRB,
and SJAB are not practicable alternatives."43 There are only three factors that could have
caused this reversal of practicability: an alteration of the mine plans, an increase in costs
related to the mine plans, or a change in the practicability analysis. Neither the mine
plans nor their related costs changed. The practicability analysis must have changed.
The Corps' responses to PCS's comments show exactly how the practicability
analysis has changed - by adoption of the results and findings of the cash-cost model.
The Corps' response to PCS is in stark contrast to its rejection of the cash-cost model in
its response to our comments and those of Dr. Wakeman. The Corps could not have
been stronger in its condemnation of the cash-cost model in response to comments in
opposition to the applicant's preferred alternative. The FEIS proclaims unequivocally
that "[t]he Corps has not used the cash cost analysis in its approach to determining
alternative practicability therefore, we do not attempt to justify, clarify or defend its
use."44 Moreover, "[t]he Corps finds the use of the `cash-cost' model data to be, at best,
uninformative in determining alternative practicability ... The Corps has not used the
cash cost analysis in its approach to determining alternative practicability. "45 But when
the applicant argued in support of more-extractive mine plans that the "`Cash Cost' basis
evaluation more accurately portrays the timing of major expenditures associated with
development capital and receding face write-off and demonstrates more clearly the point
at which the applicant must commit to relocations,"46 the Corps responded that it
"recognizes this point and has incorporated it into the economic practicability evaluation
found in Section 2.7 of the FEIS."47
And it is based on the incorporation of "this point" from the cash-cost model -
that the "`Cash Cost' basis evaluation ... demonstrates more clearly the point at which
the applicant must commit to relocations"48 - that the Corps reverses its determination of
practicability on the SCRA, SCRB, and SJAB alternatives. Rather than documenting any
change in the application of the DEIS Marston cost model to these three previously
practicable alternatives, the FEIS rejects these alternatives based on "development costs .
.. necessary to open the S33 Tract for any mining [that] are actually incurred at the time
of the relocation."49 The FEIS could not, and did not, make this determination based on a
consistent application of the Marston cost model in the DEIS - that model amortizes
40 DEIS at 2-19.
41App. J-VII.A.1.
41 SDEIS at 2-3.
43 FEIS 2-30.
44 App. J-V.13.2.R.5.
45 Id.
46 App. J-VII.A.1.C7.
4' App. J-VII.A.I.R.7 (emphasis added).
48 App. J-VII.A.I.C7.
49 HIS at 2-30.
costs over the life of the mine pit. The FEIS's rationale is not supported by that cost
model, as evidenced by PCS's introduction of the cash-cost model after the DEIS was
published to make the very argument that the Corps uses to dismiss the three previously
practicable alternatives.
What is obfuscated by the Corps' statements that it "has not used the cash cost
analysis in its approach to determining alternative practicability"50 is not whether the
Corps has used the cash-cost model - it acknowledges doing so expressly in its responses
to PCS's comments and implicitly in the text of the FEIS - but rather to what extent it has
relied on the cash-cost model. It appears as though the Corps has rejected the cash-cost
data - finding it "at best, uninformative in determining alternative practicability."" But
at the same time the Corps has embraced its conclusions - "[t]he Corps recognizes [that
the cash-cost model differently demonstrates the timing of costs and commitment to
relocations] and has incosr?iorated it into the economic practicability evaluation found in
Section 2.7 of the FEIS" Basing the FEIS practicability determinations on the results
of the cash-cost model while rejecting the data and analysis that led to those results is
irrational, arbitrary, and capricious; and it cannot be the basis of this fundamental aspect
of the FEIS. If the cash-cost data are "at best, uninformative in determining alternative
practicability," then the conclusions based on those data are themselves uninformative
and should not be used to determine practicability.
In sum, both explanations for omitting a "substantive and meaningful" response to
Dr. Wakeman's comments are invalid and therefore the FEIS violates the mandate in 40
C.F.R. § 1503.4 to reply to substantive comments. Dr. Wakeman's net present value
analysis cannot be disregarded because of any previous review of the DEIS Marston cost
model. The data necessary for that analysis were only available one month before his
comment letter was submitted. Further, PCS submitted criticisms of the analysis and
introduced an entirely new method of analysis - the cash-cost model - only nine months
earlier and that new method of analysis was accepted and incorporated into the FEIS. Dr.
Wakeman's net present value analysis also cannot be disregarded on the premise that
"[t]he cost model as applied in the FEIS and the Corps' approach to determining
practicability have remained consistent throughout the DEIS, the SDEIS and the FEIS."53
That statement - though repeated frequently in response to comments - is false. The
FEIS's economic analysis is not a clarification of the previous analysis, but rather
introduces new factors. There is no other way to explain reaching a different result on
the practicability of SCRA, SCRB, and SJAB. Neither the mine plans nor the costs of
those alternatives changed between the SDEIS and the FEIS, but their practicability did.
The Corps admits that this change is a result of the incorporation of the cash-cost model
in their response to PCS's criticism of the DEIS Marston model; a comparison of PCS's
explanation supporting that criticism to the FEIS shows that it has been incorporated
wholesale. In plain terms, the economic analysis in the FEIS was not present in the DEIS
or the SDEIS. It modifies the earlier economic analysis and - since it was not included in
so App. J-V.B2.R.5.
51 Id.
52 App. J-VII.A.1.CT
" App. J-V.B.2.R.1.
9
the SDEIS - that modification must have occurred since the release of the SDEIS. Dr.
Wakeman's comments in response to the SDEIS presenting the net present value analysis
were therefore timely, relevant, and require a substantive response. The FEIS's failure to
do so is arbitrary and capricious. 54
The FEIS's failure to respond to Dr. Wakeman's analysis is not trivial or
inconsequential. The practicability analysis is a central component of the § 404(b)(1)
Guidelines analysis and necessarily circumscribes the determination of the least
environmentally damaging practicable alternatives. Because of the role of the economic
analysis, the FEIS is not only in violation of NEPA, but is inadequate for making the
required § 404(b)(1) analysis. Because "a court must view deficiencies in one part of an
EIS in light of how they affect the entire analysis, ,55 and the economic analysis
permeates the entire analysis, the omission of a substantive, reasoned response to Dr.
Wakeman's analysis undermines the FEIS. Dr. Wakeman's comments identify a
significant problem with the Corps' analysis, and the Corps "must ... reasonably respond
to those comments that raise significant problems."sb
This failure to reasonably respond and the resulting continued reliance on the
FEIS's flawed practicability analysis, results in incomplete responses to other comments.
The FEIS fails to substantively and meaningfully respond to multiple comments
suggesting that the Corps evaluate less environmentally damaging alternatives. The FEIS
relies on this faulty analysis to avoid consideration of alternatives suggested in our
comments on the DEIS, 7 the Pamlico-Tar River Foundation's separate comments on the
DEIS,58 and the comments of multiple resource agencies. The Corps cannot rely on the
faulty economic analysis presented in the FEIS to avoid substantively responding to these
comments.
Finally, the FEIS's statement that it has not included the cash-cost model in the
economic practicability is demonstrably false in light of its response to PCS's letter
introducing that model and the economic analysis included in the FEIS. The inclusion of
this false statement in the economic analysis causes the FEIS to violate NEPA. When an
EIS "sets forth statements that are materially false or inaccurate the Court may find that
the document does not satisfy the requirements of NEPA, in that it cannot provide the
basis for an informed evaluation or a reasoned decision. '59 Therefore, the FEIS violates
NEPA and cannot serve as the decisional document for the Corps' § 404(b)(1) Guidelines
analysis.
54 See Hughes River Watershed Conservancy v Glickman, 81 F.3d 437, 445 (4th Cir. 1996).
55 Nat'l Audubon Soc'y v. Dep't of the Navy, 422 F.3d 174, 186 (4th Cir. 2005).
56 North Carolina v. Federal Aviation Admin., 957 F.2d 1125, 1135 (4th Cir. 1992).
57 App. J-V.A.2.R6, R7, R11, R12
"App. J-V.A.1.R8, R9.
59 Western N.C. Alliance v. N.C. Dep't of Transp, 312 F. Supp. 2d 765, 776 -777 (E.D.N.C. 2003)
(internal quotation marks omitted).
10
B. The FEIS violates NEPA because it fails to substantively respond to the
comments of the Pamlico-Tar River Foundation regarding the
environmental impacts of mining on the NCPC tract.
The Pamlico-Tar River Foundation ("PTRF") submitted an independent, literature
review based evaluation of the environmental impacts with its comments on the DEIS.
That evaluation was supported by 12 prominent scientists with expertise in coastal and
wetland ecology. These scientists concluded, based on an evaluation of the proposed
impacts, that substantial mining in the NCPC tract would result in significant
degradation. 60 This letter consisted of a 14 page analysis that relied on 35 cited
authorities. It was a substantive comment that merited a thorough response.
The FEIS does not adequately respond to this comment letter. In fact, the FEIS
omits any detailed response to the anal ysis.61 The only comment in the FEIS regarding
this report is that it has "been included in Appendix F" and that "relevant information"
has been included in the FEIS.62 The regulations do not authorize the Corps to include
unidentified "relevant information" in lieu of responding to substantive comments. The
Corps must respond to comments and must do so in one of five prescribed methods.63 To
fit within one of those prescribed methods, the Corps must identify the "relevant
information" and indicate how it has been applied. - It does just that in response to PCS's
introduction of the cash-cost model - indicating that the Corps "has incorporated it into
the economic practicability evaluation found in Section 2.7 of the FEIS." 64 A similar
response is required here for "relevant information" that is incorporated into the FEIS -
whether it is from the PTRF comments or PCS's Entrix report.
For those portions of PTRF's comments that are not deemed "relevant
information," the agency must "[e]xplain why the comments do not warrant further
agency res onse, citing the sources, authorities, or reasons which support the agency's
position."6 The Corps cannot ignore PTRF's comments, leaving the public to decipher
which elements were considered "relevant" and how they were incorporated into the
FEIS. Because the FEIS fails to adequately respond to PTRF's comment letter, it violates
NEPA and cannot act as the decisional document for the Corps' CWA § 404(b)(1)
Guidelines analysis.
6° App. J-V.A.I. While the letter centered on the AP Alternative, the evaluation of the environmental
impacts of mining in the NCPC tract also apply to Alternative L due to its significant mining in the tract.
61 See App. J-V.A. L
6' App. J.1I-7.
63 40 C.F.R. § 1503.4.
64 App. J-VII.A.1.R.7.
65 40 C.F.R. § 1503.4(a)(5).
11
III. The FEIS Improperly Excludes Consideration of Cumulative Impacts and
Mitigation and Cannot Be the Basis for the Corps' Significant Degradation
Determination.
Because the FEIS fails to account for important impacts and neglects to propose
mitigation for the full length of proposed impacts, it does not provide the information
necessary for the Corps to make the significant degradation determination required by the
CWA § 404(b)(1) Guidelines. Significant degradation in the context of a Section 404
permit is determined by balancing the environmental impact against the proposed
mitigation. 66 Because of this requisite balancing, the EIS must provide a detailed
analysis of both the environmental impacts and the proposed mitigation. When the
proposed mitigation does not offset the environmental impacts, the Corps should make a
significant degradation finding and deny the permit. 67 Without a complete understanding
of both the environmental impact and mitigation plans, the Corps cannot perform the
required analysis. The FEIS does not allow the Corps to perform the required balancing
because it omits critical cumulative impacts and proposes incomplete mitigation.
A. The FEIS does not account for cumulative impacts of future mining.
Cumulative impacts are the combined effect of the action being evaluated as well
as other "past, present, and reasonably foreseeable future actions. ,68 NEPA and the
Corps' public interest review require consideration and evaluation of cumulative
impacts. 69 While it is reasonable to assume that the evaluation of long-term alternatives
would better evaluate "reasonably foreseeable future actions" than shorter alternatives,
the FEIS does not do so. Rather, by referring to the alternatives as "holistic," though it is
clear that none of the alternatives limit future mining, the FEIS avoids consideration of
future impacts. In addition to the NCPC, Bonnerton, and S33 tracts included in the FEIS
alternatives, Section 2.3.1 identifies four additional sites that PCS has mineral rights to
within the project area: Core Point, the Edward Tract, the Grace Tract, and the Pamlico
River. As the Corps is aware, "[t]he applicant has clearly conveyed a desire to mine the
entire project area over time if the market allows .,,70 Further, if PCS's newly preferred
alternative, Alternative L, is permitted, some ore deposits will remain un-mined in both
the NCPC and Bonnerton tracts. As the FEIS acknowledges, "[a]ny permit issued in this
action would not require the permanent forfeiture of the right to mine any remaining
reserves,"71 meaning that PCS could apply for a permit to mine the avoided ore. Since
"the Aurora Phosphate deposit is one of the few remaining minable deposites [sic] in the
United States"72 and the company has indicated that at least those areas in South Creek
and the Pamlico River can be economically mined, we must assume that PCS will pursue
mining beyond the extent of any permit that results from this process. Such an impact is
66 See City of Olmstead Falls y. U.S. EPA, 435 F.3d 632, 637-38 (6th Cir. 2006).
67 See James City County y. U.S. EPA, 12 F.3d 1330, 1337 (4th Cir. 1993).
68 FEIS at 4-42 (citing 40 C.F.R. § 1508.7).
69 33 C.F.R. § 320.4(a).
70 FEIS at 2-28.
71 FEIS at 2-31.
72 FEIS at 1-4.
12
foreseeable and contemplated by the FEIS's discussion of the development of
alternatives. Yet the FEIS concludes that "impacts resulting from each boundary by
definition include all foreseeable future impacts resulting from mining activity. ,73
Potential future mining in these approximately 40,000 acres adjacent to the proposed
mine expansion is a foreseeable future action that must be considered.74
B. The FEIS does not propose mitigation for significant impacts.
The FEIS also falls short in providing enough information on the second
component of the § 404(b)(1) significant degradation determination, mitigation.
Although the mitigation plan required in the FEIS does not have to include every detail,
"an EIS involving mitigation must include a serious and thorough evaluation of
environmental mitigation options for a Project to allow its analysis to fulfill NEPA's
process-oriented requirements. "75 "More generally, omission of a reasonably complete
discussion of possible mitigation measures would undermine the "actionforcing" function
of NEPA. Without such a discussion, neither the agency nor other interested groups and
individuals can properly evaluate the severity of the adverse effects."76
The long-term alternatives evaluated in the FEIS were developed with an eye
towards facilitating the development of mitigation measures. The FEIS states that
"longer term alternatives may ... improve compensatory mitigation," while to PCS those
alternatives also allow "larger scale mitigation projects." ,77 But while the long-term plans
provide in excess of 30 years of mining, the mitigation proposed in the FEIS is not
commensurate.
The least environmentally damaging practicable alternative according to the
flawed economic analysis in the FEIS, Alternative L, spans 37 years; the proposed
mitigation for Alternative L only purports to account "for the first 15 years of impacts."78
The FEIS's response to comments shows that even that estimate of 15 years of mitigation
may be optimistic; according to the response, the compensatory mitigation plan "does
identify sites to be used for impacts occurring in the initial 12-15 years."79
This omission of any proposed mitigation for the impacts in the last 22 to 25 years
of Alternative L renders the FEIS completely inadequate for making a significant
73 HIS at 4-43.
74 The applicant's request for a 37 year permit does not dilute the importance of these potential future
impacts. Any permit that may be issued as a result of this request represents an authorization to mine, not
an obligation to mine. Should PCS determine that they can increase their revenues by pursuing mining in
one of these tracts; any permit that may be issued as a result of.this process would not be an obstacle in that
pursuit. The Corps is well aware of PCS's ability to apply for mining permits in the additional tracts, at the
October 12, 2004 Review Team Meeting, Project Manager Tom Walker stated that "PCS could move to
other areas outside the current project area." DEIS at A-121.
71 O'Reilly v. U,S. Army Corps of Eng'rs, 477 F.3d 225, 231 (5th Cir. 2007).
76 Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 352 (1989).
77 FEIS at 2-10.
78 FEIS at 4-104.
79 App. J-V.A.2.R44.
13
degradation determination. The impacts that will occur under the Alternative L mine
plan after the initial 12-15 years are not incidental. After year 15, Alternative L would
impact 507.41 acres of terrestrial wetlands '80 23.16 acres of riparian buffers ,81 and 14,362
linear feet of creeks. 82 These impacts include 181 acres of wetland hardwood forests, 66
acres of mixed pine-hardwood forest, 45 acres of pine forest, and 31 acres of scrub-shrub
assemblage. 83 Each of these community types must be mitigated at a 2:1 ratio for
restoration and up to an 8:1 ratio for preservation, even under the reduced recommended
ratios in the FEIS.sa
Thus, the compensatory mitigation plan proposed in the FEIS cannot be
considered "a serious and thorough evaluation of mitigation options" and therefore the
FEIS does not "fulfill NEPA's process-oriented requirements." 85 Consequently, the
FEIS does not provide the information necessary to apply the § 404(b)(1) Guidelines.
The Corps cannot balance the proposed impacts against the proposed mitigation when
there is no proposed mitigation for a significant portion of the proposed impact.
Consequently, the FEIS cannot support the Corps' public interest review, which states
that "no permit will be granted which involves the alteration of wetlands identified as
important ... unless the district engineer concludes ... that the benefits of the proposed
alteration outweigh the damage to the wetland resources."sb
C. The proposed mitigation does not compensate for the loss of nonriverine
wet hardwood forests.
The mitigation proposed in the FEIS is not only inadequate in scale - omitting
mitigation for more than 500 acres of wetlands impacts - but also in detail. Although it
recognizes that the Bonnerton tract contains "mature hardwood stands" that would be
destroyed by alternative L, the proposed mitigation plan does not indicate that those
stands are nationally significant due to the rarity of large, mature nonriverine wet
hardwood forests nor does it identify any efforts to restore this rare community type in
any of the selected mitigation sites. These omissions make clear that the Corps has not
taken the necessary "hard look" at the consequences of the proposed impacts on this rare
community.
The nonriverine wet hardwood forests on the Bonnerton site have been identified
as a site of national significance, meaning that the site is one of the five best examples of
that community type in the nation. 87 The Bonnerton site has two features that make it a
site of national significance, its size and quality. As noted above, large tracts of
nonriverine wet hardwood forests are rare. Of the 25 known sites in North Carolina, only
80 HIS at 6-59.
$' Id.
s2 See id.
S3 HIS at 6-72.
84 HIS at 4-107.
SS O'Reilly v. U.S. Army Corps of Eng'rs, 477 F.3d 225, 231 (5th Cir. 2007).
86 33 C.F.R. § 320.4(b)(4).
87 The publication noting the site as a site of national significance is in press. (Schafale, pers. comm.)
14
seven are greater than 100 acres. 88 Covering 198 acres, the Bonnerton site is the fourth
largest known site. In addition to its size, the Bonnerton site is high in quality, with large
trees that are increasingly uncommon. The N.C. Natural Heritage Program describes the
site as "very good" quality.
The Corps' regulations recognize that unique or rare wetlands have special public
interest. They recognize "wetlands which are unique in nature or scarce in quantity to the
region or local area" as "important to the public interest. ,89 The Bonnerton nonriverine
wet hardwood forests are significant on a national level, and therefore they are of the
utmost importance to the public interest.
Moreover, the proposed mitigation plan does not identify how the loss of this rare
forest will be mitigated. A mitigation plan may be inadequate where it does not
"adequately replace the types and qualities of wetlands the proposed project would
destroy."90 Here, there is no proposed mitigation to replace the nonriverine wet
hardwood forests on Bonnerton. Specific, tailored mitigation is necessary to replace
these types of forests; "Nonriverine Wet Hardwood Forests rarely regenerate to the
characteristic oak species and tend to become stands of weedy tree species that show little
tendency to ever return to an oak canopy."91 Further, since these communities are
characterized by specific canopy species,92 they cannot be mitigated by generic
"hardwood wetland restoration, enhancement, or preservation sites. ,93 As presented in
the FEIS and Appendix I, the proposed mitigation plan does not adequately replace the
nonriverine wet hardwood forests on Bonnerton. Any mine plan that includes destruction
of this nationally significant resources is contrary to the public interest and will result in
significant degradation of the aquatic environment and cannot be permitted.
V. Conclusion
The FEIS does not comply with NEPA and does not support issuing a permit for
Alternative L under the CWA § 404(b)(1) Guidelines. Not only does the FEIS fail to
fully address the shortcomings of the DEIS and SDEIS, it is inconsistent and internally
contradictory. Further, the FEIS's responses to comments on the economic analysis
include false statements that undermine the analysis and violate NEPA. Finally, the
FEIS's proposed mitigation is wholly inadequate. It not only fails to propose any specific
mitigation for the more than 500 acres of wetlands and 14,000 linear feet of streams that
would be impacted in S33 under Alternative L, the mitigation is insufficient.
For these reasons and others stated above, the FEIS is inadequate. It does not
satisfy NEPA and cannot serve as the basis for issuing any permit under the CWA §
88 Michael P. Schafale, Nonriverine Wet Hardwood Forests in North Carolina: Status and Trends, January
82008, available at http://www.ncnhp.org/Images/Other%20Publications/nrwhf2008rpt.pdf.
33 C.F.R. § 320.4(b)(2)(viii).
90 James City County v U.S. Envtl Protection Agency, 12 F.3d 1330, 1337 (4th Cir. 1993).
91 Shafale, supra n.71 at 7.
92 Id. at 1.
93 FEIS App. I at 5
15
404(b)(1) Guidelines. Therefore, we request that the Corps enlist the expertise of the
Review Team to prepare a supplement to the Final EIS that repairs the shortcomings of
that document or in the alternative, we request that the Corps deny PCS's permit request
for Alternative L.
Sincerely,

Derb S. Carter, Jr.
Senior Attorney/Carolinas Office Director
Southern Environmental Law Center
// !%y
Geoffrey R. Gisler
Associate Attorney
Southern Environmental Law Center
16
Attachment 2
SELC PTRF
401 Certification Comment Letter
07/07/2008
SOUTHERN ENVIRONMENTAL LAW CENTER
200 WEST FRANKLIN STREET, SUITE 330 Charlottesville, VA
CHAPEL HILL, NC 27516-2559 Chapel Hill, NC
Telephone [phone] Atlanta, GA
Facsimile 919-929-9421 Asheville, NC
[e-mail] Sewanee, TN
December 31, 2007
Via U.S. Mail and Electronic mail
U.S. Army Corps of Engineers
Wilmington District
Regulatory Division
P.O. Box 1890
Wilmington, NC 28402-1890
Re: PCS Phosphate, File # 2001-10096
To Whom It May Concern:
Please accept the following comments on the Supplemental Draft Environmental
Impact Statement ("SDEIS") for the PCS Phosphate Mine Continuation in Aurora, North
Carolina. The Southern Environmental Law Center ("SELC") submits these comments
on behalf of the Pamlico-Tar River Foundation ("PTRF"). PTRF is a private, non-profit
organization that has been dedicated to protecting, preserving, and promoting the Tar-
Pamlico River and its watershed since 1981. PTRF is a member of the Review Team for
this project. SELC is a private, non-profit legal organization that seeks to protect and
preserve the Southeastern environment.
As a preliminary matter, we are disappointed with the Corps' decision to release
this supplement during the holiday season. It is logistically difficult for state and federal
agencies and other interested parties to fully evaluate the document and draft comments
on its substance. 1 The public is justifiably distracted at this time of year and is unlikely
to comment. These comments are particularly important on a document such as the
supplement, which the Corps' appears to be using to describe a sudden change in course
on its analysis of this project six years into its review. Recognizing these difficulties, and
the importance of commenting on the SDEIS, we requested an extension of the comment
period until, at earliest, December 31, 2007. The Review Team was notified of a 10 day
extension on December 17, 2007. This late notice ensured that comments on the SDEIS
would be stifled and criticism of the SDEIS would be minimized. Moreover, the Corps
1 It is our understanding that the U.S. Fish and Wildlife Service submitted its comments on December 12,
2007 and that state agencies were required to submit their comments to the state clearinghouse in early
December in order to comply with the initial December 21, 2007 deadline.
100% recycled paper
failed to include in the SDEIS information critical to informal review and analysis. We
have obtained some of this information pursuant to a FOIA request. The Corps has a
continuing obligation to comply with NEPA. 40 C.F.R. § 1507.1. If necessary we will
supplement these comments.
1. The SDEIS Development Process Was Inadequate.
The Draft Environmental Impact Statement envisioned an important role for the
Review Team. It stated that "[t]he purpose of the Review Team was to identify major
issues to be addressed in the EIS and to provide input on potential alternatives to be
explored and potentially evaluated. ,2 This involvement was not intended to end with the
DEIS, but rather it was "anticipated that the Team will continue to meet and provide
input during the review of the DEIS and development of the Final EIS (FEIS)."3 The
SDEIS states in Section 2.4.1 that the "Corps worked with the Applicant and members of
the Review Team to develop various boundaries within each of the three project area
tracts." a This statement, as it relates to Alternatives L and M is, at best, misleading. The
Review Team, as a body, had no input into the development of Alternatives L and M.
A. The Review Team was not informed about Alternatives L and M.
The Corps did not work with members of the Review Team in developing the
SDEIS or Alternatives L or M. The Corps conveyed limited information regarding the
alternatives to the Review Team at a meeting to discuss new mitigation efforts being
undertaken by PCS on July 24, 2007. As an introduction to the meeting, Tom Walker
described the outline of the Alternative L using snaps of other alternatives. The Review
Team was not shown nor given any maps illustrating the outlines of the new alternative.
The Corps did not provide any information regarding the wetland impacts under
Alternative L. The Review Team was not made aware that Alternative M existed until
PTRF inquired about it on October 30, 2007. Despite being on the Review Team, PTRF
initially learned the Corps was considering Alternative M from a newspaper article.
B. The Review Team's comments were not considered in the SDEIS.
The Corps could excuse not consulting the Review Team on the SDEIS if the
document reflected the Team members' comments on the DEIS. A review of some of the
Team members' comments shows that not only were those comments not constructively
applied in the SDEIS, but they were disregarded. A quick survey of the comments of the
U.S. Environmental Protection Agency, the N.C. Wildlife Resources Commission, the
U.S. Fish and Wildlife Service and the N.C. Division of Marine Fisheries demonstrates
that the Corps did not rely on the Review Team's comments in developing the SDEIS.
The U.S. Environmental Protection Agency ("EPA") commented that "[d]ue to
the functions provided by these areas, coupled with the continued loss of wetland habitat
2 DEIS at 1-7 (emphasis added).
31d. (emphasis added).
a SDEIS at 2-1.
2
and bottomland hardwood forests, in the Southeast United States, EPA considers the
resources comprising this site to be [Aquatic Resources of National Importance]. We
also believe the proposed project, which would impact 2,378 acres of wetlands and 7.3
miles of streams, may result in substantial and unacceptable impacts to these ARNI."5
Going further, EPA stated: "[w]e believe the impacts associated with the proposed
project may cause or contribute to significant degradation of waters of the U.S."6
The N.C. Wildlife Resources Commission ("WRC") directly addressed the
impacts of mining in the NCPC tract. It commented that "drainage basin alteration [from
mining in NCPC] will significantly impact the ability of these systems to function as a
Primary Nursery Area ("PNA") through the removal of necessary chemical and
biological components of the watershed. ,7 Synthesizing its criticism of the DEIS, the
WRC "recommend[ed] neither the AP, EAP, SCR, or SJA alternatives be considered as
appropriate mining options on the NCPC tract because of significant degradation of fish
and wildlife resources." 8 The WRC noted that "[w]e are especially concerned with the
impacts to the valuable habitat areas within the NCPC tract" and that it "would look more
favorably on mine expansion that does not include the NCPC tract."9
The U.S. Fish and Wildlife Service ("FWS") was no less direct. It concluded
"that the proposed project may result in substantial and unacceptable adverse impacts to
aquatic resources of national importance."'() The agency also pointed out that "large-
scale wetland impacts located directly adjacent to the Pamlico River ... will act to
exacerbate the impacts of eutrophication while altering local food web stability; both of
which have important implications for estuarine productivity."' Since the "impacts are
likely to produce a legacy of environmental effects that could last for years," the FWS
recommended that the permit request be denied. 12
The N.C. Division of Marine Fisheries ("DMF") highlighted a panoply of
problems with the DEIS alternatives. DMF noted that South Creek is already "stressed,"
and that "further mining north of NC Highway 33 will only exacerbate existing
conditions."13 DMF's comments bluntly state that "[a]ll the alternatives examined in the
DEIS would have significant adverse impacts to estuarine fisheries resources, fish
habitats, water quality, and public trust waters in the Pamlico River system." 14
The SDEIS plainly ignores these comments from expert resource agencies.
Rather than evaluating alternatives that would impact fewer acres of wetlands in the
NCPC and Bonnerton tracts, the Corps chose to evaluate alternatives that exacerbate the
5 Letter from Giattina to Pulliam of 02/09/07, at 2.
61d. at
Memorandum from Tripp to McGee and Walker of 02/01/07, at 4
8 Id.
91d at 5.
10 Letter from Benjamin to Walker of 12/06/06, at 6.
11 Id.
12 Id.
13 Memorandum from McKenna to McGee of 02/02/07, at 7.
14 Id. at 1.
3
impacts that caused the Review Team agencies' concern. Alternative L mines over 3,600
acres of wetlands in the NCPC and Bonnerton tracts.'5 Alternative M mines over 4,000
acres in the NCPC and Bonnerton tracts. 16 Surely this enhanced mining was not what the
EPA meant when it recommended "greater depth in the alternatives analysis for this
project to ensure that the chosen alternative represents the [least environmentally
damaging practicable alternative]."17 It is clear from the Corps' decision to disregard
agency appeals for less destructive alternatives in favor of alternatives that expand
wetland impacts that it did not consult the Review Team's comments when drafting the
SDEIS.
C. The Review Team was not provided an opportunity to comment on a draft
version of the SDEIS.
The Corps could have overcome its failure to include the Review Team in the
development of the supplement and ignoring Review Team comments in creating it if the
agency had sought Review Team comments on a draft of the SDEIS. After all, the
Review Team's purpose is to "provide input" during the development of NEPA
documents for this project. Had the Review Team been consulted, many of the glaring
omissions and errors of the SDEIS may have been avoided. The SDEIS could have been
understandable and user friendly. Instead, it is confusing and lacks essential ingredients.
Enlisting the expertise of the Review Team prior to public release of the document, as
was done with the DEIS, may have averted these shortcomings.
In light of the foregoing problems with the vaguely worded assertion that the
"Corps worked with the Applicant and members of the Review Team to develop various
boundaries within each of the three project area tracts,"18 the Review Team's role should
be clarified in a second supplement to the DEIS. The second SDEIS should clearly state
that input from the Review Team was not sought or considered in the development of the
first SDEIS. To the extent that individual members of the Review Team were consulted,
those interactions should be listed separately and not attributed to the Team as a whole.
II. Alternatives L and M Will Result in Significant Degradation of the Aquatic
Environment.
Based on the resource agencies' criticisms of the DEIS, Alternatives L and M will
result in significant degradation of the aquatic environment and cannot be permitted
under the 404(b) Guidelines. The Guidelines prohibit the Corps from authorizing actions
"which will cause or contribute to significant degradation of waters of the United
States."19
" SDEIS at 6-15.
16 SDEIS at 6-17.
Letter from Giattina to Pulliam of 02/09/07, at 2.
'g SDEIS at 2-1.
19 40 C.F.R. 230.10(c).
4
State and federal agencies with expert knowledge of the ecosystems proposed to
be impacted by the mine expansion spoke strongly against the significant wetland and
streams impacts proposed by the Applicant. The EPA was concerned about both the type
and scope of areas that would be impacted by the mine expansion. The EPA expressed
trepidation about impacts "directly upstream of areas classified as primary nursery areas
for recreational and commercial fish. ,20 The agency stated that "we do not believe
impacting 2,378 acres of wetlands and 7.3 miles of streams satisfactorily avoids and
minimizes impacts to aquatic resources. We also believe it may be difficult to provide
adequate compensation for the proposed project, due to the large scale nature and types
of coastal habitats which will be impacted."'
The EPA's concerns were echoed by other expert agencies. The FWS concluded
that "the proposed project may result in substantial and unacceptable adverse impacts to
aquatic resources of national importance" due to the "large-scale wetland impacts located
directly adjacent to the Pamlico River."22 The DMF opposed all mining north of N.C.
Highway 33 "because of probable significant adverse impacts to estuarine fisheries
resources, fish habitats, water quality, and public trust waters in the Pamlico River
system. ,23 The WRC was "especially concerned with the impacts to the valuable habitat
within the NCPC tract including wetlands, streams, creeks, and inland PNAs."24 The
National Marine Fisheries Service concluded that "mining the NCPC tract would
adversely impact living marine resources and their habitats.i25 Due to these impacts, the
NMFS recommended that "[t]he Department of the Army shall not authorize mining
activities within the NCPC tract. ,26 The South Atlantic Fisheries Management Council
opined that "[n]ot only would the proposed project impact habitat through direct removal
(loss of over 2,000 acres of wetlands), it poses a significant risk to the coastal ecosystem
as a whole through alteration of food web dynamics and severely diminished water
quality."27
Rather than evaluating alternatives that would alleviate the concerns of the
resource agencies, the SDEIS amplifies mining impacts. Alternatives L and M would
exacerbate the concerns regarding wetland destruction expressed by the resource
agencies. Alternative L would mine 4,134.72 acres of wetlands total, including 1,584.28
acres in the NCPC tract and 2,040.83 acres in the Bonnerton tract. 28 Alternative M is
more destructive, mining 4,591.37 acres of wetlands total, including 2,040.93 acres of
wetlands in NCPC and 2,046 acres of wetlands in Bonnerton.29 Similarly, the AP
20 Letter from Giattina to Pulliam of 02/09/07, at 2.
21 Id. at 3.
22 Letter from Benjamin to Walker of 12/20/06, at 6.
23 Memorandum from McKenna to McGee of 02/02/07, at 1.
24 Memorandum from Tripp to McGee and Walker of 02/01/07, at 5.
25 Letter from Croom to Pulliam of 02/08/07, at 1.
26 Id. at 4.
27 Letter from Mahood to Pulliam of 02/09/07, at 2.
28 SDE1S at 6-15.
21 Id. at 6-17.
Alternative, the focus of much of the criticism of the DEIS, would mine 2,407.72 acres of
wetlands within the NCPC tract. 30
Alternatives L and M would also devastate the stream systems within the project
area. Alternative L would excavate 29,288 linear feet of creeks and eliminate 11,909
acres of the drainage basin of the remaining creeks and streams. 31 Alternative M would
expand those impacts, mining 36,990 linear feet of creeks and 12,571 acres of the
drainage basins of the remaining creeks and streams. 32 The AP Alternative would mine
38,558 linear feet of creeks and 3,412 acres of their drainage basins. 33
This analysis of the proposed wetland and creek impacts of Alternatives L and M
shows that the very concerns documented by the resource agencies regarding the AP
Alternative apply to Alternatives L and M as well. Rather than avoiding and minimizing
wetland impacts, Alternatives L and M include expansive wetland impacts in sensitive
areas. They destroy wetlands, creeks and drainage basins at a rate that will cause
significant degradation for the very reasons identified by the expert agencies in their
comments to the DEIS. We encourage the Corps to review these comments, to analyze
Alternatives L and M in light of them and, as requested in our comments on the DEIS, to
develop a second supplement to the DEIS that presents and evaluates alternatives that
will not cause or contribute to the significant degradation of the aquatic environment.
III. The 15 Year Limitation Chosen by the Corps Is Arbitrary and Derails the
Alternatives Analysis.
The Corps' determination that any alternative must provide 15 years of mining
north of N.C. Highway 33 is arbitrary and slants the alternatives analysis to favor more
destructive mine plans. The Corps' steadfast reliance on a 15 year analysis is
unsupported by reason and cannot be justified in light of its impact on the economic
practicability analysis. The Corps' 15 year minimum has its origins in the AP
Alternative, a fact that undermines its applicability because (1) the AP Alternative is
illegal and cannot be permitted under the 404(b) Guidelines and applicable state laws and
(2) it does not meet the stated purpose and need for the project.
A. The AP Alternative is illegal and cannot serve as the. foundation of the
alternatives analysis.
The AP Alternative unlawfully impacts coastal wetlands. It directly impacts 38
acres of coastal wetlands. 34 In North Carolina, "[u]ses which are not water dependent
shall not be permitted in coastal wetlands."35 It is clear from a basic review of the
applicable state law that phosphate mining is not water dependent. First, the regulations
30 Id. at 6-18.
" Id. at 6-10; 6-12.
32 Id.
33 Id.
34 SDEIS at 6-18.
" 15A NCAC 7H .0208(a)(1).
6
give examples of uses that are water dependent, including docks, wharfs, boat ramps,
dredging, bridges, bulkheads, etc. 36 The regulations also state that water dependent
structures are "those structures for which the use requires access or proximity to or siting
within surface waters to fulfill its basic purpose.i37 Not only does phosphate mining not
require surface water access "to fulfill its basic purpose," the presence of water is a
hazard to mining. As the DEIS notes, "depressurization of the Castle Hayne Aquifer
would be required to maintain dry, safe mining conditions."38 Phosphate mining is not
dependent on access to surface water, but rather is hampered by it. Moreover, the Corps
has determined phosphate mining is not water dependent, shifting the burden to PCS
under the 404(b) Guidelines to demonstrate a less environmentally damaging practicable
alternative does not exist.
The Corps is not ignorant of this illegality. At the September 1, 2006 Review
Team meeting, John Dorney of the Division of Water Quality told the group that the AP
and EAP alternatives could not be permitted because they violated state law. We
reminded the Corps of Mr. Domey's statement in our February 8, 2007 comment letter on
the DEIS.39
Furthermore, it appears that PCS has admitted that the AP alternative is illegal
and finally relented from its position that it is the only practicable alternative. It recently
submitted Alternative M. Critically, Alternative M does not impact any coastal
wetlands. 40 While it would still contribute to significant degradation because of its
expansive wetland impacts and violates state buffer mitigation requirements, 41 at least
Alternative M does not facially violate state law protecting coastal wetlands.
The AP Alternative also violates state law regarding buffer mitigation. State law
requires buffer mitigation for impacts to riparian buffers in the Tar-Pamlico River
basin.42 Under that law, PCS would be required to mitigate 280 acres of buffers to
compensate for buffer impacts under the AP Alternative.43 Based on an extensive search,
PCS has only identified 76 to 158 acres for potential mitigation. 44 It acknowledged its
inability to comply with the buffer mitigation requirements in a letter to the North
Carolina Environmental Management Commission on February 20, 2006. That letter was
included in the DEIS at Appendix I. In that letter it requested a variance from the
36 Id.
37 15A NCAC 2B .0202(67).
3a DEIS at 441 (emphasis added).
39 Letter at 7.
ao SDEIS at 6-18.
State law requires buffer mitigation for impacts in the Tar-Pamlico River Basin. 15A NCAC 2B .0260.
Buffer impacts in Zone 1 require mitigation at a 3:1 ratio and impacts in Zone 2 require mitigation at a
1.5:1 ratio. 15A NCAC 2B .0260(3)(b). Alternative M would impact 44.84 acres of Zone 1 buffers and
30.23 acres of Zone 2 buffers, together requiring 179.87 acres of mitigation. PCS admits that despite an
exhaustive search, it can only locate 76 to 158 cares of potential mitigation. DEIS at I-32. Alternative L
may also be illegal, since it would require 132.06 acres of buffer mitigation, meaning PCS would have to
successfully acquire 84% of the available mitigation to avoid violating buffer regulations.
a' I5A NCAC 2B.0260.
43 DEIS Appx. 1-32.
44 Id.
applicable law; that request has since been withdrawn. We encourage the Corps to
follow PCS's lead and to accept that the AP Alternative is illegal. The arbitrary decision
in the SDEIS to require 15 years of mining in the wetland areas north of N.C. Highway
33 is capricious when based on the Applicant's clearly illegal application for a 15 year
mine plan.
The Corps' insistence on making the AP Alternative the focus of its analysis is
puzzling given its past treatment of similar situations. The Corps has previously
disregarded alternatives that facially conflict with state law. In the Final EIS for the
Bogue Inlet Channel Erosion Response Projeet,45 the Corps rejected an alternative that
included the installation of a hardened structure on the shoreline to control erosion. 46 In
eliminating that alternative from consideration, the FEIS recognized that "the use of hard
structures as a shoreline erosion response measure for ocean and inlet structures is
prohibited by the State of North Carolina."47 After citing this specific prohibition on
hardened structures, the FEIS concluded that "[t]herefore, this alternative has been
eliminated from further consideration. "48 The unlawful alternative was also determined
not to meet the project's purpose and need. This is a logical conclusion, since it is
implicit in every applicant's purpose and need statement that the alternative that is
ultimately selected complies with the law.
B. The AP Alternative does not meet the stated purpose and need.
The AP Alternative does not satisfy the Applicant's purpose and need because it
fails to comply with state law and is not 20 years in length. PCS's stated purpose and
need is "to continue mining its phosphate reserve in an economically viable fashion" on
"approximately 20 year horizons."49 It is implicit in the statement that this mining must
be legal. The purpose and need could be rewritten so that it says that the purpose and
need is "to continue mining its phosphate reserve in an economically viable fashion that
complies with state and federal law." This change does not affect the substance of the
statement, but expressly recognizes the otherwise implicit requirement that any
alternative must be legal to satisfy the purpose and need. Since the AP Alternative
violates at least two separate state laws, it cannot satisfy the Applicant's purpose and
need.
The AP Alternative also fails to provide an "approximately 20 year horizon [j,,50
and therefore violates the purpose and need statement as expressed in the DEIS. As the
Corps determined regarding the 12 year No Action Alternative, the AP Alternative "does
not meet the applicant's purpose and need as it does not provide an approximately 20
year plan. ,51 If 15 years can be considered "approximately 20 years," then the Corps
45 FINAL ENVIRONMENTAL IMPACT STATEMENT: BOGUS INLET CHANNEL EROSION RESPONSE PROJECT,
March 2004 (`Rogue FEIS"), http://www.saw.usace.army.miI/WETLANDS/Projects/Boguelnlet/.
46 Bogue FEIS at 111.
4' Id. (emphasis added)
4s Id.
49 DEIS at 1-4.
so DEIS at 1-4.
51 Id. at 2-12.
must articulate a reason why less than 15 years cannot be. Without any such justification,
the Corps finding that the AP Alternative meets the purpose and need is arbitrary.
For the reasons stated above, the Corps cannot rationally rely on the clearly illegal
AP Alternative to impose a requirement that any practicable alternative provide 15 years
of mining north of N.C. Highway 33 .52 To the extent it is just accepting the Applicant's
result driven premise, the Corps has failed to exercise the independent judgment of
project purpose and need required by Corps regulations. 53 The Corps relies on that 15
year cutoff because it "involves no relocation during the initial 15 years."54 As discussed
above, no mine plan has been presented that can legally mine 15 consecutive years
without relocation. We do not doubt that the Applicant could devise a mine plan that
could mine 20 or more years in NCPC if allowed to entirely disregard the law. But that
cannot be the baseline.
Considering the alternatives that do not facially violate the coastal wetlands use
prohibitions or buffer mitigation requirements shows the error in relying on the AP
Alternative's illegal 15 consecutive years of mining. The L, SCR and SJA Alternatives
must relocate to a new mine pit after 8, 8 and 9 years respectively. If the Corps continues
to believe that the Applicant must be able to mine north of N.C. Highway 33 for a time
period equal to the longest consecutive mining that can be done in NCPC, then it should
consider mine plans that allow 9 years of mining north of N.C. Highway 33. That, after
all, is the maximum number of years that NCPC can be mined without facially violating
state law, though even the legality of these alternatives is not assured.55 Considering this
time frame, the Corps could consider the EPA's request to reduce mining impacts in the
NCPC tract by eliminating mining between the tributaries that feed South Creek.
IV. The SDEIS Economic Analysis Relies on Outdated Information, Makes
Improper Comparisons and Lacks Critical Elements for the Corps'
Practicability Determination.
The SDEIS introduces for the first time a new economic analysis to determine
practicability of alternatives. It cryptically presents this new economic analysis that it
appears the Corps believes changes the economic outlook on all of the alternatives
considered in the DEIS. In revealing bits and pieces of this new analysis, the SDEIS
includes a series of flaws that entirely undermine its value. First, the SDEIS fails to
acknowledge the recent dramatic improvement in the fertilizer market. Second, the
SDEIS continues to use the AP and EAP Alternatives, alternatives that the Corps knows
are illegal and cannot be permitted, as the baseline for evaluation of the practicability of
"The Corps has mentioned in the past that it believes re-evaluating its reliance on the 15 year time frame
for the economic analysis would be arbitrary. This is an unconvincing argument since the Corps has
furtively abandoned the original cost model in favor of the "cash cost" model in this SDEIS.
"See 40 C.F.R. 1506.5(c).
5' SDEIS Summary at c.
ss It is not clear that these alternatives could comply with state law considering the substantial buffer
mitigation that would be required. PCS would have to demonstrate an incredible success rate in acquiring
potential buffer mitigation sites in order to meet the buffer mitigation requirements for any of these
alternatives.
9
new Alternatives L and M. Third, the SDEIS fails to justify or explain the application of
the new "cash cost" economic analysis. Finally, the SDEIS does not produce a cost/ton
concentrate figure, the basis for determining practicability. While each of these flaws
could individually devalue the document, together they undermine the entire economic
analysis and conclusion in the SDEIS.
A. PCS's improved economic outlook must be considered in the economic
evaluation.
In the time period between the DEIS and the SDEIS, the economic outlook for
PCS dramatically improved; yet the SDEIS does not reflect this important change.
According to the DEIS Section 2.7.3, "the Corps has used sales of finished products as an
indicator of the operations [sic] economic performance. ,56 That section also pointed out
that "Diammonium Phosphate (DAP) and Monoammonium Phosphate (MAP) remains a
major part of PCS Aurora's product mix."57 The Corps based its analysis of economic
practicability on these facts and a finding that "the global phosphate fertilizer market will
not experience significant increases in price"58 and that PCS "will not experience more
favorable economic conditions than those under which they are currently operating."59
Following the release of the DEIS at least two factors have proven these assumptions
false. First, there has been an ethanol boom driven by a move towards alternative fuels
and federal subsidies. Second, large populations in China and India have moved into the
middle class and changed their diets in ways that increase demand for fertilizers.
The ethanol boom and its effects on the corn and fertilizer markets have been
widely publicized; it is unclear why the Corps has not found these impacts worth
addressing in the SDEIS. The effects of the ethanol production expansion were clear as
early as March 16, 2007. At that time, U.S. farmers were "expected to plant record corn
acreage" that was to be accompanied by "higher fertilizer costs" that were "expected to
increase."60 At that time, MAP and DAP prices had already "risen by up to $80 a ton."
The Fertilizer Institute confirmed this trend on July 12, 2007, issuing a press release
identifying "increased demand for corn used in ethanol production and natural gas prices
as the primary drivers behind fertilizer prices."61 In fact, "[a]vera§e prices paid by U.S.
farmers reached the highest level on record in April this year."6 The Fertilizer
Institute projects a continued high demand, noting that "[e]thanol plants under
construction are expected to add another 6.2 billion gallons of capacity" and that "U.S.
ethanol production could easily reach 11 billion gallons in 2011."63
16 DEIS at 2-17.
57 Id.
"Id. at 2-19.
se Id.
60 Fertilizer Demand in US Expected to Rise Thanks to Ethanol, AXCEss NEWS, March 16, 2007, at 1,
(Attached as Exhibit A).
61 Press Release, The Fertilizer Institute, The Fertilizer Institute Releases Fertilizer Price Brochure:
Fertilizer Prices Impacted by Global Demand, Ethanol Boom, Natural Gas Prices (July 12, 2007) (Attached
as Exhibit B).
62 Id. (emphasis added)
63 Id.
10
The Fertilizer Institutes also recognizes increasing affluence around the world as a
cause of increased fertilizer demand. "[P]hosphate demand grew by 19 percent from
fiscal year 2001 to 2006."64 "China, India and Brazil are the three largest contributors to
the growth in world demand .,,65 As these populations grow, so will their demand for
phosphate. This trend is already being observed in Asia, where "growing affluence has
led to an increase in demand for meat, which in turn has driven demand for grain to feed
livestock. ,66 This increase in grain demand for meat production and ethanol has resulted
in a "boon for fertilizer companies."67
The impact of this increased demand has been undeniably positive for PCS
Phosphate. In fact, "Potash proved to be the most popular fertilizer company among Pro
investors"68 in the third quarter of 2007 and "the favorite fertilizer stock among tickerspy
members."69
PCS's own reports confirm this record breaking growth of the fertilizer market.
According to their Securities and Exchange Commission filings, "[hligher prices and
continuing strong demand resulted in record phosphate gross margin of $129.9
million for the quarter, compared to $29.8 million in the year-earlier period. This raised
our phosphate gross margin to $290.9 million for the first nine months of 2007."70 It is
clear from these filings that PCS Phosphate has benefited from the growing demand for
fertilizers worldwide. It must be assumed, absent evidence to the contrary, that the
Aurora facility has also benefited. PCS has confirmed as much in their discussions with
the Corps, admitting that business is very good.71 While PCS attempts to downplay the
impact of these improved conditions with claims of market volatility, the market has been
so profitable that the amount PCS exceeded its goals for this year would cover the cost
difference between any of the alternatives.72
Rather than providing evidence contradicting this improved market, PCS's
arguments to the Corps show that the Aurora plant has benefited from the improving
fertilizer market. In August of 2003, PCS eagerly pointed out that the Aurora facility was
failing to meet PotashCorp Guidelines for Business Unit Performance. 73 Said another
way, PCS Phosphate Aurora was not making an adequate profit to satisfy their parent
company. It based this argument on a finding that its Cash Flow Return on Investments
did not meet PotashCorp standards. 74 PCS also argued as recently as February that the
64 Id.
65 Id. (emphasis added).
66 Fertilizer Stocks Boosted by Global Demand, Ethanol Subsidies, INME RESEARCH, at 1, (Attached as
Exhibit Q.
67 Id.
6s Id
69 Id
70 Available at http://biz.yahoo.com/e/071 107/potl0-q.html, (emphasis added) (Attached as Exhibit D).
71 Corps' notes of 10/04/07 meeting (Attached as Exhibit E).
72 Letter from Wakeman to Corps of 12/28/07, at 9 (Attached as Exhibit F).
79 Letter from Smith to Walker of August 30, 2006, at 8, DEIS Appx. D.
74 Id.
11
Corps should consider both "Reference to historical operating income performance
data" and "PotashCorp guidelines for business unit performance. "75
Following the release of the DEIS, and after the fertilizer market has considerably
improved, PCS is discouraging consideration of "profits," preferring only a comparison
of alternatives' costs. According to Mr. Smith, "PCS continues to encourage the Corps
and EPA to focus on cost comparisons of alternatives. Evaluations of profitability, or
factors that correlate to profitability, are not appropriate in this process. ,76 PCS wants
to have its cake and eat it too. When it is failing to meet profitability standards set by its
parent company, those shortcomings should be considered in the practicability analysis.
But when the fertilizer market has improved considerably and PCS Phosphate is reaping
record breaking profits, those same factors "are not appropriate in this process." The
Corps should not engage in the selective evaluation that PCS promotes. Rather, the
Corps should look to PCS's improved financial standing as confirmation that the market
has improved and the economic analysis must be reopened and recalculated.
The Corps has been wary to discuss profitability, and we do not introduce these
findings to encourage the Corps to determine PCS's appropriate level of profit margin.
We introduce this information to show that the statements from the DEIS that "the global
phosphate fertilizer market will not experience significant increases in price"77 and that
PCS "will not experience more favorable economic conditions than those under which
they are currently operating"78 are demonstrably false. These reports clearly show that
the fertilizer demand has increased substantially, that domestic and international demand
is expected to continue to increase and that PCS is directly benefiting from this improved
demand. By choosing not to revise the economic analysis in the SDEIS to reflect this
drastic shift in the fertilizer market, the Corps facilitates the destruction of wetlands that
could practicably be avoided. No permit can be issued based on the outdated economic
outlook in the DEIS. A second supplement must be drafted to incorporate this new
economic picture. As it is, the Corps' economic analysis is built on a false premise and
foundation and has no value.
B. The economic analysis improperly relies on illegal alternatives as the cost
baseline.
The SDEIS continues and further amplifies a fundamental mistake of the DEIS by
comparing the costs of all alternatives to the AP and EAP Alternatives. As the Corps is
aware, these alternatives clearly violate state law and cannot be permitted under state law.
In addition, those alternatives would result in significant degradation and cannot be
permitted under the 404(b) Guidelines. Moving forward, the Corps should acknowledge
the unlawfulness of these alternatives and discontinue their inclusion in any further
analysis. Under no circumstances can the Corps use these illegal alternatives as a
baseline. By making them the focal point of the SDEIS, as they were in the DEIS, the
75 Letter from Smith to Walker of 02/07/07, at 1. (emphasis added)
76 Email from Smith to Walker of 06/18/07, at 1, (Attached as Exhibit G). (emphasis added)
77 DEIS at 2-19.
78 Id.
12
Corps entirely distorts the economic analysis. The Corps must make efforts to correct
this distortion, with supplemental analysis that compares potentially viable alternatives,
those that are not facially illegal.
As discussed above, it is no secret that the AP, EAPA and EAPB Alternatives are
illegal, cannot be permitted by state law and therefore cannot be practicable alternatives.
Each violates state law prohibiting non-water dependent uses in coastal wetlands and
state law requiring buffer mitigation. It appears as though the legality of potential
alternatives is of no concern to the Corps, since it has given these illegal alternatives
elevated status in both the DEIS and the SDEIS.
The Corps' treatment of these plainly unlawful alternatives is baffling. Any
applicant could develop cheaper methods of performing a desired task by shortcutting the
applicable law. But complying with the law is a cost that must be considered. PCS could
have omitted its costs for operating labor, maintenance labor or overhead to make the AP
and EAP Alternatives less expensive. If it had done so, the Corps would have almost
assuredly rejected the cost calculations as incomplete and biased. Instead, the company
has omitted the costs of complying with the law, the costs of avoiding coastal wetlands
that cannot be legally mined and buffers impacts that cannot be mitigated. The Corps has
embraced that omission. The DEIS and SDEIS focus on these artificially lowered costs
as the baseline, and in doing so, distort the economic analysis. The cost differences
between any of the potentially legal alternatives and the AP and EAP Alternatives are
simply irrelevant. We are certain that if allowed to disregard additional legal
requirements, the Applicant could develop an even less expensive mining plan. That too
would be irrelevant. The only cost comparisons that are relevant and rational are those
between reasonable alternatives that include the cost of complying with the law. The AP
and EAP Alternatives errantly omit that cost.
The Corps' focus on the AP and EAP Alternatives in the SDEIS is not a harmless
error. Rather, by focusing on the artificially reduced costs and illegally expanded time
frames of these alternatives, the Corps has tilted the economic analysis in favor of more
extractive mine plans that destroy more wetlands and streams. 79 Comparisons to the AP
and EAP Alternatives invariably make the potentially legal alternatives seem overly
expensive because they avoid areas that cannot be mined and include jumps that are
necessary when those areas are avoided.
Moreover, the Corps' continued reliance on the AP Alternative as the baseline for
its analysis raises questions regarding whether the agency has fulfilled its duty to
independently evaluate the NEPA documents. By law, when the Corps delegates drafting
of the EIS to a contractor, as was done with CZR Incorporated here, it "shall
independently evaluate the statement prior to its approval and take responsibility for its
scope and contents."80 An independent evaluation of the DEIS and SDEIS could not
accept the central role of the AP Alternative. It is a facially illegal alternative that is an
outlier in terms of both cost and environmental impact when compared to the other
79 See generally SDEIS Summary.
S0 40 C.F.R. § 1506.5(c).
13
alternatives. Its mere inclusion in the alternatives analysis would benefit the Applicant,
its role as the focal point stacks the deck against reasonable alternatives in such a way
that a favorable outcome for PCS is ensured.
C. The SDEIS does not justify the new "cash cost" model or account for its
flaws.
The SDEIS fails to fully analyze the "cash cost" model and its distortion of the
relationship between the costs and benefits of mining in the S33 tract. As noted in the
summary but not the substance of the SDEIS, the "cash cost" model was developed to
account for the relocation of mine pits in all alternatives in the first 15 years. The
Applicant claims that this new analysis is more appropriate than the original analysis
used in the DEIS, because it concentrates relocation costs within the 15 year window that
is considered by the Corps. It is important to remember that the original cost model in
the DEIS "is the same one PCS is currently using for all its strategic planning. "81 This
new 15 year "cash cost" model was introduced by PCS simply to support its permitting
strategy. Rather than clarifying the economic picture, the Applicant's new "cash cost"
model, further distorts the economic picture and skews the economic analysis.
This is another example of where the Corps' willingness to exclude the cost of
complying with the law has distorted its analysis. The apparent justification for
concentrating all relocation costs within the first 15 years with the "cash cost" model is
that "[t]he AP and EAP alternatives involve no relocation during the initial 15 years."sz
The SDEIS fails to note that the only reason that is true is because these alternatives
require mining areas that cannot be legally mined. It is clear looking at the alternatives
that do not directly conflict with state law that no legal alternative can mine 15 years
without relocating. At this point, neither PCS nor the Corps has identified any alternative
that both 1) meets state law, 2) does not result in significant degradation of aquatic
resources and 3) provides 15 years of mining without relocation. Therefore, if this is the
Corps' justification for the new "cash cost" model, then that model is not justified.
The new "cash cost" model treats costs and benefits asymmetrically. In the
original cost model, the cost of opening a new mine pit was amortized over the life of the
mine pit. Said another way, the cost of opening the mine pit was spread over the time
period that the pit would provide an economic benefit. Since opening the pit is necessary
to gain the benefit of mining years later, this is a logical amortization and is how PCS
actually accounts for their costs. 83 The "cash cost" model on the other hand front loads
the costs of opening the pit, concentrating the losses in a few years and consequently
amplifying benefits over the life of the mine after those few years. In this instance, PCS
has attempted to support their previous contention that only AP and EAPA are
practicable, by frontloading the costs of opening S33 so that they will be included in the
Corps' economic analysis. Doing so makes mining the rest of S33 more profitable since
costs are reduced during years outside the Corps' economic window, but the "cash cost"
si DEIS at A-142.
82 SDEIS summary at c.
as DEIS at A-142.
14
model fails to recognize this benefit. PCS's ultimate costs and benefits are similar over
the life of mining S33 in either plan. 84 Under the "cash cost" model, they are simply
pushing those costs into the Corps' window of analysis in an effort to get the Corps to
change its answer to the practicability question. The Corps did not agree with PCS's first
attempt to get everything but AP and EAP deemed impracticable and should resist this
new, fundamentally flawed invitation to do so.
PCS's contention that the DEIS practicability analysis calculated using its original
cost model distorts economic reality is disingenuous. One would think that if the Corps'
analysis was as off base as PCS claims,.then the company would have complained about
it immediately upon its release. To the contrary, PCS admits that "the cost model is the
same one that PCS is currently using for all its strategic planning."8' PCS has maintained
throughout the NEPA process that only AP and EAPA are practicable alternatives, and
anticipated that the original cost model would support that belief 86 By PCS's
calculations, it did so. Ross Smith, Environmental Affairs Manager for PCS, sent an 11
page letter on August 30, 2006 arguing that only AP and EAPA were practicable based
on the 15 year segments of the original cost model analyzed by the Corps. This letter was
sent just one month before the DEIS was released and well after PCS first received a
draft. Accepting the Corps' use of the original cost model, Mr. Smith argued that the
phosphate product markets were declining, that the Aurora facility was not meeting
Potash Corp Business Unit Performance Standards, that mining south of N.C. Highway
33 was logistically impossible and that un-mined phosphate reserves should be
considered in the economic analysis. Mr. Smith did not dispute the Corps' application of
the original cost model in the economic practicability analysis. Not in one page, one
paragraph or one sentence. This claimed distortion that is now a manifest injustice
according to PCS was not mentioned prior to the DEIS.
In the DEIS, the Corps' disagreed with PCS's calculations, determining that only
S33, DL1B and the No Action Alternative were impracticable. 87 The Corps could not
find the other alternatives impracticable, meaning that by default they were practicable.ss
Following this determination, PCS sent another letter to the Corps arguing the
impracticability of all but the AP and EAPA Alternatives. 89 It was in this February letter
that PCS's claims regarding the use of the original cost model first emerged. The only
issue addressed in this seven page letter was the Corps' use of the 15 year economic
evaluation term. In the five months between its August and February letters, PCS's
arguments shifted from a variety of claims to one previously unidentified argument. The
company first made its concerns about the cost model known to the Review Team at its.
84 For example, the overall costs computed by the "cash cost" model for Alternative L is $5,304,777
compared to $5,342,853 under the original cost model. SDEIS Section 8.0. For Alternative M, the "cash
cost" model calculates total operating costs as $5,687,035 compared to $5,725,111 under the original cost
model. This comparison would be more complete if "cash cost" analyses of all alternatives were included
in the SDEIS.
" DEIS at A-142.
86 Letter from Smith to Walker of 08/30/06, Letter from Smith to Walker of 02/07/07, (DEIS Appx. D).
" DEIS at 2-19.
88 Id.
89 Letter from Smith to Walker of 02/07/07.
15
July 24, 2007 meeting, more than 10 months after the DEIS and six years after the
initiation of the permit process. It is difficult to believe that PCS just now realizes its
original cost model "distorts" the practicability analysis. What is clear is that the
company's arguments why the original cost model supported their practicability claims
were unsuccessful, so they created a new "cash cost" model that they anticipate will give
a more favorable answer. Without further demonstration why the original cost model,
used by PCS in its own planning, is inadequate and the new "cash cost" model is
appropriate, the Corps must reject this invitation to fundamentally alter the economic
practicability analysis.
The Corps is now confronted with two flawed models. Both the original cost
model and the "cash cost" model have weaknesses that originate from the truncation of
the models at 15 years. The impacts of those flaws are considerably different. The
original cost model takes a cautious approach, erring on the side of protecting wetlands,
while the "cash cost" model promotes additional wetland impacts by considering costs,
but not benefits of opening the S33 mine pit.
Going forward, the Corps must take a new look at the economic analysis,
evaluating each alternative over as much of the life of the plan as is possible. There are
two ways the Corps can do this. First, it can shorten each mine plan to 8-15 years 90 and
then evaluate the practicability of the alternatives. This approach satisfies two goals. It
is within the 15 year economic time frame that the Corps has stated it is comfortable
examining. These alternatives would also fall within the approximate range of the AP
Alternative and would therefore provide a long-term mine plan. The second way that the
Corps can better evaluate the practicability of alternatives is to extend the analysis to the
shortest potentially practicable alternative, the S33 Alternative (25 years), the DLIB
Alternative (27 years) or SCR (32 years). 91 Extending the analysis in this way, in
addition to making the changes noted in Dr. Wakeman's comment letter, will mitigate
some of the flaws in the original cost model.
If the Corps chooses one of the truncated models, it must choose the original cost
model. While it has its flaws, it has been the basis for the economic practicability
discussion through the majority of the permitting process, it represents PCS's actual
business practice, its application to all alternatives has been disclosed and it provides
information relevant to the practicability. determination included in the DEIS. In contrast,
the "cash cost" model was recently introduced, it does not represent PCS's practice, its
application to all alternatives has not been disclosed and it is unclear how it relates to
90 Based on the representations of PCS, alternatives of 8-15 years would be adequate. PCS has developed a
reputation for overstating its minimum requirements. In the process leading to the 1997 permit, it
maintained that it needed a permit to mine all of NCPC or would go out of business. It did not receive the
permit and did not go out of business. During this permit process the company has pleaded that it must
have AP or EAPA to continue. It has since abandoned that claim and submitted Alternative M,
demonstrating again that it did not need what it claimed it had to have. Based on this history, any claim
that all alternatives must be at least 15 years in length should be dismissed. If PCS actually required 15
years of mining, then they would have requested 25-30 years of mining.
91 Any use of the original cost model must take into consideration the flaws highlighted by Dr. Doug
Wakeman in his letter to the Corps of 12/28/07.
16
practicability. It lacks the key criterion, cost per ton concentrate that the Corps' DEIS
practicability determination relied on. These shortcomings of the "cash cost" model
undermine its future use.
The Corps should develop a second Supplement to the DEIS that openly revamps
the economic analysis to provide a clear, accurate depiction of the economic outlook.
Accepting a flawed, result-driven analysis that is skewed to PCS's advantage over one
that the Company claims is skewed in favor of protecting wetlands is not a justifiable
decision. It is not rational.
A new analysis that accounts for both the amortized costs and the costs of
complying with the law may even allow new alternatives to be developed that will avoid
and minimize wetlands to the maximum extent. We join the resource agencies in urging
the Corps to consider new, less destructive alternatives.
D. The information provided by the "cash cost" model cannot form the basis
for the Corps' practicability determination.
Momentarily putting aside the apparent flaws in using the "cash cost" model for
any purpose, based on the information presented in the SDEIS it cannot form the basis for
the Corps' practicability determination. There are two unavoidable problems with the
"cash cost" information presented in the SDEIS.
First, the scant information that is included in the SDEIS regarding the "cash
cost" model does not include any information regarding the cost per ton of concentrate.
In the DEIS economic analysis, the cost per ton figure was the defining criterion that the
Corps used in determining practicability. The Corps concluded that the No Action,
S33AP, and DLIB Alternatives were not practicable because the cost per ton concentrate
was too high. 92 However, cost per ton concentrate of the remaining alternatives were all
"similar to the current national averages and PCS's reported historic mine operating
costs."93 Therefore, the Corps could not deem those alternatives economically
impracticable. The Corps recommends reading the SDEIS together with the DEIS, and it
is structured as an extension of the DEIS,94 so it must be assumed that the cost per ton
concentrate will be the defining criterion for determining practicability in the SDEIS.
Without similar data for each of the alternatives under the "cash cost" model, it is unclear
how the Corps can make any determination on practicability. Unless it changes its
method of determination entirely, it cannot. If the Corps has developed a new method of
determining practicability, it should reveal that method. The practicability determination
controls the alternatives analysis and is the type of information that must be included in
NEPA documentation.
The second fatal flaw of the "cash cost" model, as represented by the spreadsheets
appended to the SDEIS, is that it does not evaluate any of the alternatives from the DEIS.
9' DEIS at 2-19.
93 id.
94 SDEIS Summary at c.
17
This precludes comparisons among the alternatives. Following the SDEIS, the analyses
of all alternatives under the original cost model have been disclosed. But only the
analyses of alternatives L and M under the "cash cost" model have been disclosed. Even
if the "cash cost" model included cost per ton of concentrate, the determining factor in
the Corps' practicability determination, it cannot be the basis for any determination
because it does not consider the DEIS alternatives. Since the original cost model is the
only model that compares all alternatives and includes the cost per ton criterion, and is
therefore the only model that can be used, those alternatives that were practicable in the
DEIS must remain practicable.
The Corps' avoidance of a forthright discussion of practicability is troubling.
Although the Corps has "tentatively determined that SCR is impracticable"95 in private, it
publicly denies such a momentous shift in position by failing to alter the practicability
analysis from the DEIS. We suspect that the Corps plans to make this "tentative" finding
permanent in the FEIS without public disclosure, review and ability to comment,
cornerstones essential to the NEPA process. Notes of the Corps' discussions with PCS
and selected members of the Review Team certainly indicate that this will happen. We
encourage the Corps to be open in NEPA documents and urge the agency to disclose to
the public essential elements of this analysis that it has disclosed in private to a select
few. The economic analysis is the driver in the practicability analysis, and the public
should not have to read between the lines of the summary to get a glimpse of the Corps'
intentions to drastically alter that analysis.
VI. The Summary is Not Supported by the Body of the SDEIS.
The summary of the SDEIS is not supported by the substance of the document.
Rather than providing an overview of the information contained within the SDEIS, the
summary of the SDEIS makes claims and assertions that are entirely unsupported by the
text. The bulk of these missteps are a consequence of the Corps' decision not to update
the economic analysis despite the addition of two new alternatives and an entirely new
cost model.
The most obvious example of the summary adding new information is the
attempted justification and presentation of the new "cash cost" model. A reader could
reasonably expect from the summary that more detailed information regarding this
shifting economic analysis could be found in "2.7 Economic Evaluation of Alternative
Boundaries."96 However, the SDEIS reports that "This section of the DEIS and its
subsections remain unchanged at this time."97 Section 8.0 is no more enlightening as to
what information justifies the new cost model or what the new model reveals. The "cash
cost model summaries" in that section do not convey any information explaining the
need, development or usefulness of the "cash cost" model. This dearth of information is
critical. The summary is written as if more detailed information were included in the
9s Corps' notes of July 24, 2007 Review Team meeting supplied pursuant to SELC and PTRF FOIA request
of November 20, 2007.
" SDEIS at 2-3.
97 Id.
18
substance of the document. But the summary's overview of the Corps and Applicant's
development of the SDEIS is wholly inadequate when no information is included in the
substance of the document to support the findings and contentions asserted.
The summary asserts "that the exploration of an additional alternative, Alternative
`L', is necessary."98 Alternative L is a bloated version of SCR, with substantially more
wetland mining in both the Bonnerton and S33 tracts. As the Corps is well aware, it can
only legally permit the least environmentally damaging practicable alternative. Since
SCR is less environmentally damaging than L, Alternative L cannot be permitted. It is
hardly clear why an alternative that cannot be permitted is "necessary."
The Corps' conclusion that Alternative L is "necessary" furtively suggests that it
no longer finds alternatives SCRA and SCRB practicable, since the Corps would be
obligated to pick either of these over L. But the SDEIS provides no evidence that
indicates that either SCRA or SCRB are no longer practicable or that any information
exists that could eventually support that conclusion. First, the SDEIS states that the
economic analysis from the "DEIS and its subsections remain unchanged at this time." 99
A review of Section 8.0 of the SDEIS shows that there is no new information regarding
the SCR alternatives. Neither was analyzed under the "cash cost" model. The results
from the original model have not been altered. No new information regarding PCS's
historical mining costs or the national average cost is included. The only comparison that
is made shows that SCRA is less expensive than L and that SCRB is comparable. 100
With no new information in the SDEIS, it does not follow how the Corps could re-
evaluate the practicability of the SCR alternatives. There is no basis for determining that
either is impracticable and therefore the evaluation of L is superfluous. Unfortunately,
the efforts wasted on L could have been invested in developing an alternative that
includes less wetland mining, and therefore would avoid causing substantial degradation
of the aquatic environment as requested in agency comments and PTRF's previous
comments on the DEIS.
VII. The Proposed Economic Re-opener Will Allow Mining in Sensitive Areas.
The economic re-opener proposed in the summary is inadequate. As discussed
above, the economic re-evaluation should be done now. The fertilizer market has
drastically changed for the better between the DEIS and the SDEIS due to the ethanol
boom. This improvement must be considered in this permitting process and not delayed
for 8 years. The proposed re-opener in year 8 would not have any effect until year 12 of
mining. At that point, many of the most sensitive wetlands on the Bonnerton tract would
already be eliminated. Comparing the SCR and L Alternatives' Bonnerton mine plans
shows that in the second part of year 11 and the first part of year 12, the L mining
boundary would impact large stretches of nonriverine wet hardwood forests. These
forests consist of swamp chestnut oak (Quercus nigra) and red bay (Persea palustris).
98 SDEIS Summary at a.
99 SDEIS at 2-3.
100 SDEIS at 6-7.
19
These types of forests are rapidly disappearing. 101 Due to its rarity and age, the stretch of
nonriverine wet hardwood forest that would be eliminated under L, but avoided under
SCR, has been recognized as a state significant natural area and is being considered for
recognition as a nationally significant natural area. 102 Since the re-opener would only
kick in after year 12, these forests would be mined even if PCS could practicably avoid
them. To have any significant effect, the proposed re-opener examination period must be
completed early enough to allow time for re-evaluation prior to the mining of these
stretches of irreplaceable wetland hardwood forest.
VIII. Conclusion
In conclusion, we request that the Corps address these issues in a second
supplement to the DEIS. A supplement is required when "there are significant new
circumstances or information relevant to environmental concerns and bearing on the
proposed action or its impacts." 103 The dramatic change in the fertilizer market and
PCS's economic standing is critical new information that shapes the economic
practicability analysis and directly determines the scope of environmental impact. This
information necessitates a second supplement. Further, when "a draft statement is so
inadequate as to preclude meaningful analysis, the agency shall prepare and circulate a
revised draft of the appropriate portion."' 04 The DEIS combined with the SDEIS is "so
inadequate to preclude a meaningful analysis" for the reasons discussed above.
We thank you for the opportunity to comment during this process. Please contact
us if we can provide any additional information or clarify our comments in any way.
Sincerely,
1:?b 1GKG
Derb Carter, Jr.
Director, Carolinas Office
Southern Environmental Law Center

Geoffrey R. Gisler
Associate Attorney
Southern Environmental Law Center
ioi "Nonriverine Wet Hardwood Forests in North Carolina: Status and Trends." Michael P. Schafale, NC
Natural Heritage Program March 1999 at 7. (Exhibit H)
10'' Pers. comm. Becky Fox, U.S. EPA.
ios 40 C.F.R. § 1502.9(c).
104 40 C.F.R. § 1502.9(a).
20
Exhibit A
V - - -- 1 G1.6?r ? Vl L
GOLIATH
8U5l&E 5M0ft10M ON OEW4111115
"ta Print 1 8 Save I 0 Email
AXcess News: Fertilizer Demand in US Expected to Rise Thanks
to Ethanol.
Business Wire March 16, 2007
HOUSTON - Corn prices are at record highs thanks to the boom in ethanol production and this spring U.S. formers are expected to plant
record com acreaae but with it comes higher fertilizer costs which is expected to increase until production catches up with demand.
Already prices fon urea and two types of ammoniated phosphate known as MAP and DAP have risen by up to $80 a ton.
Nick Drew from the Fertilizer Industry Federation of Australia says U.S. growers are continuing to increase their fertilizer use as they expand
corn plantings to supply ethanol plants.
But he says it is not clear how much higher prices will go
"It's a brave mar: who can forecast exactly where things are going," Drew said. But one company in the US is stepping up to the Dlate to do
something about it, though admittedly, they're still several years away.
This moming Reno-based Itronics, Inc. (OTCBB:ITRO) announced steps to expand its environmentally friendly GOLD'n GRO fertilizer brand
nationally for use on corn; crops. That process is a long, drawn out affair, having to first go through independent tests usually through a
respected University and that is precisely what the enviro-ag company did.
Research being conducted at Utah State University is demonstrating the effectiveness of Itronics' fertilizer on corn. Itronics first got involved
in the Zinc Nutrition Research Program at the University in August 20006.
"Presently the main area where Itronics is selling its GOLD'n GRO Zinc fertilizer is in the central valiey in California," explained Itronics
Chairman, Dr. John Whitney. Whitney said that "growers there are planning on shifting some of the cotton acreage to grain corn production."
But California is only the beginning
"We see a promising role for GOLD'n GRO fertilizers in meeting nutritional needs for the expanding U.S. corn crop," said Whitney. "The
rapidly rising demand for ethanol, which is derived from com, requires increased acreage and yields."
According to the USDA, with farmer looking to expand corn acreage it's likely that prices will remain stable. But in looking deeper into the
facts behind ethanol production the number of plants is expected to rise and along with it, higher demand for corn.
In a speech at `ne USDA Agricultural Outlook Forum 2007 on March 1, Keith Collins. Chief Economist with the Department, called this year's
U.S. crop production "profound" thanks in large par, to biofuel coupled with increased food crop demand globally.
"For the current marketing year, we exDect corn: ethanol use will reach 2.15 Nihon bushels and increase 50 percent to 3.2 billion bushels in
2007108. This sharp increase in corn demand is reducing corn carryover and driving up corn prices," said Coll
Corr planted area for 2007 is now expected to increase 8.7 million acres to 07 million, slightly above the !eve! reported in USDA Agricultural
Proieotions to 2016, released February 14, 2007. This would be the highest com plantings in more than:. 6' year (since 11946).
Carr: production is expected to reach a record 12.2 billion bushels in 2007. Nevertheless, production; could once again fall short of demand,
putting ending stocks dowr further in 2007x08 and propelling co; farm prices even :nigher. Farm prices are expected to average a record-
high 53.60 per bushel for the 20,37 crop: up $0.40 per bushes from this years expected Drice, Collins explained.
Yet according tc the Renewable Fuels Association (RFA), w i-lich also presented at the USDA Forum, 114 et^anoi plants are aiready in
operation aCrOSS a 19-state area. with a 5.5 blil;on gallon a year capacity tas of February, 2007) and aroth,,. 78 plants are under can struction
with 8 plants under expansion. The RFA says tnat once those etnano! piams are online, production will grow by another 6 billion gallons a
year and by 2008. ethanol production is forecast to grow by another 2.2 billion: calions a year. So is triose forecasts hold true. Collins is way
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of his future production estimate which will keep fe-Wi>er prices risk well into the 2038 planting season.
=or Itronics. this could be a windfall once it readies far market. The Reno-based envim-ag company has the comy =P,=, approved plan' in the
United Siate5 to manufacture its environmentally friendiV fertilize.- and according to W!1[incy the raNi ,Llppiies needed to ^'ta^: LiiacturE rivLQ'n
GPO can meet the company's plans of supplying ccrr farmers nationwide.
Noie to editors: "News Features" are stories provided to publishers copyright-free for pint or online display, a no charge. All we ask is that
publishers inciude our byline (AXcess Ne,,vs) as the source, and a I€nk io our Web sae: http:`iw:v.•r.axcessnews.corn. If you are interested in
displaying our news on a reguiar basis, please contact our editorial department at: 775-84`-5365.
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Exhibit B
The Fertilizer Institute
Nourish, Replenish, Grow
For Immediate Release: Contact: Harriet Wegmeyer
July 12, 2007 [phone]
THE FERTILIZER INSTITUTE
RELEASES FERTILIZER PRICES BROCHURE
Fertilizer Prices Impacted by Global Demand, Ethanol Boom, Natural Gas Prices
Washington, D.C. - The Fertilizer Institute (TFI) today released its fertilizer prices brochure,
"Supply & Demand, Energy Drive Global Fertilizer Prices," which has been developed as a tool
for better understanding the dynamics affecting fertilizer prices. The document cites global
demand, increased demand for corn used in ethanol production and natural gas prices as the
primary drivers behind fertilizer prices. Average prices paid by U.S. farmers reached the highest
level on record in April of this year.
"Fertilizer is a world market commodity, and being that the United States is a net importer of
fertilizer, our nation's farmers must compete against farmers from around the world for
fertilizer," said TFI President Ford B. West. "In addition, farmers in the United States planted
92.9 million acres of corn - a 19 percent increase from the 78.3 million acres planted last year -
putting upward pressure on fertilizer demand and prices."
Overall, world nitrogen demand grew by 14 percent, phosphate demand grew by 13 percent and
potash demand grew by 19 percent from fiscal year 2001 to 2006. China, India and Brazil are
the three largest contributors to the growth in world nutrient demand.
The U.S. fertilizer market is being driven by the demand for ethanol. The annual capacity of the
U.S. ethanol sector stood at 5.6 billion gallons in February 2007. Ethanol plants under
construction are expected to add another 6.2 billion gallons of capacity. According to the U.S.
Department of Agriculture, U.S. ethanol production could easily reach 11 billion gallons in 2011.
U.S. ammonia production costs have risen 172 percent since 1999 due to the extreme price
increase in natural gas. Consequently, the U.S. fertilizer industry, which typically supplied 85
percent of farmers' domestic nitrogen needs from U.S. based production during the 1990s, now
relies on net nitrogen imports for half of new nitrogen supplies.
TFI is making this brochure available to its members for use at state and regional meetings with
state legislatures, local councils and others. TFI's fertilizer prices brochure can be viewed on
TFI's Web site at www.tfi.org.
-30-
The Fertilizer Institute represents the nation's fertilizer industry. Producers, retailers, trading
firms and equipment manufacturers which comprise its membership are served by a full time
Washington, D. C., staff in various legislative, educational and technical areas as well as with
information and public relations programs.
Union Center Plaza 202,962.0490
820 First Street. NE Suite 430 202,962 0577 fax
Washington. DC 20002 ww .tfi.ora
Exhibit C
Fertilizer Stocks Boosted by Global Demand, Ethanol Subsidies: Financial News - Yahoo... Page 1 of 2
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Fertilizer Stocks Boosted by Global Demand, Ethanol Subsidies
Wednesday December 12, 9:35 am ET
By the tickerspy.com Staff
Global factors have come together to boost the fortunes of fertilizer producers this year. Millions of acres in the U.S.
have been turned over to corn production thanks to subsidies promoting ethanol. In Asia, growing affluence has led
to an increase in demand for meat, which in turn has driven demand for grain to feed livestock.
The combination of factors has led the price of food to hit historic highs. This week, The Economist said that its food
price index "is now at its highest since it began in 1845, having risen by one-third in the past year." While this has
made the going tough for many food companies and restaurants as the price of ingredients has risen, it has been a
boon for fertilizer companies, as farmers have been tasked with upping their yields in order to meet demand.
Potash (NYSE: POT - News), a Canadian firm specializing in potash, a form of potassium carbonate, as well as
nitrogen and phosphate, all of which have agricultural applications, is the biggest company in the sector. Thanks to a
limited amount of production globally, potash is the company's most profitable product. Potash's potash comes from
its mines in Canada, and the cost of replicating these massive mines represents a serious barrier to entry. Potash
producer Mosaic (NYSE: MOS - News) is the industry's other giant.
High oil prices, which keep demand for biofuels high, have been another recent catalyst for fertilizer firms, while
Canadian producer Agrium's (NYSE: AGU - News) $2.16 billion offer for agricultural-products distributor UAP
Holding (Nasdaq: UAPH - News) earlier this month has helped confirm the positive sentiment toward the sector.
Several institutional investors are locked into the bullish market for fertilizer firms. Hedge fund Dawson Herman
Capital Management, which "has traditionally invested in the growth sectors of the U.S. economy," according to its
website, has substantial exposure to the sector. Its top-three (and four of its top seven) U.S-listed equity holdings are
fertilizer producers. During Q3, the firm added shares in Terra Industries (NYSE: TRA - News), a firm that produces
nitrogen and methanol products for agricultural and industrial markets, and CF Industries (NYSE: CF - News), which
operates in two segments, nitrogen fertilizers and phosphate fertilizers. The firm also slightly trimmed its stakes in
Potash and Mosaic.
Dawson also held shares of companies in other sectors, with its largest equity holding outside the fertilizer industry
being a 719.7k stake in global engineering and construction firm Foster Wheeler (Nasdaq: FWLT - News). A list of
the other companies Dawson is investing in is available at tickerspy.com.
Another hedge fund, Peconic Partners, which "focuses on combining a top-down view of the markets with risk
management and strong fundamental stock selection," according to its website, is also a big holder of fertilizer
producers' shares. Its top-two holdings are Mosaic and CF, but it also has large stakes in Potash and Agrium.
Outside of the fertilizer sector, Peconic's largest stake is in McDermott International (NYSE: MDR - News), an
engineering and construction firm serving the oil and gas industry. A list of the other companies Peconic is investing
in is available at tickersov.com.
Potash proved to be the most popular fertilizer company among Pro investors in 03. Among the 26 investment firms
holding stakes in the company, the largest was a 19.2 million-share stake held by investment advisor Capital
Guardian Trust. Meanwhile, Potash is also the favorite fertilizer stock among tickerspy members, though Terra
Nitrogen (NYSE: TNH - News), an incredibly volatile master limited partnership (MLP) with a focus on nitrogen
fertilizer products, is popular as well.
L.+_- //I-:- ....L_^ ---I. .,a:om'71111/1 n'7 :A 1,+-17 <,-1 1)/')A/')007
Fertilizer Stocks Boosted by Global Demand, Ethanol Subsidies: Financial News - Yahoo... Page 2 of 2
Pro portfolio performance is based on institutions' top-15 holdings as disclosed in quarter-end filings with the SEC.
Pro performance does not take into account additional holdings beyond the top 15 nor does it include positions that
are not required to be disclosed by the SEC. As such, Pro portfolio performance should be considered an
approximation and not a precise record of how an institution has performed over time.
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-1,--1.--/,-,4;-/n'7111') /1n)7 -41, t-1')N.=1 Prnintar-l 1?010007
Exhibit D
SummaiT of POTASH CORP OF SASKATCHEWAN INC - Yahoo! Finance Page 1 of 4
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'Form 10=Q for POTASH CORP OF SASKATCHEWAN INC
7-Nov-2007
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is the responsibility of management and is as of November 7, 2007. The Board of Directors monies out its responsibility for review of this disclosure principally
through its audit committee, comprised exclusively of independent directors. The audit committee reviews and prior to its publication, approves, pursuant to the authority delegated to it by the Board
of Directors, this disclosure-The ter "PCS" refers to Potash Corporation of Saskatchewan Inc. and the terms "we", "us", 'our, "PotashCorp" and the 'company' referto PCS and, as applicable,
PCs and its direct and indirect subsidiaries as a group. Additional information relating to the company, including our Annual Report on Form 10-K, can be found on SEDAR at www.sedar.com and on
EDGAR at www.sec.gov/edgarshtmi. -
POTASHCORP AND OUR BUSINESS ENVIRONMENT
PotashCorp has built a global business on the natural nutrients potash, phosphate and nitrogen. Our products serve three different markets: fertilizer, industrial and animal feed. We sell fertilizer to
North American retailers, cooperatives and distributors that provide storage and application services to farmers, the end users. Our offshore customers are government agencies and private
importers, many of whom tend to buy under contract, spot sales occur in the offshore markets but are more prevalent in North America. Fertilizers are sold primarily for spring and fall application in
both northem and southern hemispheres. - -
Transportation is an important part of the final purchase price for fertilizer so producers usually sell to the closest customers. in North America, we sell mainly on a delivered basis via rail. barge, truck
and pipeline. Offshore customers purchase product either at the port where it is loaded or delivered with freight included.
Potash, phosphate'and nitrogen are also used as inputs for the production of animal feed and industrial products. Most feed and industrial sales are by contract and are more evenly distributed
throughout the yearthan fertilizer sales.
POTASHCORP VISION
We envision PotashCorp as the partner of choice, providing superior value to all our stakeholders. We strive to be the highest-quality lowest-cost producer and sustainable gross margin leader in the
products we sell and the markets we serve. Through our strategy, we attempt to minimize the natural volatility of our business. We strive for increased earnings and to outperform our peer group and
other basic materials companies in total shareholder return, a key measure of any company's value.
We link our financial performance with areas of extended responsibility that include safety, the environment and all those who have a social or economic interest in our business. We focus on
increased transparency to improve our relationships with all.our stakeholders, believing this gives us a competitive advantage.
POTASHCORP STRATEGY
To provide our stakeholders with superior value, our strategy focuses on generating long=tern growth while striving to minimize fluctuations in our upward-trending earnings line. This value
proposition has given our stakeholders superior value for many years. We apply this strategy by concentrating on our highest margin products. This dictates our Potash First strategy, which is driven
by gross margin and long-term growth potential, and our emphasis on Trinidad nitrogen and purified phosphoric acid. Our potash and purified acid businesses have sustained margins driven by less
competitive pressure and lower-cost production than other products. Long-term natural gas contracts in Trinidad give us a significant cost advantage in nitrogen over US producers exposed to higher
US gas prices.
We strive to grow PotashCorp by enhancing our position as supplier of choice to our customers, delivering the highest quality products at market prices when they are needed. We seek to be the
preferred supplier to high-volume, high-margin customers with the lowest credit risk. It is critical that our customers recognize our ability to create value for them based on the price they pay for our
products.
Table of Contents
As we plan our future, we carefully weigh our choices for our strong cash flow. We base all investment decisions on cash flow return materially exceeding cost of capital, evaluating the best return on
any investment that matches our Potash First strategy. Most of our recent capital expenditures have gone to investments in our own potash capacity, and we look to increase our existing offshore
potash investments and seek other merger and acquisition opportunities in this nutrient Expansion of Trinidad nitrogen and industrial phosphoric acid is another priority. We also consider share
repurchase and increased dividends as ways to maximize shareholder value over the long term.
KEY PERFORMANCE DRIVERS - PERFORMANCE COMPARED TO GOALS
Each year we set targets to advance our long-term goals and drive results. We have developed key performance indicators to monitor our progress and measure success. As we drill down into the
organization with these metrics, we believe:
• management will focus on the most important things, which wil: be reinforced by having the measurable, relevant results readily accessible:
• employees will understand and be able to effectively monitor their contribution to the achievement of corporate goals. and
• we will be even more effective in meeting our targets -
Our long-term goals and 2007 targets are set out on pages 22 to 23 of our 2005 summary annual report . A summary of our progress against selected goals and representative annual targets is set
out below. _
Renresencative Performance
Goal 2007 Annual Target to September 30, 2007
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- _
Summary of POTASH CORP OF SASKATCHEWAN INC - Yahoo! Finance
To continue to Exceed total PotashCoro's total shareholder return
outperform our shareholder return was 121 percent in the first nine
sector and other performance for months of 2007, exceeding the DJUSBM
basic materials our sector and return of 25 percent and our sector
companies in total companies on the average return of 70 percent.
shareholder return. DJUSBM for 2007. _
To be the low-cost Achieve 3-percent Potash conversion costs were reduced 2
supplier on a 'reduction in percent per tonne or, a Canadian dollar
delivered basis in per-tonne potash basis during the first nine months of
our industry through conversion costs 2D07 when compared to the 2006 annual
ongoing cost on a Canadian average. Compared to the nine months
reduction dollar basis. ended September 30, 2006, Der-tonne
management. potash conversion costs- were reduced 7
- percent.
Improve energy Trinidad energy efficiency rate
efficiency in improved almost 3 percent during the
Trinidad by 3 first nine months of 2007 compared to
percent from 20D6. the 2006 annual average..
Achieve rock costs Rock costs at Aurora increased 3
at Aurora and percent and White Springs increased i
White Springs 1 percent during the first nine months
percent below of 2007 compared to the 2D06 annual
2006. average. compared to the first nine
months of 2006, per-tonne rock costs
increased 2 percent at Aurora and 3
percent at Waite Springs.
Table of Contents
Representative Performance
Goal 2007 Annual Target to September 30, 2D07
To remain the leader Potash gross Potash gross margin was $655.9 million
and preferred margin to exceed for the first nine months of 2,007,
supplier of potash, $800 million, more representing 82 percent of the 2007
nitrogen and than 40 percent annual target and an increase of 74
phosphate products above 2006. percent compared to the first nine
worldwide. months of 2006.
Phosphate gross Phosphate gross margin was $290.9
margin to be up by million; up 216 percent for the first
' 50.percent from . nine months of 2007 compared to the
20D6. corresponding period in 2006. This
nine-month gross margin represents 155
percent of the 2007 annual target.
Nitrogen gross Nitrogen gross margin was $399.4
margin to exceed million for the first nine months of
$325 million. 2007, representing 123 percent of the
2007 annual target and an increase of
71 percent compared to the first nine
months of 2006.
To move closer to Reduce recordable Recordable injury rate increased 13
our goal of no harm injury rate by 15 percent for the first nine months of
to people, no percent from 2006. 2007 compared to the 2006 annual
accidents, no damage level. As compared to the nine months
to the environment. ended September 30, 2006, recordable
injury rate increased 16 percent.
Reduce lost-time Lost-time injury rate was reduced 74
injury rate by 40 percent for the first. nine months of
percent from 2006. 2007 as compared to the 2006 annual
level. As compared to the mine months
ended September 30, 2006, lost-time
injury rate was reduced 71 percent.
Reduce reportable Reportable release rate on an
releases and annualized basis declined 11 percent
permit excursions while annualized permit excursions
by 10 percent from were down 50 percent during the first
2006. nine months of 2007 compared to 2006
annual levels. Compared to the first
nine months of 2006, reportable
releases dropped 25 percent while
permit excursions were reduced 57
percent.
Table of Contents
FINANCIAL OVERVIEW
Page 2 of 4
This discussion and analysis is based on the company's unaudited interim condenses consolidated financial statements reported under generally accepted accounting principles in Canada
("Canadian GAAP"j. These principles differ in cerain significant respects from accounting principles generally accepted in the United States. These differences are described and quantified in Note
19 to the unaudited interim condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. All references to per-share amounts pertain to diluted net income
per share. Note that as discussed below in the section fltled, "Three-for-One Stock Split", the Board of Directors of PCS approved a three-for-one split of the company's outstanding common shares in
the form of a stock dividend during the second quarter of 2007. As such, all share and per-share data have been adjusted to reflect the stock split. All amounts in dollars are expressed as US dollars
unless otherwise indicated. Certain of the prior periods' figures have been reclassified to conforn with the current periods' presentation.
h1m1 12/27/2007
Summary of POTASH CORP OF SASKATCHEWAN INC - Yahoo! Finance Page 3 of 4
For an understanding of trends, events, uncertainties and the effect of critical accounting estimates on our results and financial condition, the entire document should be read carefully together with
our 2006 financial review annual report
Three-for-One Stock Split
On May 2, 2007, the Board of Directors of PCS approved a three-for-one split of the company's outstanding common shares- The stock split was effected in the farm of a stock dividend of two
additional common shares for each share owned by shareholders of record at the close of business on May 22. 2007. All equity-based benefit plans have been adjusted to reflect the stock split. In
this Quarterly Report on Form 10-Q, all share and per-share data have been adjusted to reflect the stock split. Information on an adjusted basis, showing the impact of this split for the first quarter of
2007, and by quarter and total year for 2006 and 2005 is presented in the table below. Comparative results for the second and third quarters of 2007 are also included.
First Second Third Fourth
Quarterly Data (Post Split Basis) Quarter Quarter Quarter
Quarter Year
Basic net income per share
2007 - $ 0.63 $ 0.91 $ 0.77
2006 $ 0.40 $ 0.56 $ 0.47 $ 0.59 $ 2.03
2005 $ 0.39 $ 0-50 $ 0.40 $ 0.37 $ 1.67
Diluted net income per share
2007 $ 0.62 $ 0.88 $ 0.75
2006 $ 0.40 $ 0.55 $ 0.46 $ 0.58 $ 1.98
2005 $ 0.38 $ 0.49 $ 0.39 $ 0.36 $ 1.63
Net income per share for each quarter has been computed based on the weighted average number of shares issued and outstanding during the respective quarter, therefore, quarterly amounts may
not add to the annual total.
Earnings Guidance
The company's guidance for the third quarter of 2007 was earnings per share in the range of $0.70 to $0.80 per share, assuming a period end exchange rate of
1.05 Canadian dollars per US dollar and consolidated effective income tax rate of 30 percent The final result was net income of $243.1 million, or $0.75 per share, with a period-end exchange rate of
0.9963 Canadian dollars per US dollar and a consolidated effective income tax rate of 33 percent.
Table of Contents
Overview of Actual Results
Operations
(Dollars millions except per-share amounts)
Sales
Freight
Transportation and distribution
Cost of goods sold
Gross margin
operating, income
Net income
Net income per share - basic
Net income per share - diluted
Three Months Ended September 30
Dollar
2007 2006 Change
$ 1,295.0 $ 953.5 $ 341.5
80.6 65.6 15.0
31.0 '7.6 (6.6 )
708.3 60:.5 103.8
$ 475.1 .$ 245.8 S 229.3
$ 406.2 $ 223.2 S 183.0
$ 243.1 5 145.2 $ 97.9
$ 0.77 $ 0.47 $ 0-30
$ 0.75 $ 0.46 $ 0.29
Nine Months Ended September 30
t Dollar t
Change 2007 2006 Change Change
36 $ 3,802.8 $ 2,743.8 $ 1,059.0 39
23 254.8 - 182.8 72.0 39
(16 ) 94.6 104.6 (10.0 ) (10 )
17 2,107.2 1,753.7 353.5 20
93 $ 1,346.2 $ 702.7 $ 643.5 92
82 $ 1,136.8 $ 610.0 $ 526.8 86
67 $ 726.8 $ 44518 5 281.0 63
64 $ 2.30 $ 1-43 $ 0.87 61
63 - $ 2.25 $ 1.40 $ 0.65 61
With continuing strong market conditions for all three nutrients, third-quarter earnings of $0.75 per share ($243.1 million) were 63 percent higher than last years third quarter. These earnings were the
second highest quarterly total in the company's history, surpassed only by those earned in the second quarter of 2007. Earnings for the first nine months of 2007 reached $726.8 million ($2.25 per
share), a 63-percent increase over the first nine months of last year and higher than the full-year 2006 total of $631.8 million. This reflects the continuing long-term growth of global fertilizer markets
and our ability to deliver on strategies set years ago. We are now benefiting from rapidly growing economies in the developing world which increases the demand for crops used in food, animal feed,
fiber and fuel.
Gross margin of $475.1 million was a third-quarter record, up from S245.8 million in the same period last year. Gross margin of $1,346.2 million in the first nine months of 2007 almost doubled that for
the same period in 2006, and now exceeds our previous full-year gross margin record of S1, 125.0 million set in 2005: The combination of rising global population, higher incomes and increased
protein consumption in many countries continues to propel strong demand for agricultural commodities, pushing prices for many key crops to record levels. Against this backdrop, the world's stocks-
to-use ratio for wheat and coarse grains declined in the quarter to 14.6 percent, the lowest level ever recorded by the United States Department of Agriculture ("USDA"). Together, these conditions
provide farmers in all regions with the foundation for vastly improved profitability. They are therefore motivated to increase plantings and invest in fertilizer to maximize yields, continuing the strong
demand for nitrogen, phosphate and potash. With good growing conditions in the summer and excellent fall weather in the United States, the USDA predicted that the corn crop currently being
harvested will be a record. That crop removed significant levels of nutrients from the soil, necessitating increased fertilization for future production. US dealer inventories for all three nutrients were
depleted during the second quarter and many customers began restocking in the third quarter, if and where product was available. North American producer inventories remained thin at the end of
the quarter. More acreage has already been dedicated to winter wheat plantings, strongly kicking off the US fall fertilizer season.
Potash gross margin rose to 52241.3 million from $153.6 million in the same period last year and was the second highest quarterly total in our history. The improvement is largely a reflection of higher
prices, although total volumes increased slightly over the levels of last years third quarter when China and India were purchasing heavily to catch up on shortfalls caused by extended price
negotiations. Potash gross margin for the first nine months of 2007 climbed to 5655.9 million, up from $3772 million in the first nine months of last year and approaching our full-year record potash
gross margin of 5707.4 million in 2005. North American realized potash prices contributed to this result, improving by 20 percent (S33 per tonne) quarter over quarter. Third-quarter nitrogen gross
margin of $123.9 million was almost double the $62.4 million in the same period last year and raised our total for the first nine months of 2007 to S3994 million, surpassing the record full-year gross
margin of $318-7 million set in 2005. Higher prices and continuing strong demand resulted in record phosphate gross margin of $129.9 million for the quarter, compared to 529.8 million in the year-
earlier period. This raised our phosphate gross margin to $290.9 million for the first nine months of 2007.
Table of Contents
Selling and administrative expenses for the third quarter and fie first nine months of 2007 were S8.0 million higher than in the same quarter last year and $43.4 million higher than the first nine
'kff-•/Mi?fro 1,-,--/-/(1"71107/. +1n -L+-.,..1 I - ,. -
Summary of POTASH CORP OF SASKATCHEWAN INC -.Yahoo! Finance Page 4 of 4
months of 2006, respectively, due primarily to higher incentive planaccruals related to share price appreciation and stronger results quarter over quarter and year over year. Provincial mining and
other taxes increased 126 percent quarter over quarter and 131 percent year over year, as potash profit per tonne and potash sales volumes increased substantially compared to the same periods
last year. The strengthening of the Canadian dollar at September 30, 2007 compared to year-end 2006 and June 30, 2007 had a negative impact on earnings as it contributed to a primarily non-cash
foreign-exchange loss of $25.9 million for the third quarter and $67.4 million for the first nine months of 2007. This compares to gains of S4.7 million in the third quarter of 2006 and losses of $9.2
million in the first nine months of 2006. Other income increased significantly as our investments in Israel Chemicals Ltd. Arab Potash Company Limited ("APC") and Sociedad Ouimica y
Minera de Chile ("SOM") contributed $24.2 million during the three months ended September 30, 2007 and, along with Sinofert Holdings Limited ("Sinofert"). contributed 5105.7 million during the first
nine months of the year, 23 percent higher than the amount earned in the third quarter of 2006 and 76 percent higher than the amount earned in the first nine months of last year.
Our consolidated reported income tax rate for the three months ended September 30, 2007 was 36 percent as compared to 27 percent in the same period or last year. For the three and nine months
ended September 30, 2007, the consolidated effective income tax rate was 33 percent (2006 - 3D percent). Canadian federal and provincial income tax rate reductions and income tax recoveries
contributed $6.6 million to earnings during the third quarter of 2006 and $67.2 million for the first nine months of 2006, significantly higher than the $4.7 million recorded during the first nine months of
2007, none of which impacted the third quarter. Further, the 2007 annual consolidated effective income tax rate was increased from 30 percent to 33 percent during the third quarter of 2007, largely
as a result of the increasing proportion of consolidated income earned in higher-tax jurisdictions,
Balance Sheet
Effective January 1, 2007 the company adopted new accounting standards for financial instruments and hedging activities on a prospective basis; accordingly comparative amounts for prior periods
have not been restated. The new standards had the following impact on the company's Consolidated Statements of Financial Position as of September 30, 2007:
• The fair value of available-for-sale investments are recorded as assets on the Consolidated Statements of Financial Position. The company has classified its investments in ICL and Sinofert as
available-for-sale and therefore has recorded these investments at their fair value, resulting in a balance of unrealized holding gains in investments of $1,752.5 million, accumulated other,
comprehensive income of $1,590.3 million and future income tax liability of $1622 million as of September 30, 2007. The total balance recorded in investments related to ICL and Sinofert as of
September 30, 2007 was $2,143.9 million. In previous periods these investments had been recorded at cost which, as of December 31, 2006 and September 30, 2007, was $167.7 million for ICL and
$223.7 million for Sinofert
• Derivative instruments are generally recorded on the Consolidated Statements of Financial Position at fair value. At September 30, 2007, the fair value of the company's derivative instrument assets
represented a current asset of $41.4 million and a long-tens asset of $73.5 million. Of the total, $104.4 million related to natural gas swap, option and physical gas purchase cont racts, with $103.6
million of the swap contracts designated as accounting hedges; $10.5 million related to foreign currency forward contracts. As of December 31, 2006, no such derivative instrument assets were
recorded on the balance sheet As of September 30, 2007, the current portion of derivative instrument liabilities of $0.6 million related to natural gas futures contracts was included in accounts
payable and accrued charges and S1.0 million was included in other long-term Liabilities. Gains of $62.0 million on the contracts designated as accounting hedges have been recognized in
accumulated other comprehensive income, net of income taxes, as of September 30, 2007, to the extent those hedges are effective; ineffectiveness of $0.9 million arising from January 1 to
September 30, 2007 has been recognized through net income, including-a net reduction to the total of $0.3 million recognized during the third quarter. The future income tax liability associated with
these instrumeris was $40.1 million. Net realized and unrealized gains recognized in netincome on physical gas purchase contracts and options not qualifying for hedge accounting arising from
January 1 to September 30,
Table of Contents
2007 were insignificant; no amounts were recorded in net income during the first nine months of 2006. Hedge ineffectiveness existing on derivative instruments as of January 1, 2007 was recorded as
a cumulative effect adjustment to opening retained earnings, net of income tax, resulting in an increase in retained earnings of $0.2 million and a decrease in accumulated other comprehensive
income of $0.2 million, '
• Bond issue costs were reclassified from other assets to long-term debt and deferred swap gains were reclassified from other non-current liabilities to long-tern debt, resulting in a reduction in other
assets of S23.9 million, a reduction in other non-curent liabilities of $6.6 million and a reduction in long-tern debt of $17.3 million at January 1, 2007. These costs are amortized using the effective
interest rate method, and will continue to be amortized over the term of the related liability. As of September 30, 2007, unamortized bond issue costs decreased long-tern debt by $25.0 million while.
unamorfized deferred swap gains increased long-term debt by $5.6 million.
During the third quarter of 2007, the company recorded investments in auction rate securities in other short-term investments, which it classified as available-for-sale. As of September 30, 2007, the
balance recorded in other short-term investments was $112.5 million (face value $132.5 million), resulting in a balance of unrealized holding losses in other short-term investments of $20.0 million
and accumulated other comprehensive income reduction of $13.4 million, after income taxes. The unrealized loss represents the company's ...
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1_- . -fL.. -1,-- ,,,,_ /_If)-71 1 r)7 /--f1 0 „ 1,+_1 1?/770007
Exhibit E

ti -:s
---------------- ? C?'.aL.J __C/LTZr.L-`--? ?a ??dL-?-------- - A---- - -
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i

Exhibit F
624 Sugar Lake Road
Pittsboro, NC 27312
December 28, 2007
US Army Corps of Engineers
Wilmington District, Regulatory Division
Attn: File Number 2001-10096
P.C. Box 1890
Wilmington, NC 28402-1890
Re: PCS Phosphate Permit Request and Supplemental DEIS
To Whom It May Concern:
Having perused and contemplated both the DEIS and the Supplemental DEIS pertaining to the
request by PCS Phosphate to expand their mining operation, I have significant concerns over the
methods used and many of the conclusions drawn in the attempts to assess the economic
practicability of the various alternatives. Many of these issues are explored in greater detail
subsequent sections 2 through 5, but the crux of the matter is laid out below.
The original "full-cost" analysis in the DEIS suffered from three important shortcomings. First,
the analysis was truncated at 15 years, which is wholly inadequate when several of the alternatives
exceed 40 years in length. This failure appears to be both arbitaryand capricious, and must be
remedied. Second, as noted in the SDEIS, the analysis applied Generally-Accepted Accounting
Principles in "spreading out the overhead;" GAAP are designed more for transparency and ease
of consistent use than they are to present a true economic picture of long-term projects with high
levels of discrete (as opposed to continual) fixed costs. It is rightly pointed out in the SDEIS
that financial analysts much prefer to use actual cash flows rather than accounting measures of
non-cash charges such as depreciation. But it must be done correctly, in a way that takes proper
economic notice of the opp'oitunity cost of invested capital. So, the third major shortcoming of
the prior analysis was the failure to use discounted values, so that conclusions could be properly
and defensibly drawn on the basis of Net Present Values.
The new analysis in the SDEIS corrects only one of these errors, by shifting from accounting
costs to predicted cash costs. Before any conclusions can be drawn regarding the economic
practicability of the alternatives, the other two errors must be corrected: each alternative must be
analyzed on the basis of all of its cash costs over its full life; and, all of these cash flows must be
discounted at an appropriate discount rate, so as to accurately reflect the time-value of invested
Page 1
capital. In short, this is a near-textbook example of the tools of Capital Budgeting. As they say
in the trade, such analysis is straightfoiward, but certainly not trivial. But, the most difficult part
is the estimation of cash flows, which has already been done with great apparent precision. All
that remains is to do the arithmetic, and then maize comparisons, and try to draw some
conclusions.
The data recently released pursuant to the FOIA request now enable more valid analysis of some,
but not all, of the alternatives.' Several examples of this complete, discounted cash cost analysis
are performed and presented in subsequent sections of this letter. Given the necessity and the
very conventional nature of the analysis, I have little doubt it has already been performed
internally by the applicant for all of the alternatives, even 4 the results thereof have not been
shared. The applicant could easily supply those results to the Corps and to the public.
Alternatively, 4 they could generate the full-length cash-cost estimates for all of the alternatives,
in machine-readable form, the analysis is fairly simple to program and perform, as I have done
with Altern atives L, SCRA, SJAA, and DLlB.
The result of doing the analysis on a full-length, appropriately-discounted cash flow basis is that
these alternatives appear far more similar in cost than is readily apparent using either the prior
"full-cost" analysis, or the arbitrarily-truncated, non-discounted versions of the cash cost analysis.
Alternatives L, SCRA, SJAA are essentially indistinguishable in terms of discounted cash cost; if
any one of these is economically practicable, then all three of them are economically practicable.
DLIB shows costs that are about 6.5% higher than the group just mentioned; given the national,
state, and local significance of the natural resources and ecosystem functions that would be
irreparably destroyed by other alternatives, an objective observer would lilzely conclude that this,
too, is well within the realm of economic practicability. And were the full and correct analysis to
be applied to all of the various altern atives (including the No Action alternative), those
alternatives might enter the feasible set as well. These conclusions would be valid absent any
consideration of current market realities. However, if market conditions are allowed any weight
whatsover, the feasible set is likely to expand significantly.
In short, then, the data currently available to the public provide no sound basis for the conclusion
that the less-environmentally-damaging alternatives are not practicable. I therefore urge that (1)
no official conclusions or decisions be based upon the data that have so far been made public, and
(2) that the full-length cash-cost data be provided for ALL alternatives; (3) that the practicability
assessment in the final EIS be based on Net Present Value treatment of these costs; and (4) that
the current and likely future conditions in the applicant's product markets play an explicit role in
'These data should have been included in the DEIS and/or SDEIS, and it is imperative
that they be distributed prior to completion of the Final EIS; as well as being included in that
document.
Page 2
the analysis conducted and the conclusions drawn.
2. Net Present Value Analyis
As discussed above, and as discussed at length in the Capital Budgeting chapters of any modern
text in Financial Management, the appropriate method for evaluating, comparing, and choosing
among long term business projects is to calculate and assess each project's Net Present Value
(NPV), which is the sum of all the appropriately-discounted cash lows over the entire life of the
projects. Difficulties definitely arise when the projects have different lifespans, and those are best
dealt with by including both costs AND revenues in the analysis. Even in a case such as this one,
where the revenue patterns are assumed to differ only in their length, the inclusion of revenues in
the comparison is important. An im.perfect yet reasonable second-best solution is to rely on
paimise comparisons of alternatives, using the lifespan of whichever member of the pair is
shorter. The longer, and more similar are the lifespans, the more reasonable this approximation
becomes, as the omitted portion for the longer project becomes both smaller (relative to the
whole), and much more distant, so that its Present Value is smaller. As noted previously, this
can be done for several of the alternatives under consideration using the data that have finally
entered the public domain in the last few weeks. Examples are presented below.
The comparisons below were performed as follows: the "actual cash-cost" data were taken either
directly from the spreadsheets distributed by the applicant prior to the S DEIS (for Alternative
L), or entered manually from the exceedingly-fine print on the PDP printouts of other
spreadsheets (Alternatives SCRA, SJAA, & DUB).' Cash cost entries were then discounted and
summed for each alternative. Sensitivity analysis was then conducted, by repeating the above.
process for each alternative evaluated, using a range of different discount rates. In contrast to
many such analyses one might perform, these data are not particularly sensitive to the discount
rate chosen (as will be shown) meaning that the particular choice of discount rate is a matter of
no great concern in drawing qualitative conclusions. Changing the discount rate alters the totals,
of course, but has comparatively small impact on the differences between the paired alternatives.
Costs differences between alternatives are displayed as absolute values, and the % difference is
calculated using the median of the two figures as the denominator. Results for these paired
alternatives are displayed below. In these tables, the entry labelled "years" refers to the number of
years of cash costs that are used in the comparison, rather than the years of actual production.
`Manual data entries have been checked multiple times for accuracy, some minor data-
entry errors may persist.
Page 3
Tables la and 1b: L vs SCRA
Cash-Cost Comparison la:
L vs SCRA ($ x 1000)
discount rate: 8%
.Years: 39
cost NPV for L cost NPV for SCRA difference % difference
1,307,965 1,314,405 6,440 .0049 or 0.49%
Cash-Cost Comparison lb:
L vs SCRA ($ x 1000)
discount rate: 4%
years: 39
cost NPV for L cost NPV for SCRA difference % difference
2,234,015 2,249,208 15,194 .0068 or 0.68%
The differences in the Net Present Values of the cash costs are less then seven-tenths of I% over
39 years. (This is the TOTAL difference, it is NOT an annual figure.) If L is economically
practicable, as it certainly appears to be, then SCRA must be deemed practicable as well.
Page 4
Tables 2a and 2b: L vs SJAA
Cash-Cost Comparison 2a:
L vs SJAA ($ X 1000)
discount rate: 8%
years: 44
cost NPV for L cost NPV for SJAA difference % difference
1,334,257 1,337,814 3,557 .0027 or 0.27%
Cash-Cost Comparison 2b:
L vs SJAA ($ X 1000)
discount rate: 4%
years: 44
cost NPV for L cost NPV for SJAA difference % difference
2,361,274 2,369,328 7,954 .0034 or 0.34%
The differences for this pair are even smaller, less than four-tenths of 1 per cent. (This is the
TOTAL difference, it is NOT an annual figure.) The essential qualitative conclusion appears
the same here as well. If the NPV of the difference among the costs is less than four-tenths of
1% over a 44 year period, if L is economically practicable, as it certainly appears to be, then
SJAA must be deemed practicable as well.
Page 5
Tables 3a and 3b: L vs DL1B
Casb-Cost Comparison 3a:
L vs DL1B ($ x 1000)
discount rate: 8%
years: 34
cost NPV for L cost NPV for DL1B difference % difference
1,266,590 1,351,262 84,671 .0647 or 6.47%
Cash-Cost Comparison 3b:
Lvs DL1B ($ x 1000)
discount rate: 4%
years: 34
cost NPV for L cost NPV for DL1B difference % difference
2,067,653 2,203,063 1351410 .0634 or 6.34%
The differences for this pair are larger than for the two foregoing pairs, and necessitate a different
conclusion: DUB is significantly more costly than L. Is that difference large enough to remove
it from the realm of practicability? To my knowledge, no standard has ever been established as to
how large a cost increase can be absorbed before the conclusion of practicability is altered.
Lacking such a bright-line standard, hoar might we put these costs in perspective? According to
PCS' most recent Quarterly Report, during the first 9 months of 2007 the rock costs at Aurora
increased by 3% over 2006; yet, despite that increase, the Phosphate division's 'gross margin' was
about $291 million, which amount represented "155 percent of the 2007 annual target." Tbis
implies an annual target of about $188 million. Fertilizer business is seasonal, but during the
last two years, the fourth quarter has produced an average of 25% of their net income. If that
pattern holds, a reasonable forecast for that 'gross margin' in phosphates would be $388 million
for the year. So, this year may create gross profits exceeding their own targets by about $200
million. This is easily enough, from this year alone, to 'absorb' the ALL of the costs created by
their duty to undertake the duty of maintaining aquatic and terrestrial resources of national,
Page 6
state, and local significance for future generations. Therefore, Alternative DLIB is economically
practicable.
It is essential to conduct similar analysis of the discounted cash costs for ALL of the alternatives,
including the No Action alternative. It is therefore imperative that the full-hfe "cash cost" data
be provided to the public for ALL of the alternatives, so that observers may perform their own
analyses rather than relying on the applicant's interpretation, prior to any permanent conclusions
being reached regarding the practicability of any/all of the alternatives. It is recommended that
another Supplemental DEIS be issued, containing (a) full-life cash cost data for all of the
alternatives; (b) full-life, discounted cash cost analysis for all of the alternatives; and (c)
assessment of economic practicability based upon these figures, rather than upon either the prior
"full-cost" analysis, or the arbitrarily-truncated, non-discounted cash cost analysis that is at best
in completely presented in the current SDEIS.
3. Costs, Revenues, Profits
The statutes, regulations, and Agency Guidance are all very careful to refer to practicability rather
than profitability. If one examines the legislative and regulatory history, one finds two
motivations fox this omission. The simple one is the desire to create standards that would apply
to non-profit organizations and agencies as well as the private sector; this issue is of no concern
here. The more complex motivation was the desire to avoid the difficult and divisive task of
determining the appropriate level of profit. Neither Corps nor courts are well-equipped to
conduct the equivalent of a public utility rate hearing, in which allowable costs and appropriate
rate of returns of capital are determined.
But as a practical matter in the real world, this is fagade. In the private sector of profit-seeking
business firms, "economically practicable" can have no other meaning than "profitable." All
concerned know this, notwithstanding the fact that it is rarely acknowledged in explicit terms.
But on occasion, one may find such explicit acknowledgment. For example, in their letter of
February 2, 2007, the applicant asks for consideration of "the following information... relevant
to the appropriate determination of practicability." Included on that list are "historical
operating income performance data" and "`PotashCorp guidelines for business unit
performance." Unquestionably, from the applicant's perspective, practicability is necessarily a
matter of profitability.
Page 7
And the Corps seems to agree. In a note dated June 20, 2007, the Corps suggests that in
malting the practicability assessment:
we would need to look at:
1) PCS's recent historic costs
2) PCs's recent operating income
3) The condition and trend in the DAP/MAP market
4) PCs's reliance on the DAP/MAP market as demonstrated by
theirsales distribution byproduct, Gross Margin byproduct,
etc.
"This is much the same approach we have taken in the DEIS in
determining practicability."
if we now do as the applicant and the Coi-pf have suggested, that is, if we examine both the
operating income data and the company's own performance guidelines, we gain insight into the
true degree of practicability that now exists. As discussed in various annual (2006) and quarterly
reports, the applicant set a goal of reducing their mining costs for phosphate. rock at Aurora by
1% during 2007. During the first nine months of 2007, as discussed on page 28 of their most
recent form 10-Q, filed 11/7/07; just the opposite occurred. Applicant states:
"Rock costs at Aurora increased 3 percent and White Springs increased 1
percent during the first nine months of 2007 compared to the 2006 annual
average."
Given the stated objective, then, rock costs were actually 4% above the target level. As a
consequence, anon-expert's understanding of the relationship between rock costs and profits in
the phosphate division would therefore lead to the expectation that profits would be down, and
that the company would likely be falling short of their own "guidelines for business unit
performance."
Not so. Page 29 of the same statement informs us:
"Phosphate gross margin was $290.9 million, up 216 percent for the first nine
months of 2007 compared to the corresponding period in 2006. This nine-month
gross margin represents 155 percent of the 2007 annual target."
Working backwards, the above indicates that the target was about $188 million. During the last
two years, about 25% of earnings have come in the fourth quarter of the year. Using that
proportion to extrapolate, a reasonable forecast of the 2007 "phosphate gross margin" would be
about $388 million, thereby leaving a windfall of about $200 million over and above the
company's own explicitly-stated tarcets, despite the increase in rock costs. Even if the
whole world forgot about ethanol tomorrow, and the fertilizer and animal-feed businesses retuned
Page 8
to their `normal' pre-2007 conditions, trends, and trajectories, the 2007 windfall is more than
enough to malee practicable ANY of the alternatives evaluated thus far on a full-life, discounted
cash flow basis. Recall from the previous section that even at a discount rate of 4%, the Net
Present Value of the cost increases attributable to DL1B amounted to $135 million. The
company could set aside a reserve out of current profit that would cover these additional costs, be
done with it (financially) FOREVER; and still have profits that exceeded their own profit target
for this year by $65 million (about 35%) and leaving no further additional costs to be borne for
the remainder of the mine's life.
Stockholders would object, of course, especially those who have recently been paying over $140
per share, for a stock that (adjusted for splits & dividends) sold for $10 in December of 2002.
That produces a Compound Average Annual Rate of Return of about 70% per year over the last
five years. Yes, there are risks in their business, but the sharebolders have been amply rewarded. 3
Consider also the following data for the company as a whole, not just the Phosphate operations.
Although the FY2007 data are not yet available, for the 12 months ending in September of
2007, the following "Trailing-Twelve-Months" data can be found at any of several financial
websites:4
gross profit: $1.0 billion
operating cash flow: $1.5 billion
operating margin: 31%
return on equity: 24%
When the "practicability" analysis for the EIS was initiated, it was assumed that there would be
no fundamental alteration of market conditions for the applicant's phosphate-derived products.
Unquestionably, in the last two years, those markets have changed in extraordinary ways, and
profits and profitability have reached extraordinary levels.
3Also amply-rewarded were the five "Key Executives," arbo cashed in some $32 million in
stock options in 2006, as the stock price increased by about 80%. One can only speculate. as to
how much better they've done during 2007, as the stock has increased nearly 200%. We'll know
in January or February 2008, when the next annual ti's quarterly reports are filed.
4For example, http://finance.yahoo.com/q/?s?s=POT
Page '9
That which may have not been practicable a few years ago, is quite clearly practicable now. To
choose to ignore those changes would be arbitrary, capricious, and irresponsible. Yet, the
applicant has recently' encouraged exactly that type of myopia:
TCS continues to encourage the Corps and EPAto focus on cost
comparisons of alternatives. Evaluations of profitability, or factors that
correlate to profitability, are not approprate in this process."
This position is both a complete reversal of their position of only four months earlier, and it is
preposterous.
4. Conclusions
Prior attempts to assess the economic practicability of the various-alternatives is
significantly flawed, and in important ways both misleading and incorrect. The
truncation to either 15 or 20 years is arbitrary, unreasonable, and inadequate. So, too, is
the failure to consider the timing of the costs, and the opportunity cost of invested capital.
Look purely at costs, a much-improved analysis can be conducted by applying the
fundamental techniques and tools of Capital Budgeting. In particular, the costs should be
assessed via calculation of Net Present Values of the predicted cash costs over the full
productive life of each of the alternatives. As shown here for the small set of alternatives
for which such data have recently been provided pursuant to a FOIA request, but not
previously available, the cost differences are much smaller than had been apparent from
prior analyses. Several of the alternatives (L, SCRA, SJAA) are virtually
indistinguishable on the basis of cost, and all of the alternatives thus far assessed in this
way (including DUB and S33AP) appear to be economically practicable.
Full-life cash-cost data must be made available for all of the alternatives, and similar
analyses must be conducted, before valid conclusions regarding practicability can be
reached.
Cost factors alone are inadequate to any meaningful determination of economic
practicability. As has been done in the past, and as the applicant has urged as recently as
eerily 2007, consideration must be given to current market conditions for the final ..
products, and consideration must be given to reasonable and realistic forecasts of future
conditions in those markets, and consideration must be given to not just to costs but to
prices, revenues, costs, profits, and rates of return on prior invested capital. It is absurd
'Letter to USACE, dated June 18, 2007.
P age 10
1 .
to conduct the analysis under the assumption that market conditions of two (or more)
years ago have not changed and will not ever change. They have changed, they will
continue to change. It is absurd to ignore current and probable future levels of
profitability in attempting to assess economic practicability. As both the DEIS and the
SDEIS have failed to apply rational and realistic judgment in these areas, these
statements are inadequate as written and presented. The information in the DEIS and in
the SDEIS fails to show that any of the alternatives are impracticable in economic terms,
given current market conditions and likely future market conditions.
The DEIS and SDEIS have failed to demonstrate the economic impracticability of any
of the alternatives. Even the No Action Alternative must be deemed practicable on the
basis of the information currently in the public's hands. Therefore, the only action
supported by the DEIS and SDEIS as currently written and presented would be denial of
any/all permits for actions that would result in the destruction of wetlands and/or the
degradation of significant natural aquatic and terrestrial resources.
Thank you very much for the opportunity to present these comments on these extremely
important matters, and thank you for giving them your full consideration.
These comments are entirely my own professional judgments, and do not reflect any judgments or
conclusions reached by my employer, Meredith College.
Respectfully submitted,
Douglas J_'Wakeman, Ph.D.
Professor of Economics
School of Business, Meredith College
Raleigh, NC 27607
919-760-8482 //,wak,[e-mail]
624 Sugar Labe Road
Pittsboro, NC 27312
919-542-7414 // [e-mail]
attachments: NPV comparisons: L vs S CRA, L vs SJkk L vs DLI B
Page II
Exhibit G
Walker, William T SAW
From: [e-mail]
Sent: Monday, June 18, 2007 2:51 PM
To: Walker, William T SAW
Subject: Re: Alt L reopeners - PCS Phosphate initial review
Tom
PCS Phosphate provides the following initial comments related to the potential of "re-
opener" provisions being contemplated by the Corps. our initial review and comment should
not be considered as a final evaluation or a final position. We are interested in
continued discussion about this concept.
1) Truthing of the economic model -
The current version of the cost model appears to be robust, detailed,
and accurate. Comparisons of actual historical costs to the model
results have shown good correlation. Evaluation of the cost model at
some time in the future will require comparing actual annual mining
block boundaries to the projected annual mining blocks (the actual
mining.block boundary will differ from the projected block boundaries
in the mine plan due to variations in production requirements,
recoveries, unscheduled down time and turnarounds). Adjustments for
changes m accounting practices or unique ("one-time") events may
also be identified during a re-opener evaluation. Assuming that
provisions are made for such adjustments, then the existing cost
model should perform well during a future true-up evaluation.
A definition of "sufficient deviation" should be provided for review
and comment.
2) Review of the national average reported by USGS and TFI -
As noted in DEIS Section 2.7.2, the USGS Annual Minerals Commodities
Summary reports an average price per ton of phosphate rock. Any
future re-opener provision related to this topic should provide
assurance that rock costs (not sales prices) are evaluated and that
the same units and P205 concentration are normalized prior to
comparisons. Influences of non-domestic rock suppliers (Morocco,
etc.) also may need to be considered.
Rock cost at PCS-Aurora is a significant contributor to the overall
cost of products produced. Other raw material inputs (ammonia,
sulfur, etc.) and energy are also significant contributors to product
costs. Consideration of these costs may be appropriate during a
re-opener evaluation.
3) Review of DAP/MAP market trends -
As noted in DEIS Section 2.7.3, the 2D04 USGS Minerals Yearbook
provides information about phosphate fertilizer production projects
in China and Saudi Arabia that will likely have a significant affect
on market fundamentals. Current information continues to support
this projection.
PCS continues to encourage the Corps and EPA to focus on cost
comparisons of alternatives. Evaluations of profitability, or
factors that correlate to profitability, are not appropriate in this
process.
1
Exhibit H
NONRIVERLNE WET HARDWOOD FORESTS IN NORTH CAROLINA
STATUS AND TRENDS
Michael P. Schafale, North Carolina Natural Heritage Program
March 1999
INTRODUCTION
Nonriverine Wet Hardwood Forests are among the most threatened of North Carolina's natural
communities, and in some ways among the least well known. Also called oak flats, they were
once widespread in the outer Coastal Plain of northeastern North Carolina, but were long ago
reduced to a small fraction of their presettlement abundance. Today few citizens of North
Carolina have knowingly seen and appreciated this part of the state's natural heritage.
Definition and Description
Nonriverine Wet Hardwood Forests, as defined in Schafale and Weakley (1990), are wetland
forests of poorly drained, mineral soils on broad interstream flats. They correspond to the
Quercus michauxii-Quercus pagoda/Clethra alnifolia-Leucothoe axillaris Forest and Quercus
laurifolia-Nyssa Mora Forest associations of the Nature Conservancy's vegetation classification
(Weakley, et al. 1998). They would be classified as type 91, Swamp Chestnut Oak-Cherrybark
Oak in the Society of American Foresters system, along with the more common bottomland
hardwoods along rivers (Eyre 1980).
Nonriverine Wet Hardwood Forests are naturally dominated by some of the same trees as.
bottomland hardwood forests along large brownwater rivers: sweetgum (Liquidambar
styraciflua), swamp chestnut oak (Quercus michauxii), laurel oak (Quercus laurifolia),
cherrybark oak (Quercus pagoda), water oak (Quercus nigra), loblolly pine (P'nus taeda), red
maple (Acer rubrum), and tulip poplar (Liriodendron tulipifera). The understory, shrub, and
herb layers consist primarily of plants shared with black-water river floodplains or with pocosins
and nonriverine swamp forests, though some are also shared with brownwater rivers. The most
typical understory trees are red bay (Persea palustris), red maple (Acer rubrum), and ironwood
(Carpinus caroliniana). Common shrubs are sweet pepperbush (Clethra aln folia), evergreen
dog hobble (Leucothoe axillaris), and cane (Arundinaria gigantea ssp. tecta). The dominant
herbs are netted chain fern (Woodwardia areolata), Virginia chain fem (Woodwardia_ virginica),
and royal fern (Osmunda regalis). Peat moss (Sphagnum spp.) is usually present in small
amounts.
Animals include widespread species such as white-tailed deer, black bear, and gray squirrel. The
large oak component makes Nonriverine Wet Hardwood Forests potentially excellent habitat for
wild turkeys. The multi-layered structure characteristic of mature Nonriverine Wet Hardwood
Forests supports high densities and diversities of neotropical migrant birds such as wood thrush,
ovenbird, Swainson's warbler, worm-eating warbler, prothonotary warbler, hooded warbler, and
white-breasted nuthatch. In the outer Coastal Plain, where large river floodplains with
bottomland hardwoods are absent, the once-extensive Nonriverine Wet Hardwood Forests may
have once supported much larger populations of these species than now occur in this region.
Invertebrates of these communities have not been studied, but it is likely that a suite of insects
specialized to feed on oaks and a suite of soil organisms adapted to the unique hydrological
conditions are present.
In contrast to bottomland hardwood forests along rivers, wetland conditions in Nonriverine Wet
Hardwood Forests are caused by the limited runoff of rainfall, due to flatness and natural
absence of streams. Rheinhardt and Rheinhardt (1998a) found that soil drainage class in this
type did not correlate with soil texture as is common in many places, but was more subject to
topography and landscape position. The soil is generally saturated or flooded with a few inches
of water through most winters and well into the early summer, and the lower soil probably
remains moist through most summers. The water never gets as deep as it may be in river
floodplains, but the soil undoubtedly stays saturated longer than in bottomland hardwoods.
Furthermore, no additional nutrients are brought in by flowing water, and aquatic animals cannot
move in from the river during flooded times. Thus, debris processing and nutrient cycling are
likely very different from floodplain communities.
A number of other natural community types occur on wet nonriverine flats and share some
characteristics with the Nonriverine Wet Hardwood Forest type. Most similar are Nonriverine
Swamp Forests, which are wetter and lack oaks, but share many of the other plants. Mesic
Mixed Hardwood Forests contain some of the same tree species but are drier than Nonriverine
Wet Hardwood Forests and have beech (Fagus grandifolia) as a major component. Often the
centers of nonriverine flats are so wet that organic matter has accumulated, burying the mineral
soils. These patlands support either pocosin communities, Nonriverine Swamp Forests, or
Peatland Atlantic White Cedar Forests. Fires were an important part of the natural dynamics of
the pocosin and white cedar communities. Fire is believed to have been much less frequent in
Nonriverine Wet Hardwood Forests, due to the limited flammability of the leaf litter and lack of
continuous live fuel layers, but they certainly would have burned with low intensity surface fires
at times. Fire has not been believed to be important to Nonriverine Wet Hardwood Forests or
Nonriverine Swamp Forests, but Rheinhardt and Rheinhardt, (1998a) suggest it may play a
significant role in maintaining dominance of oaks over other hardwoods.
A typical natural landscape pattern on the largest nonriverine flats is a complex of peatland
communities in the center of the flat, with a fringe of Nonriverine Wet Hardwood Forest where
the peat gives way to wet mineral soils, then a band of upland communities on the gentle slopes
closer to the streams, then stream swamps and tidal swamps and marshes along the drainages.
On some of the smaller flats farther inland, no peat may be present, and Nonriverine Swamp
Forest and Nonriverine Wet Hardwood Forest on mineral soils may be in the center of the flat.
Because the easiest lands to drain and convert to other uses are the least wet and those close to
slopes, the Nonriverine Wet Hardwood Forests were generally among the first wetlands to be put
into agriculture and later intensive silviculture.
2
The primary range of Nonriverine Wet Hardwood Forests is northeastern North Carolina. They
range from Craven County north into the southeastern counties of Virginia. None are known
south of North Carolina or north of Chesapeake Bay. Although one example was known inland
nearly to Tarboro, the vast majority of acreage was, and is, on the outermost terrace of the
Coastal Plain, east of New Bern, Washington, and Plymouth.
The Nonriverine Wet Hardwood Forest community type corresponds to two associations in the
Nature Conservancy National Classification: Quercus michauxii-Quercus pagodalClethra
alnifolia-Leucothoe axillaris Forest and Quercus laurifolia-Nyssa bifloralClethra alnifolia-
Leucothoe axillaris Forest (Weakley et al. 1998). Its closest equivalent in the Society of
American Foresters cover type classification is type 91: Swamp Chestnut Oak-Cherrybark Oak, a
bottomland hardwood type (Eyre 1980).
Composition and Quality of Nonriverine Wet Hardwood Forests
Most early and more recent qualitative descriptions of Nonriverine Wet Hardwood Forests
describe them as being dominated by oaks. The only extensive quantitative study of Nonriverine
Wet Hardwood Forest composition is that recently completed by Rheinhardt and Rheinhardt
(1998b). They measured canopy and understory basal area and density in most of the known
remaining examples in North Carolina. In contrast to earlier qualitative descriptions, they found
essentially all stands dominated by sweetgum, red maple, or tulip poplar. Oaks were abundant,
but only in a few places were they codominant.
Sweetgum, red maple, and tulip poplar are, ecologically speaking, weedy species, producing
abundant, small, widely dispersed seeds, and able to take advantage of disturbance much more
readily than oaks. If is therefore likely that, although these native species have always been
present, they have increased in absolute and relative abundance as a result of logging. Thus,
.although the precise composition of the natural forests is not well known, examples with more
oak are believed to be closer to natural composition and therefore of higher natural quality. This-
belief is supported by the abundance of oak saplings in examples that contain a strong minority
of oak in the canopy, suggesting that over time without severe disturbance oaks will increase in
the forest. The presence and abundance of oaks therefore serves both as an indicator that a
community is a Nonriverine Wet Hardwood Forest rather than a Nonriverine Swamp Forest and
as an indicator of its natural quality. In the best remnants known, Rheinhardt and Rheinhardt
(1998a, 1998b) found oaks to be 1.2% to 50% of basal area and 1.5% to 42.9% of canopy stem
density. Given current conditions, examples with oaks comprising more than 10% of the basal
area or of the canopy cover should be considered good examples. They have the best potential to
recover to natural oak abundance in time, and are most likely to retain species associated with
oaks.
Observations of areas clearcut in recent years indicate that they almost always regenerate to the
weedy hardwoods or to loblolly pine, with essentially no oak component. Given the abundance
of weedy tree species and the scarcity of oaks in the landscapes where they once were abundant,
it is unlikely that oaks will ever again become abundant on these sites. Any species which are
dependent on oaks are presumably eliminated. Therefore, Nonriverine Wet Hardwood Forests
that are clearcut at present must be considered lost. Those that are selectively cut may be
expected to recover if a substantial amount of oak is left or if there are remnants adjacent.
Besides abundance of oaks in the canopy and understory, other indicators of quality in
Nonriverine Wet Hardwood Forests are canopy maturity, canopy age structure, extent, and
connection-to other natural communities. The most mature examples known have many trees
16-24 inches in diameter, with some exceeding 36 inches.- However, given the scarcity of these
communities, examples with trees averaging 12 inches in diameter are considered reasonably
mature. Even those with trees averaging 8 to 10 inches in diameter are significant if the canopy
composition is good and the example.is extensive. The natural canopy is believed to be uneven-
aged, with trees reproducing primarily in small to medium canopy gaps that formed periodically
from storms and possibly fires, and with old trees abundant. In no, remaining examples is this
structure well developed, but it can be expected to develop over time in the oldest examples.
Examples with some canopy gaps containing oak saplings, or with large old trees that will form
canopy gaps in the near future, will have more of the characteristics of natural forests than those
with uniform younger canopies. Nonriverine Wet Hardwoods naturally occurred in large
patches, and some aspects of ecosystem function probably depend on large extent. Therefore, .
large examples are more likely viable and are more significant than small examples.
CURRENT STATUS OF NONRMRINE WET HARDWOOD FORESTS
Methods
The study by Rheinhardt and Rheinhardt (1998b) allowed thorough updating of the Natural
Heritage Program database for Nonriverine Wet Hardwood Forest, creating a good picture of the
amount and condition of the remnants in North Carolina. They attempted to sample every
known example, and examined aerial photos and consulted with foresters to determine the status
of examples they were not allowed to visit. The Natural Heritage database was updated from
their acreage figures and sample data, examples found to be destroyed were removed, and
quality ratings of the occurrences were updated. These ratings (EO ranks) are based on a
combination of condition and size, using the criteria described above. I reevaluated the
classification of the existing records, and reclassified a couple that had been called Nonriverine
Wet Hardwood Forest by mistake. In the few cases where Rheinhardt and Rheinhardt's report
did not give the condition of the site, I attempted to determine its status by personal
communication with them and by consulting aerial photos. Sites not confirmed to be destroyed
were assumed extant, possibly resulting in an overestimate of amount remaining. An
overestimate may also result in cases where Rheinhardt and Rheinhardt did not visit but were
forced to rely on aerial photos which were already several years old.
Results
Table 1 lists the known sites, and Map 1 shows their distribution. A total of 24 separate sites for
Nonriverine Wet Hardwood Forest communities are known to the Natural Heritage Program.
These occurrences total approximately 3870 acres. Of these, six sites have quality rankings of
A, six have rankings of B, eleven have rankings of C, and one is too little known to rank. Only
eight sites are 100 acres or larger. Only four exceed 500 acres, and only one, Scranton
Hardwoods, still seems to cover as much as 1000 acres. The greatest concentration of separate
4
remaining sites is in the counties north of Albemarle Sound, especially Currituck County.
However, the largest remaining acreage is in Hyde County, followed closely by Pamlico County.
Of the 24 sites, only three are under any kind of protective designation. All three are small, and
the three together total less than 100 acres. They include the. Gum Swamp special interest area
on Croatan National Forest, a small area on Great Dismal Swamp National Wildlife Refuge, and
one private tract. All three are on the state's Registry of Natural Heritage Areas, based on
voluntary protection agreements that are not legally binding. An additional site, Indiantown
Creek/North River Cypress Forest, is likely to be dedicated, a more permanent form of
protection. Two more examples are on state lands -- on Gull Rock Game Land and Tidewater
Research Station, but they do not have any designation that ensures their long term protection.
Indeed, the Tidewater Research Station occurrence was damaged within the last year by logging
operations occurring on adjacent state lands. No examples are owned by private conservation
groups. Even counting the public lands without protective designation, less than 6% of the
remaining total acreage is in any conservation status.
TRENDS IN NONRIVERINE WET HARDWOOD FOREST LOSS
Methods
While an impression of continued loss of the few remaining examples has been created by the
periodic discovery that a known example had been destroyed, it has been difficult to determine
trends more precisely. The best time for a snapshot of overall status to compare with the current
update is around 1990. Natural area inventories conducted as part of the Albemarle/Pamlico
Estuarine Study (Frost, Legrand, and Schneider 1990; LeGrand, Frost, and Fussell 1992) covered
all of the range of Nonriverine Wet Hardwood Forest .in North Carolina. Most of the field work
for these studies was conducted in 1989 and 1990. More of the known occurrences were found
during these studies than at any other single time. The occurrences were recorded in the Natural
Heritage Program database when the studies were completed, and some occurrences were visited
and the records updated over the years.
I reconstructed the status of Nonriverine Wet Hardwood Forest around 1990 by estimating
acreage for all the examples we have evidence of having existed at that time. This includes ones
still known to exist, ones known to have been destroyed since 1990, and a few discovered since
1990. Records that were thought to be Nonriverine Wet Hardwood Forest at the time and were
later determined to be other community types were not included. There are several potential
sources of error in this list, all leading to underestimation of the amount existing at that time and
therefore underestimation of the amount lost. Examples discovered after 1990 may have been
larger in size in 1990 than when they were discovered. In addition, some examples likely were
destroyed between 1990 and the present without ever becoming known to the Natural Heritage
Program.
To get an indication how much Nonriverine Wet Hardwood Forest may have once been present,
I analyzed digitized soil survey maps for two sample counties, Hyde and Currituck (USDA-
NRCS 1996 and 1997). Acreage of all soil series believed to support large areas of Nonriverine
Wet Hardwood Forest in the past was determined by GIS. The list of soils to include in the
acreage started with those series mapped under known remnant Nonriverine Wet Hardwood
Forest occurrences. Series were rated by the fraction of their acreage that probably supported
Nonriverine Wet Hardwood Forest, based on what communities they support in remnant natural
areas. Those that were rated low were those that appeared only once or twice and occurred more
often with other community types; these were not used in calculating acreage. The Nonriverine
Wet Hardwood Forests probably occur on inclusions within these map units or Nonriverine Wet
Hardwood Forests occur on these soils only in unusual circumstances. Additional series not
represented by remnants were added to the list if they were taxonomically very close to series on
the list and were not known to support other community types. This was particularly important
in Hyde County, where the soil survey was done more recently and used newly defined series
that could not be associated with remnants in other counties. Acreage totals were calculated for
high rated soils alone and for high and medium rated soils together. The former can be expected
to be a serious underestimate of the amount of Nonriverine Wet Hardwood Forest once present,
the latter an overestimate.
Results and Discussion
Based on the Albemarle/Pamlico Estuarine Study surveys and other information, a total of 29
sites are known to have existed around 1990, totaling about 8150 acres (Table 2). Of the 29
sites, five were completely destroyed or degraded beyond viability by 1998. An additional nine
had their acreage substantially reduced. Overall, at least 4275 acres of Nonriverine Wet
Hardwood Forest were lost, 52% of the amount documented as existing in 1990. An additional
three sites had selective cutting or other disturbance that reduced their natural quality. The
largest loss occurred in the counties north of Albemarle Solmd, where 2815 acres of this
community type were lost, 78% of the 1990 total for this region. However, major losses
occurred throughout the range. There has been a loss of the largest sites; of the four sites with
over 1000 acres in 1990, only one remained over 1000 acres in 1998.
Given the limitations of Natural Heritage inventories, some additional examples of Nonriverine
Wet Hardwood Forest probably remain undiscovered. During the eight years since 1990, four
new occurrences were found. These totaled 141 acres, with the largest being 90 acres. There is
therefore some hope that additional occurrences will be found, but these are unlikely to be
anywhere as large individually or in total as the sites now known.
The ultimate fate of land formerly supporting Nonriverine Wet Hardwood Forest was often not
clear in this study. Most sites that were lost had obviously been clearcut when viewed on aerial
photos or were reported to have been clearcut by county foresters. A few appeared to have been
developed or converted to cropland. Some were found to have been converted to pine
plantations. It is likely that many of the other clearcut sites were also converted to pine
plantation after the aerial photo was taken. Clearcut sites that are not converted can be expected
to regenerate to weedy hardwoods or pine and are unlikely to recover to their previous
composition.
6
Soil series used in estimating past abundance of Nonriverine Wet Hardwood Forest are listed in
Table 3. Six were rated as high (primarily supporting Nonriverine Wet Hardwood Forest) and
three as medium (supporting extensive Nonriverine Wet Hardwood Forest but also probably
supporting substantial amounts of other communities). Acreage of these series is given in Table
4. Based on these estimates, Hyde County had between 34961 and 50586 acres of Nonriverine
Wet Hardwood Forest. Currituck County had 15317 to 43941 acres. The most extensive of the
medium-rated series, Roanoke, probably supported Nonriverine Wet Hardwood Forest on a
majority of its acreage, but is also known to support significant amounts of Mesic Mixed
Hardwood Forest. It is likely that the true estimate, at least for Currituck County, is closer to the
higher figure. This is more difficult to evaluate for Hyde County, where substantial acreages of
soil series cannot be compared to other counties.
While there is high uncertainty in the estimates of original acreage based on soils, this analysis
shows the drastic loss of Nonriverine Wet Hardwood Forest. Currituck County alone, one of the
smallest counties in North Carolina, once had several times, perhaps ten times, as much
Nonriverine Wet Hardwood Forest as now remains in the whole state. Much of the loss occurred
long ago, as the most easily converted lands were put into agriculture or repeatedly logged.
However, recent losses are still proportionally high, with more than 50% of acreage lost in less
than a decade. While this study did not compare this rate of loss in recent times to other
community types, it appears to exceed that of virtually all other community types. In overall
portion lost from original extent, it is comparable to the losses of wet and mesic longleaf pine
savannas, and probably exceeds that of any other wetland community type. In percentage of
remaining examples unprotected and likely to be lost in the near future, it far exceeds longleaf
pine communities and virtually all other community types in the state. Unlike many wetland
community types, the recent trends show that the potential for activities that will destroy or
severely compromise the natural integrity of remnants remains high. By any measure,
Nonriverine Wet Hardwood Forests are among the most endangered natural community types in
North Carolina.
7
REFERENCES
Eyre, F.H., ed. 1980. Forest Cover Types of the United States and Canada. Soc. Am. For.
Washington, D.C. 148 pp.
Rheinhardt, M.C., and R.D. Rheinhardt. 1998a. Canopy and woody subcanopy composition of
wet hardwood flats in eastern North Carolina and southeastern Virginia.
Manuscript submitted to Journal of the Torrey Botanical .Society.
Rheinhardt, M.C., and R.D. Rheinhardt. 1998b. Canopy and Woody Subcanopy Composition of
Nonriverine Wet Hardwood Forests in Eastern North Carolina. Report to North
Carolina Natural Heritage Program.
Schafale, M.P., and A.S. Weakley. 1990. Classification of the Natural Communities of North
Carolina. Third Approximation. North Carolina Natural Heritage Program,
Division of Parks and Recreation.
U.S. Department of Agriculture-Natural Resources Conservation Service. 1996. Detailed
County Soils - Currituck County, North Carolina. Digital soil map. USDA-
NRCS, Raleigh, NC.
U.S. Department of Agriculture=Natural Resources Conservation Service. 1997. Detailed
County Soils -Hyde County, North Carolina. Digital soil map. USDA-NRCS,
Raleigh, NC.
Weakley, A.S., K.D. Patterson, S. Landaal, M. Pyne, and others, compilers. 1998. International
Classification of Ecological Communities: Terrestrial Vegetation of the
Southeastern United States. Working Draft of March 1998. The Nature Conservancy.
8
Table 1. Remaining Nonriverine Wet Hardwood Forest sites in North Carolina. EO ranks are
from the May 1998 Natural Heritage Program database. A is excellent, B very good, C fair, E
uncertain. Size figures are in acres.
site name county EO
ran
k size protection
Jackson Swamp Remnants Beaufort . AB 165
Roquist Pocosin Bertie AB 31
Whitehall Shores Hardwood Forest Camden C 100
Gum Swamp Bottornland Hardwoods Craven B 40 registered federal land, Forest Service special
interest area
Sea Gate Woods Craven C 85
Buckskin Creek/Great Swamp Currituck C 100
Lower Tull Creek Woods and Marsh Currituck C 30
Indiantown Creek/North River Cypress Forest Currituck A 48 state-owned, to be dedicated
Gibbs Woods/Tull Bay Marshes Currituck C 135
Troublesome Point/Gibbs Point Forests and
Marshes Currituck C 40
Great Dismal Swamp National Wildlife
Refuge Gates BC 5 registered federal land
Scranton Hardwood Forest Hyde A 1000
Gull Rock Game Land Hyde BC 20 state-owned
South Prong Natural Area Pamlico B? 35
Light Ground Pocosin Southeast Section Pamlico C 60
Merritt Hardwoods Pamlico A 900
Little Flatty Creek Forests Pasquotank C 40 registered private land
Big Flatty Creek Forests and Marshes Pasquotank E 300
Menzies Pond Perquimans B 20
Belvoir Carolina Bays and Flats Pitt C 34
Bethel/Grindle Hardwood Flats Pitt A 530
Lewis Point Swamp Forest Tyrrell C 15
Highway 99 Nonriverine Hardwood Flat Washington BC 50
East Dismal Swamp Washinggon C 90 state-owned
total 24 sites 13 counties 3873

Table 2. Change in Nonriverine Wet Hardwood Forest from 1990 to 1998. EO ranks are based
on 1998 condition.
site name county EO
rank 1990
size 1998
size status change
Jackson Swamp Remnants Beaufort AB 165 165
Roquist Pocosin Bettie AB 31 31 newly discovered
Whitehall Shores Hardwood Forest Camden C 100 100
Forest Wet Hardwood Forest Craven 138 0 destroyed
Gum Swamp Bottomland Hardwoods Craven B 40 40
Sea Gate Woods Craven C 280 85 part destroyed
Buckskin Creek/Great Swamp Currituck C 420 100 part destroved
Lower Tull Creek Woods and Marsh Currituck C 120 30 part destroyed
Indiantown Creek/North River Cypress Forest Currituck A 48 48
Gibbs Woods/Tull Bay Marshes Currituck C 135 135 selectively cut
Maple Swamp Gordonia Forest Currituck 40 0 destroyed
Northwest Backwoods Currituck 900 0 destroyed
Troublesome Point/Gibbs Point Forests and
Marshes Currituck C 40 40 part selectively cut
Mildred Wet Hardwood Flat Edgecombe 40 bought for wetland mitigation
after site was destroyed by
highway construction, borrow pit,
and clearcut
Black Mingle Pocosin Gates 150 0 destroyed
Great Dismal Swamp National Wildlife Refuge Gates BC 5 5
Scranton Hardwood Forest Hyde A 1000 1000 some limited cutting may have
occurred
Gull Rock Game Land Hyde BC 20 20
South Prong Natural Area Pamlico B? 35 35
Light Ground Pocosin Southeast Section Pamlico C 60 60 part destroyed in 1980s
Merritt Hardwoods Pamlico A 1400 900 part destroyed, more destroyed in
1980s
Little Flatty Creek Forests Pasquotank C 185 40 part destroyed, part registered
Big Ratty Creek Forests and Marshes Pasquotank E 1500 300 part destroyed
Menzies Pond Perquimans B 20 20
Belvoir Carolina Bays and Flats Pitt C 85 34 part destroyed
Bethel/Grindle Hardwood Flats Pitt A 1080 530 part destroyed
10

Lewis Point Swamp Forest Tyrrell C 15 15 newly discovered, some
additional area may have been
clearcut since 1990
Highway 99 Nonriverme Hardwood Flat Washington BC 50 25 part destroyed
East Dismal Swamp Washington C 90 90 damaged by logging of adjacent
area

total 29 sites 14 counties 8148 3873 5 sites destroyed, 9 partly
destroyed
11
w .•
Table 3. Soil series of Nonriverine Wet Hardwood Forest occurrences and additional series
likely to have supported Nonriverine Wet Hardwood Forest. Rating is an estimate of the fraction
of the soil series acreage that would have supported Nonriverine Wet Hardwood Forest.
series taxonomy sites rating
Acredale Typic Endoaqualf Scranton high
Arapahoe Typic Humaquept Merritt Hardwoods low
Argent Typic Endoaqualf Light Ground Pocosin Southeast, South Prong, Scranton Hardwoods high
Brookman Typic Umbraqualf Scranton med.
Cape Fear Typic Umbraquult Highway 99 Hardwood Flats, Belvoir Carolina Bays high
Deloss Typic Umbraquult Sea Gate Woods low
Hydeland Typic Umbraqualf Scranton med.
Leaf Typic Albaquult Roquist Pocosin, Gum Swamp low
Pantego Umbric Paleaquult Gum Swamp low
Pasquotank Typic Endoaqualf high
Portsmouth Typic Umbraquult Jackson Swamp Remnants low
Roanoke Typic Endoaquult Whitehall Shores, Sea Gate Woods, Gibbs W oods/Tull Bay,
Troublesome Point, Lower Tull Creek, Buckskin Creek/Great Swamp,
Big Flatty Creek, Little Flatty Creek, Menzies Pond, Bethel/Grindle,
East Dismal Swamp med.
Tomotley Typic Endoaquult Indiantown Creek, Lewis Creek high
Yonges Typic Endoaqualf high
12

Table 4. Amount of soils likely to have supported Nonriverine Wet Hardwood Forest in Hyde
and Currituck counties. Rating is an estimate of the fraction of the soil series acreage that would
have supported Nonriverine Wet Hardwood Forest.
series Hyde Currituck rating
Areent 9467 high
Acredale 12425 high
Brookman 7777 medium
Cape Fear 6104. medium
Hydeland 17848 medium
Pasquotank 590 1509 high
Roanoke 28624 medium
Tomotley 6104 high
Yonges 2479 high

total 50586 43941
total of high probability only 24961 15317
13

Map 1. Locations of Nonriverine Wet Hardwood Forest community occurrences remaining in
North Carolina in 1997.
14
0 .• w
Attachment 3
SELC PTRF
401 Certification Comment Letter
07/07/2008
SOUTHERN ENVIRONMENTAL LAW CENTER
200 WEST FRANKLIN STREET, SUITE 330 Charlottesville, VA
CHAPEL HILL, NC 27516-2559 Chapel Hill, NC
Telephone [phone] Atlanta, GA
Faesimile 910,929-9421 Asheville, NC
[e-mail] Sewanee, TN
February 8, 2007
U.S. Army Corps of Engineers
Wilmington District
Regulatory Division
69 Darlington Avenue
Wilmington, NC 28403
Re: PCS Phosphate, File # 2001-10096
To Whom It May Concern:
The Southern Environmental Law Center ("SELC") submits these comments on
behalf of the Pamlico-Tar River Foundation ("PTRF"). PTRF is a private, non-profit
organization that has been dedicated to protecting, preserving, and promoting the Tar-
Pamlico River and its watershed since 1981. SELC is a private, non-profit legal
organization that seeks to protect and preserve the Southeastern environment.
Additionally, we endorse the separate comments submitted by the Pamlico-Tar River
Foundation as well as those submitted by Environmental Defense.
1. OVERVIEW
The draft environmental impact statement ("EIS") in the above-referenced matter
is an extensive document that covers many important issues relating to Potash
Corporation of Saskatchewan's ("PCS") proposed mine expansion. There are many
things that the document does well, it provides a detailed description of the mining
process, the area to be impacted, and each of the alternatives evaluated. Due to the length
of the document, and the corresponding length of these comments, the successes of the
document are not highlighted in this comment letter. Notwithstanding that omission,
SELC and PTRF appreciate the Corps' effort in developing the EIS. This comment letter
will primarily highlight areas in which the EIS can be strengthened or where more
information should be provided to complete the document. A brief summary of those
comments follows below.
The purpose and need is too narrow.
- The stated purpose and need excludes reasonable alternatives and foreordains
mining in the NCPC tract.
100% recycled paper
SELC Comments
PCS DEIS
File Number 2001-10096
2
The purpose and need should be rewritten to represent the general goal of the
proposed project: to provide a reliable, economical source of phosphate to the
manufacturing plant.
The alternatives analysis is inadequate.
- The alternatives evaluated each seek to accomplish different goals, and therefore
cannot provide the information necessary to determine whether wetlands have
been avoided to the maximum extent practicable as required by the Guidelines.
- Multiple reasonable alternatives that are potentially practicable and less
environmentally damaging than the current alternatives were not considered.
The economics analysis is incomplete.
The economic analysis does not present the information in a manner, that is
understandable by the public. Important information on cost calculations is either
omitted or buried in the appendix.
- The economic analysis does not provide enough information to allow the public to
understand the basis of practicability determinations.
The EIS does not provide the information necessary for the Corps to make the
required Section 404 determinations.
The environmental impacts of the AP alternative are not fully discussed.
Important direct and indirect impacts are omitted or only briefly discussed.
The mitigation plan does not provide enough detail for a significant degradation
determination. Fatally, it does not identify mitigation sites or how those sites will
be developed.
The EIS relies on scientifically inadequate studies for the vast majority of its
claims that there will be no adverse impact to the aquatic ecosystem. These
studies should be substantiated with peer reviewed studies.
The EIS does not adequately consider supplemental restrictions.
The discussion of financial assurances does not adequately consider PCS'
economic situation and the potential costs of reclamation and mitigation.
The EIS should consider instituting conditional mining areas due to the
unprecedented nature of the proposed impacts, the potential catastrophic effects,
and extremely limited understanding of PCS' ability to prevent those effects from
occurring.
II. STATUTORY CONTEXT
This EIS was prepared to comply with the National Environmental Policy Act
("NEPA"). Under NEPA, the purpose of an EIS is to incorporate the policies and goals
of NEPA into actions of the federal government. 40 C.F.R § 1502.1. The broad purpose
of NEPA represented in those. policies and goals is to "sensitize all federal agencies to the
environment in order to foster precious resource preservation." Nat'l Audubon Soc'y v.
SELC Comments
PCS DEIS
File Number 2001-10096
3
Dep't of the Navy, 422 F.3d 174, 184 (4th Cir. 2005). The EIS process promotes that
purpose in two ways. First, it guarantees that federal agencies will take an objective,
thorough look at the environmental impacts of a proposed action so that the decision
making agency makes an informed decision. Id. The second way it furthers NEPA's
purpose is that it requires the agency to widely disclose the environmental impacts of the
proposed action, ensuring that other governmental agencies and the public have the
opportunity to inform themselves and comment on the action. Id. In order to fulfill that
role, the evaluation of the environmental impacts must provide enough information to
allow those who were not a part of the development process to gain a complete
understanding of the issues surrounding the project. See Sierra Club v. U.S. Army Corps
of Eng'rs, 772 F.2d 1043, 1054 (1985).
In a Section 404 permit application, an EIS serves as the basis for the evaluation
of the permit application. Therefore, it must provide the necessary information for the
Corps to make the determinations required under the Clean Water Act and its
accompanying regulations, specifically the 404(b) Guidelines. The EIS must provide
enough information for the Corps to determine if less environmentally damaging
practicable alternatives exist and if the project would result in a significant degradation of
the aquatic environment. The EIS must also provide the evidence of whether wetland
impacts have been avoided to the maximum extent practicable, that the unavoidable
wetland impacts have been minimized, and that there is adequate compensatory
mitigation for those impacts.
III. DEIS FLAWS
A. Purpose and Need
The EIS must include the applicant's purpose and need. That statement should
explain the underlying purpose and need to which the agency is responding. 40 C.F.R. §
1502.13. The purpose and need has much broader implications. The goal established in
this section of the EIS provides the direction for the document and defines the realm of
reasonable alternatives. See N.C. Alliance for Transp. Reform, Inc. v. U.S. DOT, 151 F.
Supp. 2d 661, 686 (M.D.N.C. 2001). Therefore, the purpose and need must be broad; it
cannot be narrowly defined so as to make the selection of a given alternative or action a
"foreordained formality." Id. citing Citizens Against Burlington, Inc. v. Busey_, 938 F.2d
190, 196 (D.C. Cir. 1991). The purpose and need must reflect the "general" goal of the
project, allowing for flexibility in selecting an alternative to meet that broader goal. See
Van Abbema v. Fomell, 807 F.2d 633, 638 (7th Cir. 1986).
The applicant's stated purpose and need is too narrow. It does not meet the legal
requirement that it state the general goal of the project and restricts the range of
reasonable alternatives.
1. The stated purpose and need requires mining in the project area.
SELC Comments
PCS DEIS
File Number 2001-10096
4
The DEIS defines the applicant's purpose and need in the first paragraph of
Section 1.2.2 as follows:
The applicant's purpose and need is to continue mining its
phosphate reserve in an economically viable fashion. More
specifically, the applicant's purpose and need is to
implement a long-term systematic and cost-effective mine
advance within the project area for the ongoing PCS mine
operation at Aurora, North Carolina.
DEIS at 1-4.
2. The stated purpose and need is too narrow.
The applicant's stated purpose and need does not meet the legal requirements, it is
too narrow and does not represent the general goal of the project. PCS does not sell the
phosphate ore it mines, but rather refines it into a variety of products. See DEIS at 1-1.
The phosphate ore recovered in the mining process supplies the on-site plant. The
purpose of mining within the project area is to supply the plant. Therefore, defining the
purpose and need in terms that require mining is not only inconsistent with the remainder
of the DEIS in that it treats mining as an end in and of itself, it does not represent the
overall goal of the project. This restrictive purpose and need statement eliminates the
consideration of alternative methods of meeting the ultimate goal, supplying the plant
with phosphate ore in a reliable, economically viable manner. It is exactly this type of
exclusion of viable alternatives that the regulations and case law prohibit.
3. The purpose and need should be revised to reflect the general goal:
The unlawful restrictions in the stated purpose and need should be corrected by
rewriting the first paragraph in Section 1.2.2. To represent the general goal of the
project, the paragraph should read: The applicant's purpose and need is to maintain a
steady supply of phosphate ore to its Aurora processing plant in an economical and
reliable manner. This purpose and need accounts for the general goal of the project:
securing an economical, long term supply of phosphate ore for the processing plant.
While this may ultimately result in selecting an alternative that includes mining, it does
not foreordain a mining alternative and would allow the Corps to evaluate the full range
of reasonable alternatives.
B. Alternatives Analysis
The EIS must evaluate a range of reasonable alternatives to the proposed action.
42 U.S.C. § 4332. This section is "the heart of the environmental impact statement,"
forming the substance of the EIS and. providing the information necessary for an
SELC Comments
PCS DEIS
File Number 2001-10096
5
informed decision. 40 C.F.R. § 1502.14. In order to fulfill this substantial role, the
analysis should "sharply" define the issues and provide a "clear basis" for decision
making both by the agency and the public. Id. It is "absolutely essential" that the
analysis provide the decision maker with an understanding of the positive and negative
aspects of each alternative. NRDC v. Callaway, 524 F.2d 79, 92-93 (2d Cir. 1975).
The EIS does not have to consider all possible alternatives and does not have to
address those that are remote or speculative. Vt. Yankee Nuclear Power Corp. v. NRDC,
435 U.S. 519, 551 (1978); Miller v. U.S., 654 F.2d 513 (8th Cir. 1981). However, an
agency cannot exclude an alternative because it only partially achieves the purpose of the
project. See Town of Matthews v. U.S. DOT, 527 F. Supp. 1055, 1057-58 (W.D.N.C.
1981). The agency should also consider variations of alternatives that have already been
discussed as long as the variations are not minor. See California v. Ber lg and, 483 F.
Supp. 465, 489 (E.D. Cal. 1980), affd, California v. Block, 690 F.2d 753, 767-68 (9th
Cir. 1982).
The alternatives analysis in Sections 2 through 4 of the DEIS is inadequate
because it does not include the information necessary for the Corps to make the required
determinations for a Section 404 permit, it does not give a complete analysis of the AP
alternative, and it does not consider all reasonable alternatives.
1. The alternatives evaluated do not attempt to avoid wetland impacts to the
maximum extent practicable.
Although practically the Corps evaluates much of the information regarding a
project at the same time, the regulations require a sequential analysis in evaluating a
Section 404 standard permit. See MEMORANDUM OF AGREEMENT BETWEEN THE
ENVIRONMENTAL PROTECTION AGENCY AND THE DEPARTMENT OF THE ARMY
CONCERNING THE DETERMINATION OF MITIGATION UNDER THE CLEAN WATER ACT
SECTION 404(B)(1) GUIDELINEs 3 (February 6, 1990) ("MOA"). The Corps is obligated
first to determine that wetland impacts have been avoided to the maximum extent
practicable, then implement measures to minimize unavoidable impacts, and finally to
compensate for those impacts with mitigation. Id. Under the applicable regulations, the
avoidance requirement means that only the least environmentally damaging practicable
alternative can be permitted. Id.; 40 C.F.R. 230.10(c).
The alternatives evaluated in the DEIS do not allow the Corps to determine that
wetland impacts have been avoided to the maximum extent practicable. They are
designed based on other considerations which, though relevant, do not attempt to
maximally avoid wetlands as required.
The alternatives that were evaluated in the DEIS each approach mining from a
different perspective. They are focused on the applicant's preference, avoiding certain
areas, state agency jurisdiction, and the minimum mine operating requirements.
SELC Comments
PCS DEIS
File Number 2001-10096
6
Individually, none of the alternatives attempt to avoid wetlands to the maximum extent
practicable. Collectively, they do not provide the Corps with the information necessary
to make the required avoidance determination. Due to their vastly different purposes,
none of which is to maximally avoid wetland impacts, comparison of the alternatives to
make an avoidance determination is impossible. The alternatives provide different
options, some of which avoid more wetland impacts, but do not allow the Corps to
determine how wetland impacts may be avoided to the maximum extent practicable.
The AP and EAP alternatives make no attempt to avoid wetlands to the maximum
extent practicable. These alternatives were designed based on two considerations: (1) the
location of the highest quality ore and (2) obtaining maximum efficiency with the mining
equipment. DEIS at 2-10. Avoidance of wetlands was not a consideration in designing
either of these alternatives.
The SCR alternative was developed through the review team process to be more
environmentally sensitive than the AP and EAP alternatives, but still does not avoid
wetlands to the maximum extent practicable. The boundary was designed to "avoid to
the maximum extent possible, waterways and riparian corridors as well as those aquatic
resources considered most valuable to the local aquatic ecosystem and most difficult to
replace through compensatory mitigation." DEIS at 2-10. The boundary also protects
more of the tributaries' drainage basins than the other alternatives. Id. Rather than
attempting to avoid all wetlands to the maximum extent practicable, the SCR alternative
selects certain areas that are to be avoided if possible. While prioritizing wetland value
for protection purposes may be appropriate to minimize wetland impacts, the wetland
impacts must first be found to be unavoidable. The SCR alternative skips this essential
first step, it does not attempt to avoid overall wetland impacts to the maximum extent
practicable, but rather attempts to avoid some wetland impacts to the "maximum extent
possible."
The SJA alternative was also developed through the review team process. The
SJA alternative was designed to avoid North Carolina Division of Water Quality
("NCDWQ") and Division of Coastal Management ("DCM") jurisdiction. DEIS at 2-10.
No other consideration of wetland impacts was considered in developing this alternative.
Since NCDWQ and DCM jurisdiction cannot be considered a substitute for avoiding
wetlands to the maximum extent practicable, the SJA alternative does not allow the Corps
to make the avoidance determination required by the regulations.
The DL 1 alternative was designed to minimize mining on the NCPC tract. It was
designed based on the minimum operating requirements of the mining equipment. DEIS
at 2-10. The DL 1 alternative is based solely on mining requirements; it does not attempt
to avoid wetland impacts to the maximum extent practicable. Therefore it cannot assist
the Corps in making the required avoidance determination.
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While the Corps is not required to evaluate minor variations of existing
alternatives, there are legitimate alternatives between the existing alternatives that could
avoid more wetlands at a level that would be significant. The SCR alternative impacts
1,221 more acres of jurisdictional waters than the DL1 alternative. The SJA alternative
impacts 2,746 more acres of jurisdictional waters than the DL1 alternative. There are
several alternatives that could be evaluated between the SCR and SJA boundaries and the
DL 1 boundary that could be practicable and avoid significantly more wetlands than either
the SCR or SJA alternatives. These alternatives would not be minor variations of
existing alternatives, and would provide important information that would assist the
Corps in making the required avoidance determination.
In order for the Corps to make the avoidance determination required by the
regulations, the alternatives should attempt to find a line at which mining less would be
impracticable, but mining more would impact avoidable wetlands. The Corps should
evaluate alternatives that approach that line, one that is likely between the SCR and DL1
alternatives based on assumptions in the current economic analysis. By working with the
applicant to develop an alternative between SCR and DL1 that could be practicable, then
evaluating that alternative and others that avoid wetland impacts to a greater and lesser
extent, the Corps can gain information to make the required avoidance determination.
Without the information that analyzing these potential alternatives would provide, the
Corps has no basis for determining that wetland impacts have been avoided to the
maximum extent practicable. Since the purpose of the EIS is to provide this type of
information, a supplemental EIS should evaluate alternatives that do so.
2 The AP analysis is incomplete.
In order to fulfill its role of making the environmental impacts of federal actions
transparent, the EIS must put the public on notice of the pros and cons of each alternative
evaluated. Without complete disclosure, the public cannot be expected to develop an
informed opinion, one of the primary purposes of NEPA. As noted above, complete
disclosure means providing enough information that those outside the development
process, not on the review team, can acquire a complete understanding of the project.
See Sierra Club v. U.S. Army Corps of Eng'rs, 772 F.2d 1043, 1054 (1985). The
evaluation of the AP alternative fails to provide the necessary transparency because it
does not disclose that the AP alternative cannot be permitted under state law.
The nature of the review team process that resulted in the draft EIS led to regular,
in depth discussions of the alternatives between the Corps and several state agencies.
During the September 1, 2006 review team meeting, John Dorney of the Division of
Water Quality informed the review team that the AP alternative could not be permitted
under state law. While the Corps should not be expected to approximate in a DEIS
whether a proposal can be permitted under state law on all occasions, this is a unique
situation. This is a high profile project that was the subject of detailed review for 6 years.
Mr. Dorney, the representative of the agency responsible for issuing the necessary permit,
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made clear to the review team that the AP alternative cannot be permitted. Moreover, the
AP alternative is not even a "practicable" alternative under the 404(b) Guidelines because
it is contrary to state law and thus not "available and capable of being done." 40 C.F.R.
§230.10(2). In this situation the Corps should convey this information to the public
openly in the EIS.
The fact that a proposed alternative cannot be permitted is the type of information
that the public should be informed about. It is impossible for the EIS to give the public a
complete picture of the alternatives without disclosing this fact, one that is well known to
those involved in the EIS process. That it cannot be permitted is a significant
disadvantage to the AP alternative, and it is specifically the type of information that is
valuable in comparing the various alternatives.
We recommend correcting this omission by inserting a sentence in Sections
2.4.1.1 and 2.7 that states that the AP and EAP alternatives cannot be permitted under
state law.
3. Reasonable alternatives were not considered.
The Corps is required to consider a range of reasonable alternatives in an EIS. 42
U.S.C. § 4332. That range should include more environmentally sensitive alternatives,
whether that means "shelving" the project or reaching the goal through a different
method. See Envtl. Defense Fund v. U.S. Army CoMs of Eng'rs, 492 F.2d 1123, 1135
(4th Cir. 1974). Within the range of reasonable alternatives that the Corps should
consider are alternatives that partially meet the goals of the original purpose. Since no
true alternative will fully meet the goal of the proposed actions, alternatives that partially
fulfill that goal should also be considered. See Town of Matthews v. U.S. DOT, 527 F.
Supp. 1055, 1057-58 (W.D.N.C. 1981).
There are several reasonable alternatives that were not identified by the review
team, and not evaluated in the EIS. For evidence that less environmentally damaging
alternatives exist, the Corps only has to look at the average cost over the first 15 years of
the alternatives that were found practicable. The SCRB alternative, the least
environmentally damaging practicable alternative ("LEDPA") of the current alternatives,
has an average annual cost in the first 15 years of $22.58/ton. The historic average cost
from the years 2000-2005, a key ingredient in the practicability determination, was
$24.13/ton. DEIS at 2-17. There are multiple alternatives that will result in an average
cost within the $1.55/ton difference between the historic average and the SCRB cost.
These alternatives have the potential to be less environmentally detrimental than the
current alternatives, though they may still result in the significant degradation of the
aquatic environment. Whether these potential alternatives would result in significant
degradation cannot be determined without further consideration of their potential. The
Corps should consider these alternatives.
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a. The EIS should evaluate a DMA alternative.
The EAP, SCR, and SJA alternatives evaluated in the EIS each include an A and
B sequence. The S33AP and No Action alternatives cannot be mined in multiple
sequences since they are wholly contained within the S33 tract. Like the EAP, SCR, and
SJA alternatives, the DL 1 alternative includes mining in all three tracts, but unlike those
alternatives only the B sequence is evaluated. The EIS should evaluate the DL 1 A
alternative.
According to the DEIS, the A sequence is preferred by the applicant. DEIS at 2-
11. Presumably, the A sequence is less costly over the long term. The economic analysis
supports this presumption, finding that over 26 years, the EAP, SCR, and SJA A
sequences are all to some degree cheaper than the B sequences. Therefore a DLIA may
be more economical than DL1B, and may be practicable. The DL1A sequence is a
reasonable alternative, and should be fully evaluated in the EIS.
b. The EIS should consider the 15-20 year versions of the alternatives
presented as well as any supplemental alternatives developed.
The applicant has clearly expressed an interest in mining the project area as
completely as possible. DEIS at 2-9. They have also established to the Corps'
satisfaction that long-term mining plans are necessary in phosphate mining for a variety
of reasons. Id. Based on these premises, the applicant has proposed a 15 year mine plan
and has developed alternatives that range from 12 years (No Action Alternative) to 49
years (EAP). The SJA and SCR alternatives span 38 and 32 years respectively. These
plans cover more than the necessary 15-20 years. The EIS should evaluate the
practicability of 15-20 year mine plans for each alternative, including those to be defined
at a later date.
There are several reasons that shorter versions of the current alternatives, as well
as any other potential alternatives, are preferable to over 30 year plans. As PCS
acknowledges, the phosphate market is unstable, so predicting 30-40 years into the future
is extremely difficult. DEIS at 2-18. The market may improve, allowing less sensitive,
upland areas to be mined profitably.
Similarly, PCS' recent diversification of product line may result in significant
profit increases, also allowing it to mine less sensitive areas more profitably than is
currently expected. The EIS accounts for this possibility in the economic analysis, but
does so in the context of the longer alternatives. DEIS at 2-19.
Limiting the permit to the 15-20 years, PCS states, is necessary to plan and
prepare to mine will allow more information to be gathered on both their reclamation and
mitigation efforts. There are serious concerns regarding the reclamation of mine sites due
to high metal concentrations in the clay/gypsum blend. Extended permits prevent a full
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reconsideration of reclamation practices and their impacts on the environment, including
terrestrial and aquatic organisms as well as ground and surface waters. Shorter permits
that are still within PCS' required 15-20 years would also allow their mitigation efforts
such as Parker Farm to be further evaluated so as to improve their practices for future
mitigation efforts.
The multi-tract mining alternatives considered in the EIS more than double the
duration of the proposed alternative. Not only does this difference in time span
complicate the economic analysis, it makes comparison of environmental impacts more
difficult. Shorter alternatives would meet PCS' stated planning requirements while
facilitating comparisons to the AP alternative. Finally, the shorter alternatives would
promote more informed choices on mining 20-30 years in the future due to the additional
economic, reclamation, and mitigation information that would be available. For these
reasons, the EIS should analyze 15-20 year versions of the current alternatives and any
other alternatives that are developed.
C. The EIS should identify the environmental benefits of life of mine
alternatives.
The EIS focuses on alternatives that are "life of mine" alternatives, they exhaust
mining in the project area. The premise is that despite the limitations in predicting
economic trends and reclamation impacts 40 years into the future, these longer
alternatives provide some environmental benefits. The:;e benefits should be identified
and fully discussed in the EIS.
d. The EIS should evaluate the practicability of using combinations of
different mining approaches in each tract.
The alternatives evaluated in the EIS are applied equally throughout the three
mining tracts, NCPC, Bonnerton, and South of 33. This approach fails to take into
account the individual characteristics of the separate tracts in terms of either phosphate
ore concentration or wetland sensitivity. The across the board application of a single
mining approach unnecessarily excludes reasonable alternatives.
There are at least two alternatives that would impact fewer wetlands in NCPC that
can be created by applying the mining approaches used in the EIS alternatives on a tract
by tract basis. One potential alternative using this method would mine in NCPC
according to the DL1 mine plan, in Bonnerton according to the SCR mine plan, and in
S33 according to the AP mine plan. This alternative would impact approximately 2,943
acres of jurisdictional waters. For comparison, that is approximately 700 more acres of
mining in jurisdictional waters than DL 1, with no additional impact in the more sensitive
NCPC or Bonnerton tracts.
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Another alternative that could be created using this method would mine in NCPC
according to the DL 1 mine plan, in Bonnerton according to the SJA mine plan, and in
S33 according to the AP mine plan. This alternative would impact approximately 3,537
acres of jurisdictional waters. It would mine approximately the same number of
jurisdictional acres as the SCR alternative and approximately 1,200 more jurisdictional
acres than DLL
The range of alternatives considered excludes reasonable alternatives by applying
mine approaches uniformly in the three potential mine tracts. By applying different
mining approaches in different tracts, reasonable alternatives can be developed that may
be practicable and come closer to avoiding wetland impacts to the maximum extent
practicable. The examples of alternatives detailed above are two such possibilities. Each
of these alternatives is environmentally preferable to the alternatives evaluated in the EIS
because their impact is farther removed from the Pamlico River and South Creek.
Additionally, the substantial damage that would occur to the tributaries to South Creek
under the AP, EAP, SCR, and SJA alternatives would be significantly diminished. The
Corps should evaluate the practicability of these alternatives and others that would result
in a decreased environmental impact.
e. The EIS should evaluate a two drag line alternative.
The EIS evaluates the practicability of a single drag line alternative, the DL 1 B
alternative. Although it was suggested in the review team meetings, a two dragline
alternative ("DL2") was not evaluated. See DEIS at A-139. A DL2 alternative would be
technologically and logistically possible. It may also satisfy the Corps' economic
analysis given that it would approximately double the mining available in the NCPC
tract. Compared to the AP alternative, a DL2 alternative would be less environmentally
damaging and therefore should be evaluated.
f. The EIS should evaluate the practicability of supplementing mining
with importation of ore.
The EIS excludes the possibility of importing ore to supply the plant facilities
despite finding that the plant could be operated by importing ore from Morocco. The EIS
states that importation to supplement any mine alternative "is essentially a delayed
shutdown of the mine and as such would not meet the applicant's purpose and need."
DEIS at 2-13. Supplementation with imported ore would actually extend the life of the
mine, and is perfectly consistent with the applicant's purpose to continue mining.
There are two flaws in the EIS analysis: It does not differentiate importation from
any other alternative; and it improperly excludes alternatives that partially satisfy the
purpose and need. The finding that importation is a "delayed shutdown" does not
distinguish supplemental importation from any other alternative. Therefore, it should not
be excluded from analysis. Each and every mine alternative will ultimately result in the
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shutdown of the mine. Even the AP alternative delays the shutdown of the mine for at
least 15 years. Longer mine alternatives will delay the shutdown of the mine for a longer
period of time. Delaying the shutdown of the mine would only fail to meet the purpose
and need if the stated purpose and need were to cause an immediate shutdown of the
mine. The stated purpose and need in Section 1.2.2 does not include the immediate
shutdown of the mine. Therefore, importation to supplement any mine plan cannot be
excluded as being inconsistent with the purpose and need because it, like all other
alternatives, delays the shutdown of the mine.
Even if the purpose and need were to exclude solely relying on importation,
supplementing mining with importation would partially meet the purpose and need. PCS
would be able to mine their reserves in an economically viable method for an extended
period of time. Supplementing mining with importation would simply allow PCS to
subsidize more resource intensive upland mining with less expensive, high quality
imported ore. This combination of approaches would provide both long term ore stability
and access to the phosphate reserves within the project area. Therefore, supplemental
importation cannot be eliminated and should be evaluated for practicability with DL I,
S33, and the No Action alternatives. Supplemental importation would permit the
applicant to mine within the project area practicably, and therefore is a reasonable
alternative.
Giving more thorough consideration to supplemental importation neither dictates
to the applicant how to run their business nor conflicts with the resolution of the litigation
that resulted from the past permit. The Corps is limited to permitting the least
environmentally damaging practicable alternative. It is inconsequential whether that
alternative involves mining or importation. Supplemental importation would in fact be
less environmentally damaging than the AP alternative, therefore the Corps' should
determine if it is practicable. In that process, the applicant would submit economic
information illustrating the cost involved in importing ore and adapting their facilities to
accommodate the process just as they have submitted economic information regarding
the other alternatives.
Permitting a mine plan that required importation for practicability would not
differ from permitting any other mine plan. The Corps would authorize mining in a given
area. The applicant could then determine whether it was in their interest to import
through the entire mine sequence, import when the mining was exhausted, or discontinue
mining. These choices are no different than the applicant would face if anything other
than the AP alternative is permitted. If the AP alternative is not permitted, the applicant
will have to determine whether the less than preferred permit suits their business
expectations. By permitting a plan that required importation, the Corps would not be
dictating the applicant's business plan, but rather restricting the applicant to the least
environmentally damaging practicable alternative as the law requires.
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Importation of ore from Morocco to supplement mining was improperly excluded
from evaluation in the EIS. The reasoning for the exclusion, that it would result in a
"delayed shutdown," does not distinguish the importation alternative from any other.
Additionally, mining supplemented by importation would partially satisfy the purpose
and need, and therefore should be considered. Since importation appears to be a
reasonable alternative, and no justifiable reason for its exclusion has been stated in the
EIS, it should be thoroughly evaluated as an alternative.
C. Economic Analysis
The economic analysis is a crucial part of the EIS. It is a key component of
determining practicability, and the practicability analysis in turn narrows potential
alternatives. Therefore the economic analysis must not only be thorough, but must also
be presented in a manner which can be understood by the public. The economic analysis
in Section 2.7 accomplishes these goals in some ways, but is lacking in that it does not
discuss certain costs and does not present others clearly.
1. The economic analysis appropriately excludes the "lost" ore.
The applicant submitted information regarding ore that would not be mined under
the various alternatives, identifying that ore as value lost. The Corps' economic analysis
appropriately excludes that cost from the analysis. The applicant cannot claim the ore
that cannot be mined as a loss. Under the Guidelines, the Corps' selection of the least
environmentally damaging practicable alternative is required by law. As a result, any
alternative that is not the least environmentally damaging practicable alternative cannot
be permitted, doing so would be illegal. Therefore, any ore that is not recovered because
certain areas cannot be mined is a loss that results because a preferred mine plan is not
legal. Accounting for the un-recovered ore in the economic analysis would frustrate the
purpose of the Clean Water Act by prejudicing the analysis against wetland protection.
Additionally, any ore not mined under a permitted mine plan may be accessible in
the future without destroying the aquatic ecosystem due to advances in technology.
Allowing the applicant to claim that ore as "lost" now and recover it in the future would
produce a windfall for the applicant that the current economic analysis appropriately
prevents.
2. The economic analysis does not discuss moving the mill.
The EIS documents that increased transportation costs play a significant role in
the increased overall costs in the S33 tract. Although it has been considered at some
level, there is no discussion in the EIS regarding the economic impact of relocating the
mill facility. Since this action has the potential to significantly reduce one of the primary
additional expenses in mining in the S33 tract, the EIS should directly address the
possibility of moving the mill. This discussion should include any studies that have been
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conducted regarding the feasibility of mill relocation and a description of how those
studies have been implemented in the economic analysis.
In addition to providing this information, the DEIS should provide a comparison
between the current expenses involved in relocating the mine with previous plans to do
so. Prior to purchasing the NCPC tract, Texasgulf [PCS] had no option to mine in NCPC
and therefore prepared a plan that included moving the mill south to reduce transportation
costs. The development of this plan demonstrates that this was once a feasible option,
and therefore the DEIS should provide information that disproves this previous
understanding of feasibility.
3. The economic analysis does not present information regarding the cost
variations in a form that is capable of being understood by the public.
A complex cost model is the basis for the economic analysis in the EIS; it is
included in Appendix D. Marston developed the cost model to estimate the costs of
mining the various mine plan alternatives. It provides detailed year to year costs in a
number of categories as well as the overall cost of each alternative. However, this
information is not presented in a way that is useful to the public. The information should
be presented in a form that would allow meaningful review by the public.
One way in which the information could be better represented is through a
graphical representation demonstrating how variables fluctuate through each of the
mining alternatives. This display could plot the costs of each of the variables over the
course of the mine plan for a given alternative. This approach could then be replicated
for each alternative. This type of display would highlight the differences between
alternatives in terms of the cost fluctuation of the important variables, allowing the public
to develop a more informed opinion.
Another graphical representation of the data could show how each variable
fluctuates in each alternative over the life of that alternative. For example, one graph
could isolate transportation costs, diagramming the variation in costs over a period of
time for each alternative on a single graph. Similar graphs could be developed for each
of the cost areas that are expected to widely fluctuate with the mining advance. This type
of presentation would put the information contained in the spreadsheet into context and
allow a more thorough interpretation.
Representing the cost model results in these ways would assist in further
explaining the differences between the mine plans that drive the additional costs. While
it is easy with the information in the EIS to determine the relative expense of the
alternatives, it is exceedingly difficult to determine why certain plans are significantly
more costly. Representing the information in a format that is more user friendly than the
spreadsheets in Appendix D should make this comparison substantially easier for the
public.
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4. The economic analysis does not explain mitigation costs.
The economic analysis does not explain how mitigation costs are calculated in the
economic model. Given that the proposed impact is somewhat unprecedented for the
applicant, a detailed explanation of how Marston determined the mitigation costs is
appropriate. These costs should take into account the particular problems that will arise
in attempting to mitigate for the proposed impacts. Not only would the applicant have to
mitigate a very large area to compensate for the proposed level of destruction, but the
mitigation would have to account for the diversity and the special functions of the
proposed impact area. Therefore any calculation of mitigation costs must go beyond
reliance on past mitigation sites such as Parker Farm due to the relative simplicity of that
type of mitigation project. As discussed below in Section III(D)(2)(b), Parker Farm type
mitigation would be inappropriate for the proposed impacts so the economics of Parker
Farm are also inappropriate for this economic analysis.
Further explanation of the mitigation costs used in the cost model is even more
important when looking at the apparent discrepancy between the values used in the model
and those that result from applying Ecosystem Enhancement Program ("EEP") rates to
the proposed mitigation. For example, the EIS estimates that mitigation for impacts in
the AP alternative will cost approximately $46 million. Applying the EEP rates to the
mitigation proposed for the AP alternative on page 26 of Appendix I would more than
double the EIS estimate, with costs exceeding $92 million. While the estimated costs cf
the mitigating for the other alternatives increase when applying the EEP rates as well, the
increases are not as significant as the doubling of mitigation costs for the AP alternative.
Therefore, applying EEP rates could alter the economic analysis by reducing the
increased costs of the other alternatives in comparison to the AP alternative.
While the Corps may not require Marston to adopt the EEP rates for estimating
mitigation, the estimates used in the cost model should account for the factors addressed
by the EEP rates rather than relying on only two previous mitigation projects. Relying on
two mitigation experiences does not adequately estimate the cost of mitigation because it
fails to control for the relative ease of PAII and Parker Farm. In fact, the authors of a
study on PAII expressly caution against relying on the site to predict future success.' If
the site cannot be relied upon to predict future success, it certainly cannot be relied upon
to predict the cost of successful mitigation. Unless the applicant can demonstrate that the
proposed impacts can be compensated with similar ease, which the complexity of the
existing wetlands suggest they cannot, the current mitigation cost estimates are
inappropriate. The estimates should reflect the complexity of mitigating for the proposed
impacts and fully detail how that complexity is accounted for in the mitigation rates used
to create the estimates.
1 West, Terry, et al., Assessment of Function in an Oligohaline Environment: Lessons Learned by
Comparing Created and Natural Habitats, 15 ECOLOGICAL ENGINEERING 303, 319 (2000).
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5. The economic analysis should include a comparison of actual costs.
The economic analysis relies solely on comparative costs in making a
determination on practicability. In order to provide a complete picture of the alternatives,
the economic analysis should also present a comparison of the total costs. The total costs
give context to the increased costs and therefore are both relevant and informative.
Although the total cost could be deduced through Appendix D, it should be the presented
in the Section 2.7 economic analysis to complete the analysis.
6. The economic analysis does not provide sufficient guidance on
practicability.
The economic analysis does not adequately explain the basis for practicability
determinations. Rather than identifying a cost level below which an alternative is
practicable and above which an alternative is impracticable, the analysis appears to rely
on an "I know it when I see it" approach to practicability. By comparing historical
operating income to historical rock cost averages, the Corps' has determined that the
applicant can withstand some -level of additional cost over some short period of time.
Using that as context, the analysis then determines that some alternatives meet that
standard while others do not. There is not sufficient information for anyone not involved
in the practicability determination to determine when an alternative is practicable and
when an alternative is impracticable, or how close to the border of practicability the
current alternatives are. Under the current practicability analysis, that line must be
somewhere between the average cost of SCR and DL I, but it is not clear where it is
between those alternatives. This crucial aspect of the economic analysis should be more
fully explained in the EIS so that those outside of the practicability determination process
can determine the boundaries of practicability.
D. Section 404 Permit Information
Under Section 404 of the Clean Water Act, permits for dredged or fill material
must be evaluated through the application of the 404(b) Guidelines. 33 U.S.C. § 1344(b).
Those Guidelines provide that a permit application must be denied if there is a practicable
alternative to the proposed project that has a less adverse effect on the aquatic ecosystem,
if the proposed project would result in significant degradation, or if there is not sufficient
information to make a reasonable judgment that the project will comply with the
guidelines. 40 C.F.R. 230.12(a). A permit application must be rejected if it meets any of
these conditions. The EIS does not provide enough information to determine if these
criteria are met.
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1. Alternatives that have less adverse effect on the aquatic ecosystem were
not evaluated.
One of the primary purposes of the NEPA process is to ensure that federal
agencies fully consider the environmental impacts of their actions. Based on the current
economic analysis, there are multiple alternatives between the DLIB alternative and the
SCR alternatives that could be practicable and would have a less adverse impact on the
aquatic environment. These potential alternatives are discussed in more depth in Section
III(B)(3) above. These alternatives should be evaluated in order to provide the Corps
with the information necessary to make the required identification of the least
environmentally damaging practicable alternative.
2. The EIS does not provide the necessary information to the required
significant degradation determination.
Significant degradation in the context of a Section 404 permit is determined by
balancing the environmental impact against the proposed mitigation. See Ci of
Olmstead Falls v. U.S. EPA, 435 F.3d 632, 637-38 (6th Cir. 2006). This is an important
variation from determining whether there is a less environmentally damaging practicable
alternative, where mitigation is not considered. Because of this requisite balancing, the
EIS must provide a detailed analysis of both the environmental impacts and the proposed
mitigation. When the proposed mitigation does not offset the environmental impacts, the
Corps should make a significant degradation finding and deny the permit. See James
City County v. U.S. EPA, 12 F.3d 1330, 1337 (4th Cir. 1993). Without a complete
understanding of both the environmental impact and mitigation plans, the Corps cannot
perform the required analysis. The EIS does not allow the Corps to perform the required
balancing because the environmental impacts of the proposed project are not completely
discussed and the mitigation plan does not provide the required detail.
a. The environmental impacts of the AP alternative are not fully
discussed.
The EIS is the basis for the Corps' decision on whether the proposed action
complies with the Guidelines. Therefore, the information regarding the environmental
impacts of the proposed project must be discussed completely and thoroughly. While the
EIS acknowledges complete loss of any environmental value of the area that would be
directly impacted, it omits discussion of some critical direct and indirect impacts of the
proposed action.
The discussion of water quality impacts on page 4-12 is cursory and should be
expanded. Specifically, sources other than the Jacks Creek monitoring reports and the
Porter Creek study should be cited for support of the claim that water quality impacts will
be minimal. As discussed below in Section III(D)(3), these studies are not informative
concerning the proposed impacts. Given that the wetlands that would be destroyed
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perform significant water quality protecting functions, there should be some explanation
why the loss of those functions will not negatively impact water quality. The cited
studies are substantially flawed and cannot serve as the basis for such a bold conclusion.
The water quality impacts should be fully discussed in the EIS.
A component of the water quality analysis is the salinity analysis on pages 4-10
and 4-11. This analysis finds that the elimination of the South Creek tributaries'
headwaters will not affect the salinity within the tributaries. There are freshwater fish
communities within the headwaters that could be drastically impacted. These impacts are
dismissed through the misinterpretation of studies within the area. The Jacks Creek
monitoring study is incapable of confirming any findings as it is relied on to do on page
4-11. Similarly, the study of PAII does not provide any support for the EIS' claim. The
study was conducted on a small scale, with limited sampling sizes, causing the authors to
caution using the study to make claims like those that the EIS makes.2 The EIS should
thoroughly evaluate the impact of eliminating the headwaters of coastal streams on the
salinity within those streams. The studies cited cannot provide that evaluation and do not
support the bold claims of the EIS that mining will result in minimal impact to the South
Creek tributaries.
The discussion of wetlands impacts on page 4-14 suffers from similar
deficiencies. The EIS relies heavily on Jacks Creek monitoring. This type of reliance is
misplaced. As a result, the EIS makes a bold assertion, that eliminating 2,400 of 2,500
acres of wetlands will not negatively impact the remaining 100 acres, without any
supporting documentation. The filtering, buffering, habitat, groundwater recharge, and
nutrient cycling functions that wetlands provide are undoubtedly impacted by the size of
the wetlands. As the wetlands shrink, many of these functions are effectively lost despite
the fact that the peripheral wetlands remain. This occurrence means that any alternative
extends well beyond the mine plan boundary and has a significant impact on the remnant
wetlands. These impacts should be fully discussed in the EIS citing peer-reviewed
scientific literature.
While the EIS admits that all immobile organisms within the project area will be
eliminated, it proposes that more mobile organisms will be able to relocate to suitable
habitat. These statements are made in the discussion of impacts to terrestrial and aquatic
wildlife communities on pages 4-15 and 4-16. If these organisms are expected to
emigrate to other habitats, the EIS should identify areas of habitat similar to that which
would be destroyed as well as the corridors through which these mobile organisms may
reach those habitats. If those areas cannot be identified, the EIS should state that all
organisms within the area proposed to be impacted, mobile and immobile, will be
eliminated.
2 West (2000).
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The EIS does not fully discuss long term impacts of the proposed project. On
multiple occasions long term impacts are acknowledged to be difficult to determine.
DEIS at 4-13 and 4-15. The long term impacts of the proposed action have the potential
to be catastrophic and widespread. In particular, the EIS should evaluate the long term
impacts of replacing wetlands with 60 foot berms and uplands in relation to sea level rise
and major storms. Sea level is predicted to rise and storms are expected to increase in
intensity in the near future. These events could exacerbate the impact of the proposed
action on the surrounding areas. In addition to eastern North Carolina's natural
predisposition to flooding, the proposed impact would eliminate absorptive wetlands and
replace them with berms that would channel rising seas and storm surges inland. These
impacts would not only threaten the "avoided" wetlands within the project area, but
would impact area towns such as Aurora.
Reclamation presents one of the more significant long term impacts that is not
adequately addressed in the EIS. Apart from concerns regarding the vast majority of
previously mined areas that have not been reclaimed, there are significant potential
threats that result from the applicant's reclamation practices. The EIS admits these
threats are difficult to evaluate over the long term on page 4-8. The most important of
these potential impacts concerns the known cadmium-laced blend that the applicant uses
to reclaim mined land. While the EIS does address the cadmium issue in some detail, it
omits at least two crucial considerations: The impact of directly connecting reclamation
areas to South Creek tributaries and the potential breach of the containment dikes.
Upon completion of reclamation, the applicant will breach the containment dikes
to allow drainage into the existing tributaries. The EIS asserts that a rock dam will
prevent any harm downstream. As the EIS explains it, Whitehurst Creek appears to be
such a site. Since breaching the containment dike will directly connect a highly
contaminated area to the tributaries, some evidence should be presented that the
contamination is not transported. Long term monitoring at Whitehurst Creek could
potentially demonstrate that, but no evidence to that effect is provided in the EIS. By
connecting cadmium-contaminated reclamation areas to tributaries that lead to estuarine
environments containing organisms that are adversely impacted by cadmium, such as
crabs, the applicant would create a substantial threat through the proposed reclamation
activities. This threat should be thoroughly discussed in the EIS.
Reclamation presents an additional threat due to rising sea levels and increased
storm intensity. The reclamation areas will be raised above current height and
surrounded by a containment dike to prevent contamination from spreading. There is no
discussion in the EIS regarding the ability of the containment dikes to withstand being
submerged or struck by very powerful storm systems. As noted in the EIS, hurricanes
and nor'easters occur frequently in the area. Therefore the danger of placing
contaminated waste sites within low-lying areas that border South Creek and the Pamlico
River is significant. The failure of even one of the proposed containment dikes could
result in an environmental impact that would eclipse the significant harm that has resulted
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from previous discharges of cadmium by the applicant. The EIS should fully address
these potential impacts.
b. The proposed mitigation plan is inadequate for comparison to the
proposed impacts.
The EPA Region IV Compensatory Mitigation Policy ("Mitigation Policy") cited
in the EIS on 4-91 highlights several flaws in the proposed mitigation plan. The
Mitigation Policy states that the applicant should complete a mitigation analysis that is
comparable to the alternatives analysis as the basis for selecting a mitigation alternative.
Mitigation Policy at 4. The mitigation plan should include an assessment of the area
impacted, detailed mitigation site information with a description of how a wetland will be
established, and monitoring and performance criteria to determine the success of the
wetland. Id. In addition to these components, the plan should include a reference
wetland to serve as the target for the mitigation project. Although the EIS provides an
assessment of the area impacted, the remaining criteria are noticeably absent. In addition
to going against the policy, these omissions make any comparison of the proposed
impacts and the proposed mitigation impossible. The mitigation plan is inadequate; it
lacks the detail necessary for comparison and is unjustified in requesting mitigation ratios
below the recommended standards.
The mitigation plan lacks the required detail
In order for the Corps to adequately determine whether a significant degradation
would likely occur as the result of a project, the mitigation plan must provide some
insight into the efforts to replace the lost value and functions of the impacted site. The
detail of the mitigation plan, like the rest of the rest of the EIS, should reflect the
significance and complexity of the project. See 40 C.F.R. § 230.6(b). The mitigation
plan in Section 4.3.2 is entirely inadequate for the scope of the proposed project, even in
combination with the conceptual mitigation plan included in Appendix I.
The mitigation plan in City of Olmstead Falls v. U.S. EPA ("Olmstead Falls") is
instructive on the level of detail that should be expected in the EIS for this project. In
Olmstead Falls, the City of Cleveland proposed to fill and culvert 5,400 linear feet ("If')
of Abrams Creek (14% of the AP impact), fill 2,5001f of Abrams Creek tributaries (7%
of the AP impact), and fill 87.85 acres of wetlands (4% of the AP impact). 435 F.3d at
633. To further compare those impacts to the AP alternative, the project in Olmstead
Falls impacted over 30,000 fewer linear feet of streams and 2,320 fewer acres of
wetlands. To mitigate for that impact, the mitigation plan included:
- preserving 1,070 if of Abram Creek downstream of the airport;
- paying $2 million towards preserving 3600 if of Abram Creek upstream of the
airport;
- restoring 265 acres of wetlands;
- restoring 5,000 if of the Black River;
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- enhancing 12,400 if of Doan Brook;
- paying $682,000 towards restoring 3,264 if of Woodiebrook Creek;
- paying $600,000 toward the preservation of 4,7071f of Spring Brook; and
- paying $500,000 toward the preservation of 3,000 if of Elk Creek.
Id. at 634-35.
The level of detail of the mitigation plan in Olmstead Falls allows some
meaningful evaluation of whether a significant degradation will occur. Despite the fact
that impacts in Olmstead Falls were minimal compared to the AP alternative, the
mitigation plan was very detailed. In contrast, the mitigation plan in the EIS lacks any
detail. Fatally, it does not identify the sites for the proposed mitigation.
Identifying the sites proposed for mitigation is perhaps the most significant
omission in the mitigation plan included in the EIS. The nature of the proposed impacts
will require specific mitigation. The AP alternative proposes to impact areas that are
substantially different in character and function than the areas previously impacted and
subsequently mitigated by Parker Farm. The proposed alternative would have significant
buffer, stream, and coastal and riparian impacts. These types of impacts cannot be
mitigated through a Parker Farm type of project. While there may be farmland available
that can be transformed into a Parker Farm type mitigation site, that type of mitigation
will not be suitable for the proposed impacts. Rarer, more difficult to obtain, and more
expensive waterfront sites will be necessary to mitigate for impacts to the Primary
Nursery Areas, brackish marsh, over seven miles of tributaries, and riparian wetlands that
would be impacted under the AP alternative.
A second shortcoming of omitting any designation of mitigation sites is that there is
serious concern that the degree of mitigation that would be required for the AP alternative
cannot be completed within the hydrologic unit. This possibility is acknowledged in the
EIS. DEIS at 4-89. Without knowing where the potential mitigation sites are located, or
even if they will be within the same hydrologic unit as the impact, the Corps cannot
weight the severity of the impact against the potential mitigation.
Since the mitigation plan does not identify the proposed mitigation sites, it cannot
include a description of how wetlands will be developed as recommended in the
Mitigation Policy. The mitigation plan also lacks any monitoring or performance
requirements, making it impossible to compare the functions and values of the proposed
mitigation if successful to the impacted area.
Finally, the plan does not include a reference wetland. Without a reference
wetland, it will be impossible to determine whether the mitigated wetlands are successful
in replacing the functions and values lost in the impacted area. A reference wetland
would also facilitate the significant degradation determination by illustrating what
functions and values successful mitigation sites would possess in comparison to the site
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proposed to be impacted. The absence of a reference wetland in the mitigation plan
makes the Corps' required balancing of impacts and mitigation impossible.
ii. The lowered mitigation ratios suggested are not justified by the EIS.
A critical aspect of the mitigation plan is the mitigation ratio for the proposed
impacts. The EIS cites the EPA standards of 2:1 for restoration, 4:1 for enhancement, 6:1
for creation, and 10:1 to 60:1 for preservation. DEIS at 4-91. The EIS then immediately
proposes mitigation ratios that do not meet these standards, but does not adequately
support the proposed reductions. These lowered ratios are based on the Parker Farm
mitigation site. Id. Although the Parker Farm site has been determined to be successful,
it does not indicate that PCS and CZR are infallible in terms of mitigation. There is no
evidence that they are capable of repeating their success either in other areas similar to
Parker Farm or in different types of mitigation. The mitigation ratios are based on a
widely held understanding that mitigation is an inherently risky endeavor that cannot be
assumed to fully compensate for the functions and values lost in the impacted area. By
requiring the party responsible for mitigation to mitigate more than they impact, the
recommended ratios provides some safeguards against mitigation efforts that fail either
completely or to an extent that they cannot replicate the functions and values of the
impacted area. Additionally, the ratios compensate for the differences in function
between natural and created or restored wetlands and temporal losses of wetland
function. Even Parker Farm, a generally successful mitigation site has been shown to be
inferior to natural wetlands in certain aspects.3
The error in lowering mitigation ratios due to Parker Farm and PAII is best
summarized by the authors of a study comparing PAII to the South Creek tributaries.
Despite finding that PAII was comparable in some ways to the natural creeks, the authors
had serious reservations about predicting mitigation success based on the study.
Specifically, the authors state "these concerns ... limit the ability to make accurate
predictions about the probability of success (or failure) of future mitigation efforts." 4
Because of the shortcomings of mitigated wetlands and the inherent risk in mitigation, the
standard EPA mitigation ratios should be the minimum acceptable ratios in PCS'
mitigation plan.
iii. The mitigation plan does not meet the standards prescribed in the
proposed mitigation rules.
The weaknesses in the mitigation plan in the EIS are even more apparent when
compared to the draft mitigation rules currently being considered by the Corps. The draft
rules require an explanation of how the selected site will compensate for the impacts
3 Bruland GL and Richardson CJ, Comparison of soil organic matter in created, restored and paired
natural wetlands in North Carolina, 14 WETLANDS ECOLOGY AND MANAGEMENT 245, 250 (2006).
4 West (2000).
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ecologically, a description of the selection factors that were used in selecting the
mitigation site, how that site will be protected in perpetuity, and a description of the
current ecological conditions at the site. 71 Fed. Reg. 15519, 15550 (March 28, 2006).
These requirements are all premised on the designation of a specific mitigation site. The
"conceptual" plan proposed in the EIS falls substantially short of identifying a mitigation
site or mitigation sites, substituting site selection factors for actual selected sites. While
these draft rules are not binding, they further demonstrate the Corps' realization that a
project cannot be fully evaluated without a detailed mitigation plan to compare with the
proposed impact. The proposed mitigation plan in the EIS should be brought up to the
standards of the draft rules, beginning with the identification of specific mitigation sites.
iv. The mitigation plan does not address important impacts.
Compensatory mitigation is based on the premise that the functions and value of
the impacted area can be mitigated. While that may be possible for certain wetlands, it is
not the case for the wetlands that would be impacted under the AP alternative. The
functions and values provided by three Primary Nursery Areas that feed directly into a
Special Secondary Area cannot be mitigated through compensatory mitigation.
Similarly, the functions and values of a large, contiguous collection of diverse wetlands
cannot be mitigated. These two unique aspects of the area that the AP alternative would
impact certainly cannot be mitigated through a Parker Farm type mitigation project. The
mitigation plan does not address these impacts, or how they will be mitigated, making the
balancing of the proposed environmental impact and the proposed mitigation impossible.
3. The studies relied on by the EIS do not provide the information
necessary to satisfy the Guidelines.
The Corps must deny a permit when there is not "sufficient information to make a
reasonable judgment as to whether the proposed discharge will comply with these
guidelines." 40 C.F.R. § 230.12. The applicant has the burden of proof in demonstrating
that their proposed project complies with the 404(b) Guidelines. 61 Fed. Reg. 30990,
30998 (June 18, 1996). The applicant has not demonstrated that the proposed project will
not cause a significant degradation of the aquatic environment.
The EIS relies primarily on two studies to evaluate the environmental impacts of
the proposed project. These studies, the Jacks Creek monitoring reports5 and the Porter
Creek study, do not provide enough information to support the claims that the EIS makes.
Both of these studies have serious flaws that limit their applicability to the proposed
project.
5 The monitoring performed at Jacks Creek was part of a monitoring program mandated by the last permit.
In addition to Jacks Creek, Tooley Creek and Huddles Cut were monitored. Jacks Creek is the focus of the
EIS because pre-mining and post-mining data are available on Jacks Creek. Therefore, the monitoring
program will be referred to as the Jacks Creek study in these comments.
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a. The Jacks Creek study does not support the EIS' claims.
The Jacks Creek study is relied on extensively throughout the EIS to dispel the
possibility of harm to the aquatic environment. The Jacks Creek study is used to claim
there will be no adverse consequences of mining to water quality, sediment metal
concentrations, adjacent wetlands, fish communities, and benthic communities. DEIS at
4-13, 4-14, 4-15, and 4-17. The EIS then qualifies those claims by acknowledging, as the
Jacks Creek reports do, that no definitive conclusion can be made based on the study.
DEIS at 4-11, 4-13, 4-15, and 4-17. This qualification of the study is understated, the
study has significant deficiencies: it lacks adequate baseline data, does not monitor for
an extended period of time, analyzes an impact that is of an entirely different scale than
the proposed impact, and lacks peer review which typically validates scientific studies.
The baseline data are inadequate.
The focus on the Jacks Creek study is based on one unique factor, that pre-mining
and post-mining data exist for Jacks Creek. However, because of the limitations in the
monitoring, these data are entirely inadequate. During the first year of monitoring, no
baseline data were taken in regard to groundwater, surface water flow, water quality, or
salinity. NCPC TRACT STREAM MONITORING PROGRAM FOR PCS PHOSPHATE COMPANY,
INC.: YEAR ONE (1998) END-OF-YEAR REPORT at 35 ("Year One Report").
The second year of monitoring does provide data for groundwater, surface water
flow, water quality, and salinity, but is not without serious reliability problems. These
problems are most directly addressed in the conclusion of the fish sampling section. It
states "[t]he data do not allow any determination of true differences in fish abundances
between years." NCPC TRACT STREAM MONITORING PROGRAM FOR PCS PHOSPHATE
COMPANY, INC.: YEAR TWO (1999) END-OF-YEAR REPORT at 71 ("Year Two Report").
Similarly, the section on benthic monitoring fails to state any conclusion other than
recognizing that the data reflect a dynamic system. See Id. at 85.
The water quality monitoring conclusions were no clearer. The analysis in that
section found that the difficulty in acquiring data "makes comparison of results among
stations somewhat difficult, particularly for parameters that exhibit seasonality." Id. at
47. Going further, the report states that water quality data problems "may also hamper
future comparisons of year-to-year variability for a given station ...." Id. Additionally,
the "baseline" data collected during the 1999 monitoring season covered a season
"characterized by periods of unusually high precipitation in eastern North Carolina,
which had noticeable effects on the salinity and some, but not all, of the chemical
parameters." Id.
The EIS sums up the weaknesses of the baseline data in the Jacks Creek study by
stating that "it is difficult to draw any definite conclusions" because "there was only one
year of baseline ... data for Jacks Creek." DEIS at 4-13. The Year Two Report shows
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this description to be a drastic understatement. The only determination of any sort that
can be made from the baseline data is that the sampled system is a dynamic one, one that
would require years, if not decades, of monitoring to demonstrate a trend. The Year Two
Report admits that some of the data collected will be of little value to compare to
different sample sites, much less to analyze trends from year to year. It also
acknowledges that a portion of the baseline data was taken during a season which
demonstrated decidedly uncharacteristic weather patterns.
The summary of the baseline data eliminates any predictive value of the Jacks
Creek study. Even if the year of sampling were perfect, it would be too short to allow a
meaningful prediction of the future. However, this year of sampling was far from
perfect. The data are flawed, through no fault of the researchers. The purpose of the
sampling is to allow a comparison of data over the years to evaluate the impact of
mining. The fish and benthic community analyses acknowledge that satisfying this
purpose is impossible given the dynamic nature of the system. The water quality analysis
admits that the baseline data are essentially useless due to an unusually wet year and
limitations in the data. With no useful baseline data, the Jacks Creek study has no basis
for predicting that there will be no harm to the aquatic ecosystem. Therefore, any
reliance on the Jacks Creek study to claim there will be no harm should be removed from
the EIS. Specifically, the reliance on the study on pages 4-13, 4-14, 4-15, and 4-17, as
well as throughout the EIS, should be deleted.
ii. The duration of post-mining monitoring is inadequate.
The post-mining monitoring is inadequate to determine whether there are actual
impacts due to mining. Overlooking the substantial, fatal flaws in the baseline data, the
post-mining data also make the Jacks Creek study inadequate for predicting the impact of
the proposed project. The aquatic ecosystem sampled is a dynamic system; it changes
naturally each year. Therefore, a prolonged sampling period is necessary if any
conclusion can be made regarding the impact of changes such as reductions in drainage
basin. For example, the 2004 Report ("Year Six Report") cited in the EIS states that "fish
data illustrate the extreme natural variability in fish catch in these creeks." NCPC TRACT
STREAM MONITORING PROGRAM FOR PCS PHOSPHATE COMPANY, INC.: YEAR SIX (2004)
END-OF-YEAR REPORT at 59. That variability "makes it very difficult to discern any
spatial or temporal patterns in fish abundance." Id. The report goes on to explain that
future years of sampling may eventually be able to determine long term trends. Id.
The benthic samples showed similar "considerable variation." Id. at 63. This
variation even extended to submerged aquatic vegetation. Id. at 64. On the last
substantive page of the report, the last summary page of the benthic monitoring, the
report cites a problem in discussion of the benthic community that overshadows the entire
monitoring program. The report states that "such variability cannot easily be attributed to
simple changes in hydrographic parameters or habitat structure." Id. It continues,
emphasizing the need for further monitoring, stating that "[t]he large range of variability
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documented thus far during this study reinforces the need for careful interpretation of any
variation that may occur during continued post-disturbance monitoring." Id.
These sections of the Jacks Creek study highlight one of the problems that plague
the study; the post-mining monitoring is insufficient to allow any prediction to be made.
It is a short term study of a dynamic system that only shows trends over a long period of
time. The report acknowledges its inadequacy in this regard. The information is directly
applicable to the NCPC tract, but it is not a proper basis for predicting future impacts of
mining. It is also not sufficient to refute the general consensus in the scientific
community that drastic drainage basin reductions and nearly complete destruction of
headwaters will adversely affect the aquatic ecosystem. Since the Jacks Creek study
cannot be relied on to evaluate the proposed impacts, references to the study on pages 4-
13, 4-14, 4-15, and 4-17, as well as throughout the EIS, should be deleted.
iii. The EIS distorts the Jacks Creek study conclusions.
In addition to the data flaws identified in the previous two sections, the Jacks
Creek study cannot be relied upon to predict the impacts of the proposed project because
the impacts studied are miniscule compared to the proposed impacts. The impacts to
Jacks Creek under the current permit and impact to the NCPC creeks under the proposed
permit are incomparable. The current permit impacted 198 acres of the Jacks Creek
drainage basin, approximately 37% of the watersbed. DRAFT ENVIRONMENTAL IMPACT
STATEMENT FOR THE TEXASGULF, INC. MINE CONTINUATION: AURORA, NORTH
CAROLINA, JANUARY 1994 at 200.. The AP alternative would impact 2,408 acres of
wetlands, including nearly complete elimination of the watersheds of Jacks Creek (88%),
Jacobs Creek (89%), Drinkwater Creek (88%), Tooley Creek (84%), Huddy Gut (73%),
and Huddles Cut (93%). See DEIS at 6-60. There is no comparison between the impact
to Jacks Creek under the current permit and the proposed impacts based on drainage
basin reduction, even without considering the 38,558 linear feet of streams that would be
destroyed under the AP alternative.
Due to the drastic difference in the current impact monitored by the Jacks Creek
study and the proposed impact, no reasonable prediction of the impact to the aquatic
ecosystem can be made based on the Jacks Creek study. Not only are the AP alternative
impacts substantially greater for each stream than the impacts to Jacks Creek under the
current permit, they combine to have an impact that dwarfs the impact to Jacks Creek
under the current permit. The Jacks Creek study, even it were to have perfect data, could
not reasonably predict the impact of the AP alternative on a single creek, much less the
collective impact of the AP alternative on all of the South Creek tributaries and South
Creek itself. Since the Jacks Creek study cannot be relied on to evaluate the proposed
impacts, references to the study on pages 4-13, 4-14, 4-15, and 4-17, as well as
throughout the EIS, should be deleted.

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iv. The Jacks Creek study is unreliable because it is not peer reviewed.
Within the scientific community, peer review serves as a validation process. The
peer review process certifies that the experiment design, procedures, and conclusions
meet the standards of the scientific world. Studies that are not peer reviewed may meet
these standards, and provide valuable information, but should not be relied upon
extensively. The Jacks Creek study and its conclusions do not meet the standards of peer
reviewed scientific papers. If the conclusions made in the EIS were submitted to peer
review, the problems with data and scale identified in the previous three sections would
be considered fatal flaws to the predictive use of the Jacks Creek study. While the
monitoring reports may ultimately provide enough reliable data that they could be written
into a study that would meet peer review standards, they do not currently meet that level
of scientific reliability. The EIS improperly relies upon the Jacks Creek study, giving it
the weight of a peer reviewed study while not holding it to the standards of such a study.
Due to this misplaced reliance on the Jacks Creek study in the EIS, references to the
study on pages 4-13, 4-14, 4-15, and 4-17, as well as throughout the EIS, should be
deleted.
b. The Porter-Durham Creek study is not applicable to the proposed
impact.
The second study which the EIS primarily relies upon to support the claim that
there will be no adverse impacts to the aquatic ecosystem is the Porter Creek study.
DEIS at 4-12. The Porter Creek study compared water quality in Porter-Durham Creek
to the water quality in the South Creek tributaries based on a variety of parameters. The
EIS claims the study is relevant to the proposed impact because PCS mined within 200-
300 feet of Porter Creek in the 1970's and 1980's. Id. The study did not find any mining
related variations between the water quality in Porter Creek and the tributaries, leading to
the conclusion that mining the tributaries will not adversely impact water quality. Id.
The variations that were discovered were found to be a result of the variations in channel
depth between Porter Creek and the tributaries. Id. The EIS does not further address the
physical differences in channel depth and volume or mining impact between Porter Creek
and the South Creek tributaries. These differences are substantial, and minimize the
value of the Porter Creek study in evaluating the proposed impacts.
Porter-Durham Creek and the South Creek tributaries are drastically different in
their physical characteristics. In the EIS' description of water bodies, the differences
between the creeks are apparent. Durham Creek is a "major tributary of the Pamlico
River," drains over 41,000 acres, and is over 2000 feet wide at its mouth. DEIS at 3-35.
Porter Creek is a "moderately sized tributary of Durham Creek," drains over 2,600 acres,
and has an average depth of 4 feet. Id. The South Creek tributaries are significantly
smaller. Jacks Creek is "short, narrow" and drains only 328 acres. Id. at 3-32. Jacobs
Creek is a "small, shallow creek" that is described as "typical of many of the South Creek
tributaries." Id. at 3-33. Jacobs and Drinkwater Creeks each drain only 418 acres. Id.
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Tooley Creek is a "shallow tributary" that drains only 444 acres. Id. Huddles Cut is the
largest of the South Creek tributaries, draining only 756 acres. Id. at 3-34. Huddy Gut is
also substantially smaller than Porter and Durham Creeks, draining only 392 acres. Id.
These differences can be easily summarized. Porter and Durham Creeks are large creeks
that drain large areas and transport large volumes of water. The South Creek tributaries
are small, shallow creeks that have relatively small drainage basins.
In addition to the physical differences between Porter and Durham Creeks and the
South Creek tributaries, the impacts studied in the Porter Creek study are of an entirely
different nature than the impacts proposed. PCS mined within 200-300 feet of Porter and
Durham Creeks in the 1970's and 1980's. Id. at 4-12. Neither Porter nor Durham Creek
were directly mined. Additionally, Porter and Durham Creek collectively retained over
41,000 acres of drainage basin after mining. Those impacts do not compare to the
proposed impacts to the tributaries. In contrast to the zero linear feet of Porter and
Durham Creek being mined, over 38,000 linear feet of the South Creek tributaries will be
directly mined. Id. at 6-59. In addition to those impacts, each of the tributaries will have
more than 70% of their drainage basin eliminated. See Id. at 6-60. Huddles Cut alone
will lose 93% of its drainage basin. Id. The impacts to Porter and Durham Creek did not
directly impact the creeks and left a substantial drainage basin intact. The impacts to the
South Creek tributaries will directly eliminate over 7 miles of the tributaries themselves
and destroy nearly all of their drainage basins.
These differences between Porter and Durham Creeks and the South Creek
tributaries make any reliance on the Porter Creek study unjustified. Not only were the
impacts studied much less invasive and destructive than the proposed impacts, they
affected large creeks. The proposed impacts will more adversely affect smaller, more
vulnerable creeks than the studied impacts. Any comparison of the two mining plans is
unjustified. This unreasonable comparison is best illustrated by considering the proposed
impacts to Huddles Cut. The AP alternative would mine 702 acres of Huddles Cut
drainage basin, the largest drainage basin of the South Creek tributaries. Id. That is
approximately 93% of Huddles Cut entire drainage basin. Mining the same number of
acres in the Porter Creek drainage basin would only result in a 27% reduction. In
Durham Creek's drainage basin, eliminating an area equal to 93% of Huddles Cut's
drainage basin would be less than a 2% reduction. Any prediction of the water quality
impacts of the proposed project on the water quality in the South Creek tributaries based
on the Porter Creek study is clearly erroneous.
The EIS' reliance on the Porter Creek study to claim that water quality in the
tributaries will not be impacted by the proposed project is clearly misplaced. The
differences in the physical characteristics of the impacted water bodies as well as the
drastic differences in impact to those water bodies eliminates any predictive value of the
study. Therefore, the reference the Porter Creek study on page 4-12, as well as any other
comparative use of the study in the EIS, should be deleted.
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E. Expert Analyses of the EIS
The limitations and omissions identified in this comment letter have been echoed
by experts. In addition to the North Carolina Division of Marine Fisheries ("NCDMF"),
the U.S. Fish and Wildlife Service ("FWS"), and likely other governmental agencies,
many non-governmental scientists agree that the impacts of the proposed alternative
would be devastating to the aquatic environment.
The NCDMF and FWS have been extensively involved in the review team
process and the development of the EIS. That experience combined with their technical
expertise makes their criticisms of the EIS particularly relevant. Both agencies, relying
on significant scientific research, conclude that the EIS does not adequately represent the
environmental impacts of the proposed project, that mitigation cannot compensate for
those impacts, and that no mining in NCPC should be permitted. Although our
comments focus more specifically on the information that must be added for the Corps to
be able to make an informed decision, we would reach a similar conclusion based on the
evidence in the current EIS. We therefore fully endorse NCDMF and FWS' conclusion
that any mining in NCPC would constitute significant degradation based on the
information presented in the EIS.
The scientists that have signed on to the January 26, 2007 letter submitted by
PTRF have a wealth of experience and expertise. They have expressed significant doubts
regarding the claims of minimal impact stated in the DEIS. To the contrary, they express
a view that any mining in the headwaters of the South Creek tributaries or the tributaries
themselves will have significant adverse impacts on the immediate environment as well
as far reaching effects on the systems surrounding the project area. These views are well
grounded in basic scientific understanding of the role of wetlands and the facts of the
proposed impacts. These views are in line with both our concerns presented in these
comments and the concerns of NCDMF and FWS in their comments.
F. Additional Considerations
1. Financial assurance should be more thoroughly discussed.
The EIS briefly discusses financial assurances in Section 4.3.2.3.4.4 on page 4-92.
The discussion provides a cursory overview of the basics of financial assurances, but it
does not discuss the application of those basics to the proposed impact. There is no
discussion of project specific circumstances such as declining phosphate markets, the
costs of reclamation and mitigation, and the tenuous financial position that PCS claims to
be in. Each of these variables should be part of the Corps' "hard look" at whether to
require financial assurances. The final EIS should fully examine the pros and cons of
requiring financial assurances in this permit.
SELC Comments
PCS DEIS
File Number 2001-10096
30
2. Conditional Mining Areas should be considered.
A possibility that is not discussed in the EIS is the potential designation of
Conditional Mining Areas ("CMA"). A CMA is an area of particular environmental
concern that is permitted to be mined only after reclamation success is demonstrated.
This approach has been used at PCS' White Springs, FL site when the operation was
under the control of Occidental Chemical Company. See Department of the Army
Record of Decision, Permit application 8413-4652, October 7, 1987 at 32-33. The
proposed mine plan threatens sensitive areas in each tract. In particular, the tributaries to
South Creek, pocosin bays in S33, and wetlands in Bonnerton are sensitive environmental
areas. Given that the proposed impact is unprecedented, it is substantially different than
any previous impact in this area, the possibility of establishing CMAs should be
discussed in the EIS. Any permit that allows mining in NCPC near the South Creek
tributaries, in the southern portion of S33, or in Bonnerton should require that the
applicant demonstrate that the aquatic ecosystem has not been adversely impacted prior
to continued mining in these vulnerable areas. The EIS cites previous impact studies that
cannot begin to predict the impacts of the proposed project. Implementing CMAs would
tentatively permit mining, but not rely entirely on poorly supported claims that no
adverse impact will occur. Because CMAs would protect sensitive environmental areas
until the applicant could demonstrate that the proposed impacts will not adversely impact
the aquatic ecosystem, their potential use should be evaluated in the EIS.
IV. CONCLUSION
We appreciate the opportunity to comment on the draft EIS. We re-emphasize
our understanding of the complexity of this project and the substantial effort that the
Corps has invested in the draft EIS. The changes suggested in these comments would
make the EIS a more complete document, one that can serve the role that is mandated to
it by NEPA. Thank you for considering these comments.
Sincerely,
5 ? 164 G
Derb S. Carter
Senior Attorney
Southern Environmental Law Center
'61? (? ))K-
Geoffrey R. Gisler
Associate Attorney
Southern Environmental Law Center
Attachment 4
SELC PTRF
401 Certification Comment Letter
07/07/2008
February 8, 2007
U.S. Army Corps of Engineers
Wilmington District, Regulatory Div.
ATTN: File Number 2001-10096
P.O. Box 1890
Wilmington, NC 28402-1890
To Whom It May Concern:
This letter and attached document is in response to the request by the PCS Phosphate, Inc. which
applied to the Army Corps of Engineers (USACE) for a Clean Water Act Section 404 permit to
impact and fill wetlands and waters of the state for the purpose of continuing its mining
operations along South Creek and the Pamlico River in eastern Beaufort County near the town of
Aurora. The permit request includes excavation of 2,408 acres of wetlands and waters, including
brackish marsh and public trust areas, and greater than 38,800 linear feet of stream. Sections of
three designated inland Primary Nursery Areas that drain to South Creek, a Secondary Nursery
Area, would be excavated under the Applicant Preferred mining alternative. This alternative lies
within a tract of land known as the NCPC tract, which is bordered to the north by the Pamlico
River and to the east by South Creek.
Due to the special nature of the upland-, wetland-, and estuarine-creek ecosystem within the
NCPC tract, we, the undersigned believe that the Applicant Preferred alternative would result in
a significant adverse impact to the aquatic ecosystem that cannot be replaced through mitigation
in a reasonable time frame. Furthermore, we contend that any mining through the headwaters or
other downstream portions of the three PNAs and their associated riparian wetland complex
would result in significant degradation. The attached document, "Impacts to the Aquatic
Environment Associated with the PCS Phosphate, Inc. Proposed Mine Expansion" produced by
the Pamlico-Tar River Foundation has been included to support this claim.
Sincerely,
Heather Jacobs
Pamlico-Tar RIVERKEEPERO
Pamlico-Tar River Foundation
John Alderman, President . Dorothea Ames
Alderman Environmental Services, Inc. Geologist, PG
David Knowles, Ecologist Michelle Duval, Ph.D.
Greenville, NC Scientist
Environmental Defense
Joe Rudek, Ph.D. Doug Rader, Ph.D.
Senior Scientist Principal Scientist for Oceans
Environmental Defense and Estuaries
Environmental Defense
William H. Schlesinger, Ph.D. JoAnn Burkholder, Ph.D.
James B. Duke Professor, Biogeochemistry Director, Center for Applied
& Dean Aquatic Ecology
The Nicholas School of the North Carolina State University
Environment and Earth Sciences
Duke University
William W. Kirby-Smith, Ph.D. Robert R. Christian, Ph.D
Associate Professor of the Practice of Marine Ecology Coastal Ecologist
Duke University Marine Laboratory
Norm Christensen, Ph.D. Emily S. Bernhardt, Ph.D.
Professor of Ecology Assistant Professor
Nicholas School of the Environment Department of Biology
Duke University Duke University
2
Impacts to the Aquatic Environment Associated with PCS Phosphate, Inc.
Proposed Mine Expansion
1) INTRODUCTION
1.1 Purpose: The purpose of this document is to evaluate the impacts to the aquatic
environment located within and adjacent to the proposed mine expansion by PCS Phosphate, Inc.
This tract of land is commonly referred to as the NCPC tract (formerly owned by the North
Carolina Phosphate Company). Information originates from peer reviewed journals, the Draft
Environmental Impact Statement (DEIS), and personal communication with researchers and
DENR Agency personnel.
1.2 Significant Degradation: Under 404(b)1 guidelines of the Clean Water Act, the US
Army Corps of Engineers (hereafter referred to as the Corps) must deny a permit to fill wetlands
if it will result in significant degradation of the waters of the U.S. The burden of proof lies with
the applicant to prove that wetland and water fill activities will not cause significant degradation.
Two considerations that are balanced in determining whether significant degradation occurs are
a) impact to the environment and b) the mitigation required by the permit. The Corps may be
more likely to find significant degradation if. 1) the impact affects a particularly sensitive or
unique area; 2) the impact affects a large area; or 3) the affected environment has other features
that are not easily replicated by mitigation.
Four broad categories of impacts can result in significant degradation:
1. Impacts to human health;
2. Impacts to wildlife;
3. Impacts to the aquatic ecosystem; and
4. Impacts to recreational, aesthetic, and economic values.
When evaluating these impacts, the guidelines specify a focus on the "persistence and
permanence" of the impacts. This paper's focus is on proposed mining sequences and their
associated aquatic ecosystem impacts. Certain impacts to aquatic environments that are
scrutinized by the Corps include but are not limited to:
water chemistry salinity temperature dissolved gas levels
nutrients eutrophication diversion of flow hydrologic changes
shoreline erosion aquatic communities aquatic habitat spawning areas
nutrient cycling contaminant levels invasive species
altering upstream or downstream areas
1.3 Applicant Preferred Alternative: PCS Phosphate, Inc. has applied for a permit to
impact 2,408 acres of jurisdictional waters and wetlands. A breakdown of the impact can be
found in Table 1. The request includes more than 38,800 linear feet (lf) of intermittent and
perennial stream impact and a 70% to > 90% reduction of the drainage basins of 6 named
3
tributary drainage basins (Table 2). Some reductions are considered permanent, others temporary
in the DEIS. The present natural hydrology within and in the periphery of the mine site will be
permanently altered. Three streams located within the NCPC tract proposed to be excavated are
listed as inland Primary Nursery Areas (PNAs) (Street et al. 2005).
Table 1: Breakdown of wetland and water impacts by biotic community type (DEIS)
Biotic Community Type Applicant
Preferred Site
Public Trust Waters acres 5
Public Trust Waters linear feet 14564
Perennial Stream acres 3
Perennial Stream linear feet 7008
Intermittent Stream acres 3
Intermittent Stream linear feet 17267
Wetland Brackish Marsh 38
Wetland Bottomland Hardwood
Forest 102
Wetland Herbaceous Assemblage 235
Wetland Scrub-Shrub . 202
Wetland Pine-Plantation 514
Wetland Hardwood Forest 509
Wetland Mixed Pine/Hardwood
Forest 564
Wetland Pine Forest 195
Pond 19
Upland Herbaceous 234
Upland Scrub-Shrub 262
Upland Pine Plantation 55
Upland Hardwood Forest 67
Upland Mixed Pine/Hardwood Forest 140
Upland Pine Forest 38
Upland Agricultural Land 117
Upland non-vegetated/maintained
areas 92
Total wetlands, waters, upland) 3412
Total linear feet streams 38839
Total Uplands acres 1005
Total Wetlands/water acres 2407
4
Table 2: Drainage basin reductions for tributaries to the Pamlico River and South
Creek under the applicant preferred (AP) alternative (DEIS)

Creek Name Existing Total
Drainage
acres. Drainage in
NCPC Tract
acres Drainage in AP
to be Excavated
acres Proposed
Drainage Basin
Reduction
Jacobs 418 407 370 89
Jacks 320 310 280 88
Toole 444 430 375 84
Drinkwater 426 418 373 88
Huddles Cut 756 707 702 93
Hudd Gut 392 285 285 73
1.4 NCPC Characterization:
More than 70% of the NCPC tract proposed for mining consists of delineated, federal and state
jurisdictional wetlands and open waterways. Riparian wetland types located in this tract of land
and within the AP site include estuarine, riverine, headwater, and flat or depressional hardwood
and pine wetlands. Certain wetland types such as brackish marsh, bottomland hardwoods and
scrub-shrub within the NCPC tract are irregularly inundated due to dominance of wind tides,
which can cause dramatic fluctuations in salinity and water levels. The soils are poorly drained
with a high runoff potential. Under natural conditions, the seasonal high water table ranges from
ground surface to 2 feet below ground level. Wetland types are noted in Table 1. Jacobs, Jacks,
and Tooley Creeks are designated inland PNAs and South Creek is a special secondary nursery
area. These nursery areas are important habitats for numerous finfish and shellfish species.
Complete descriptions of the significant tributaries to South Creek within the NCPC track can be
found in the Journal of the Elisha Mitchell Scientific Society (1985 v.101). In general, tributaries
to South Creek within the NCPC tract have complex marsh biotic communities that are
influenced by complex, interacting environmental factors rather than one environmental gradient.
They occur along steep physical gradients where laterally uplands and forested wetlands
dominate and upstream areas gradually give way to swamp forests. Most of the tributaries are
relatively shallow, narrow systems where runoff is greatest during the winter season when
evapotranspiration is low. Downstream reaches of the tributaries are bordered by brackish marsh
dominanted by Juncus romerianus (needlerush), but also include a mosaic of other marsh
species. Creek sediments are high in organic content. South Creek is dominated by wind tides.
Annual precipitation is around 50 inches/year.
The following sections provide information on the potential for water quality and
other aquatic environmental impacts associated with the proposed mining
alternative.
5
The first discussion below in section H is related to downstream and peripheral
impacts to areas not directly impacted via the proposed mine expansion within the
NCPC tract.
II) Impacts to Downstream/Peripheral Wetlands of the Proposed Mine Site
Wetlands perform many functions critical to the health of aquatic environments (USEPA, 2001).
North Carolina has lost approximately 50% of its original 11.1 million acres of wetlands (Dorney
et al. 2004). Today, approximately 95% of the remaining wetland acres in the state are found
within the coastal plain (Bales and Newcomb 1999). The Albemarle-Pamlico Estuary is a
nationally significant estuarine resource. This estuarine system provides essential nursery habitat
for most of the commercial and recreational fish and shellfish species caught on the US east
coast. Over 90% of North Carolina's commercial fish landings and over 60% of recreational
harvest by weight are comprised of estuarine-dependent fish species (Street et al. 2005).
Wetland and stream functions (2408 acres) within the mine excavation site will be permanently
lost, as noted in the DEIS. The uses of the land to be mined will also be permanently altered.
Section III of this document describes functions that will be lost within the mine site (AP), and
assesses whether or not these functions can be recovered through mitigation/reclamation within a
reasonable time frame (10 years). Table 3 includes functions that will be lost or reduced in
wetland and stream systems along the periphery of the mine site within the NCPC tract. Impacts
to downstream areas are not required to be mitigated; therefore, any impact or loss of function in
these areas will not be replaced.
Table 3: List of functions provided by downstream and peripheral wetlands of the
proposed AP mine alternative and associated impacts.
Functions Provided Impacted by AP Alternative Explanation
Flood control Impacted Section 2.4
Nutrient cycling Impacted Section 2.4a
Carbon sink or source Impacted Section 2.5
Loss of upstream functions as
sink and placement of dike
Sink for pollutants Impacted constructed with contaminated
sand tailings. Section 2.6.
Sediment accumulation Not-Impacted
Soil Organic Matter Not-Impacted
accumulation
Increasing load from upstream
Primary Productivity Impacted nutrients and groundwater input.
Sections 2.4a and 2.5
Dampen wave energy Not-Impacted
(erosion control)
Habitat (terrestrial & aquatic) Impacted Section 2.3
Nursery Impacted Section 2.4
Detritus export Impacted Section 2.5
6
2.1. Elemental Contamination
A study conducted prior to the implementation of the wastewater recycling system at the plant
site revealed that sediments in the vicinity of discharge sites on the Pamlico River and South
Creek contained elevated levels of cadmium, molybdenum, arsenic, Manganese, vanadium and
titanium as well as fluorine (Riggs et al 1989). All of these elements are found within the
phosphate grains. The toxicity of heavy metals to the aquatic environment has been well studied.
Specifically in the Pamlico Estuary several studies have associated metal contamination with
crab shell disease (Engel and Noga 1989; Brouwer et al. 1992; Gemperline et al. 1992;
Weinstein et al. 1992). Since the recycling system has been in place in the mid-1990s for PCS
Phosphate, crab shell disease has declined (personal communication, Sean McKenna, DMF
2006). The reclamation process uses a blend of gypsum and clay, which results in elevated levels
of metals, specifically cadmium within the mine site. Studies conducted by North Carolina State
University and outlined in the DEIS also found that cadmium had bio-accumulated in several
plant species located on existing reclamation areas. Further studies revealed elevated levels of
cadmium in benthic organisms, blue crabs and clams adjacent to PCS outfalls and ponds on
company property.
Of particular concern is the potential impact of metals leaching into downstream muds from
reclamation areas. The company proposes, at some point in the future, to reconnect natural
downstream areas with reclaimed streambeds within the mine site. It is clear in the DEIS that
current levels of cadmium and other metals around the mine site are elevated, including areas in
the NCPC tract which could cause adverse biological effects. The future long-term impacts from
mining and reclamation activities on cadmium and other heavy metal accumulation within the
aquatic environment are unknown. The potential suspension and transport of contaminated muds
during hurricane events or other strong storm events should also be evaluated. The DEIS fails to
consider these long-term impacts to the downstream aquatic environment.
2.2 Flow Dynamic Impacts on Salinity Gradient
The tributaries of South Creek have varying salinities (0-17 ppt). During low precipitation years,
it is evident that salinities are mainly driven by South Creek and ultimately by the Pamlico River
Estuary (Davis et al. 1985). Watershed input of precipitation and potentially surficial
groundwater flow are sources of freshwater to the headwater portions of these streams, and also
play an important role in producing a downstream salinity gradient. The greatest runoff occurs
during winter when evapotranspiration is low (Bradshaw et al. 1985). Both vertical and
downstream stratification occurs after periods of runoff. Groundwater salinities for the Jacks
Creek watershed ranges from fresh (-0) to 13 ppt (Brinson et al 1985). Sun et al. (2002) suggest
that topography affects stream flow patterns and storm flow peaks and volumes, and is the key to
wetland development in the-southern US. The unique features and diversity of the contiguous
forested wetlands, uplands, and riparian wetlands (marsh, bottomland hardwood) within the
proposed mine block underscore the potential difficulty of providing mitigation that replicates
the complexity of this system.
The 2006 DEIS uses a similar argument to the previous permit EIS against any significant
salinity change due to large drainage basin reductions and excavation of ephemeral, intermittent,
and perennial stream segments. The basis for such an argument appears to come from two
studies: West's (1990) benthic study comparing Project Area II to 4 natural stream channels, and
7
the NCPC monitoring program in Jack's Creek (CZR Incorporated et al. 2005). West's (1990)
study sample size for water quality parameters is 4 replicates throughout one year, of which the
report states, "It should be noted... that these data address only gross trends in temporal variation
in water quality because the time scale of sampling (trimonthly) far exceeded the time scale of
significant change in water quality parameters (<1 day)." Furthermore, the sample sites were
located in the lower stream segments (lower half to third approximately) of each tributary (Jacks,
Jacobs, Drinkwater and Tooleys) where influence from South Creek likely is the dominant
factor. The 2-4 ppt salinity change in this study does not capture the salinity regime of the
upstream portions. The second study on Jacks Creek is seriously limited because 1) Only one
year of baseline sampling took place, and 2) The impact described for Jacks Creek (37%
drainage basin reduction) cannot be reliably scaled up to assess potential aquatic system impacts
from 73-93% drainage basin reductions as proposed in the DEIS.
These cited studies do not provide sufficient evidence to support the premise that drainage basin
reductions will not result in salinity changes to downstream segments. By mining through upland
and adjacent wetlands areas, as well as headwaters and perennial stream segments, the drainage
basins will be severely reduced. As a result, there could be potentially significant increases
salinity for at least 15 years until reclamation can, at best, re-establish a drainage basin. At this
time it is unclear how the drainage basins will be permanently altered by reclamation activities,
but it is clear that the alterations will be significant and long-term. Due to the significant increase
in elevation of the reclamation area and altered soil horizons that will not resemble natural
conditions, drainage basins could potentially be permanently and significantly altered. The
affects of salinity changes on stream systems are further described in the following sections.
2.2.a Groundwater Alterations:
There is little information in the DEIS regarding the nature of groundwater- or surface water
flow in reclaimed areas as compared to flow under natural conditions. Castle Hayne Aquifer
impacts have been studied fairly extensively, but there is a lack of information on how surficial
aquifer or subsurface (rain-driven subsurface flow) may be altered in either adjacent natural
areas or in reclaimed tracts. The potential loss of groundwater input as well as surface drainage
loss to South Creek tributaries could further impact the naturally occurring vertical and
downstream salinity gradients.
2.3. Salinity Change Impacts to Other Factors
Eliminating the freshwater /saltwater interface will most likely significantly alter natural function
of the creeks, including nutrient cycling (discussed in section 2.4.a below). Salinity changes will
also result in the loss of freshwater habitat for beneficial finfish species such as pumpkinseed,
largemouth bass, and bluegill. WRC shock studies from November 2006 (Data provide by Maria
Tripp, NC WRC) as well as Rulifson (1990) confirm freshwater species present; including those
listed above, in South Creek tributaries within the NCPC tract.
There also exists the potential for accelerated sea level rise that would result in salt-induced
stress to forested and bottomland-hardwood freshwater wetland areas and more rapid succession
to brackish marsh. Such salinity stress could affect the carbon and nutrient dynamics of these
wetlands, resulting in nutrient and energy loss (Lugo et al. 1988). This could, in turn, result in the
loss of bottomland hardwood- and freshwater marsh functions at a much faster rate than what
would occur naturally.
2.4 Hydrologic Changes and Consequences
EPA estimates than one acre of wetland can hold up to one and a half million gallons of
floodwater (US EPA, 2001). Verry (1997) suggests that wetlands can reduce flood peaks even
when wetlands are at water storage capacity, behaving similarly as reservoirs or lakes. Such
flood storage loss will alter the local hydrology within the NCPC tract. Dike construction may
induce more lateral flow and floodwater movement to areas previously inundated on less
frequent levels. Altered hydroperiods would result in an increase in frequency and magnitude of
anaerobic conditions within the riparian wetland areas. Increased anaerobic conditions can
promote release of nutrients (especially phosphorus and iron) from sediments into the water
column. Increased nutrients could result in increased algal blooms, further exacerbating
anaerobic bottom waters and mortality of fish and benthic fauna. Elevated levels of phosphorus
can also stimulate blooms of potentially toxic cyanobacteria (Burkholder 2002).
2.4.a Nutrient Cycling
Changes in hydrology resulting in prolonged anoxic conditions could significantly alter the
nutrient dynamics of the system. Mitsch and Gosselink (1993) stated, "Anoxic conditions during
flooding have several other effects on nutrient availability. Flooding causes soils to be in a highly
reduced oxidation state and often causes a shift in pH, thereby increasing mobilization of certain
minerals such a P, N, Mg, S, Fe, Mn, B, Cu, and Zn. This can lead to both greater availability of
certain nutrients and also to an accumulation of potentially toxic compounds in the soil."
Phosphorus sorption potential in forested wetlands is partly a function of flooding and saturated
soil conditions that cause the accumulation of organic matter and aluminum (Axt and Walbridge
1999). Natural wetlands appear to have superior P sorption capacity in surface soils and,
conversely, upland P sorption occurs in the subsurface soil. Thus, wetlands appear to perform P
sorption via surface runoff and upland areas are more suited for improving groundwater quality.
(i.e. differences in soil chemistry as a function of landscape position). Again, it is important to
point out the diversity of upland, riparian wetland, and forested wetland systems in the NCPC
tract.
It is unclear from the DEIS whether groundwater input is significant in the wetland and estuarine
creek systems of the NCPC tract. If groundwater input does play an important role, then there is
likely to be a high input of nutrients entering the system from the subsurface flow through
organic soils. Therefore, the primary productivity in upper areas of the creek systems may
depend on this high nutrient groundwater input.
An active point in the nutrient cycle is the naturally occurring die-offs of freshwater algae. The
potential loss of freshwater input and subsequent loss of freshwater algae could eliminate this
part of the nutrient cycle (personal communication, Robert Christian, ECU 2006).
Finally, marshes act as sinks for nutrients, sequestering them in plant tissue and sediments thus
removing them from the water column. The major tributaries to the Pamlico Sound, the Neuse
and Tar Rivers, have been designated by the NC Environmental Management Commission as
9
"Nutrient Sensitive Waters" due to consistently elevated levels of nitrogen, phosphorus and other
pollutants and basin-wide nutrient reduction strategies have been implemented. This nutrient
enrichment has promoted algal productivity, hypoxia, anoxia, and fish kills in the lower estuaries
(Burkholder et al. 2006). Removal of wetlands in the Pamlico Sound system would exacerbate
the impacts of this loading by removing the nutrient uptake capability of the marshes.
2.5 Carbon Cycle (Export and Sequester)
The interaction of marshes and adjacent, aquatic systems can be very important to the supply or
sequestering of organic carbon to those aquatic ecosystems. Some studies suggest that marshes
can either export or retain carbon, depending on the relationship between aerobic microbes and
their consumers (Mitsch and Gosselink 1993). Marshes are detrital-based systems and conversely
many studies have found the export of detrital (particulate organic) and/or dissolved organic
carbon to be an important input to aquatic systems. Bottomland Hardwoods (BLH) perform
functions such as nutrient uptake and transformations, sediment retention, floodwater storage,
and organic C export to downstream ecosystems (Mitsch and Gosselink 1993). Other studies
have found that much carbon is exported from marsh systems in the guts of migratory feeding
fish and birds or cycled through the marsh to the upper ends of tidal creeks and back to the
marsh. (Mitsch and Gosselink 1993). Mining in the areas close to the estuary as proposed in all
alternatives (except in the area south of highway NC 33) will remove mature watersheds that are
potentially significant sources of organic carbon to the estuary.
Unless the impact is mitigated with creation or effective, carefully evaluated restoration of
systems that can provide a similar magnitude and quality of organic carbon to the estuary, the
estuary will suffer a net loss of habitat quality.
2.6 Headwater Stream Function
The proposed mine site includes mining through more than 38,000 linear feet of stream,
including 100 acres of BLH wetlands and other areas of riparian wetlands. Of particular concern
is any mining alternative that would eliminate the headwater stream channel as well as its
associated BLH and freshwater riparian wetlands. A memo from John Dorney (NC DWQ), April
2006 states, "Headwater streams are very common and provide significant benefits to
downstream water quality and aquatic life. Intermittent streams have significant aquatic life even
though their flow is not constant throughout the year. Headwater wetlands are often associated
with these streams and provide important water quality filtration to protect downstream water
quality as well as significant aquatic life habitat. Therefore based on this on-going research, the
Division of Water Quality believes that protection of these headwater streams and wetlands is
essential to protect downstream water quality."
Headwater stream areas are typically influenced by adjacent riparian zones and should be
considered jointly with their associated riparian wetland areas. Physical hydrology/topography
(geomorphology) defines ecosystem function of headwater wetlands (Havens et al. 2004).
Coastal plain headwater wetlands typically have higher frequencies of overbank flows, flatter
hydrograph and longer inundation periods than piedmont or mountainous headwater regions
(Hupp 2000).
10
2.6 Other Mining Impacts
Construction of the dike system that will transect South Creek tributaries may also directly
impact surface water quality via sedimentation and increased turbidity. Another main concern is
the direct erosion of contaminated sand tailings, which are the base used in dike construction.
The DEIS notes that a 1980 study found cadmium present in all three ore-processing by-products
(sand tailings, clay, and phosphogypsum) in levels that exceed natural background
concentrations at the ground surface (Wakefield 1980). Therefore, dike construction may cause
direct contamination of surface water and/or muds of the tributaries within the NCPC tract
2.7 Section II Summary
Existing in-stream data for South Creek tributaries within the NCPC tract suggest that drainage
basin input of freshwater is important to the overall function of those stream systems. The direct
mining of headwater, intermittent, and perennial stream channels as well as their associated
riparian wetlands would impact the hydrology, salinity gradient, nutrient cycling, and carbon
availability of the downstream portions of the south Creek tributaries, listed in Table 2. The
DEIS fails to demonstrate that mining portions of the estuarine creeks and riparian wetlands
would not result in a significant impact to downstream and peripheral areas.
The following section discusses direct impacts via the mine expansion, including a
discussion of existing wetland functions and the possibility that these functions can
be replaced through reclamation and mitigation.
III) MITIGATION
The DEIS notes that the existing functions of the 2,408 acres of wetlands within the mine
expansion boundary would be lost. The question then remains is whether resulting
compensatory mitigation and the reclamation process can replace the functions lost through
mining- and fill activities (Table 4). PCS Phosphates' conceptual mitigation plan could result in
approximately 4,000 acres of restored, enhanced or preserved land. Mitigation ratios in this plan
depend upon the wetland type. At this time, it is unclear where mitigation will take place,
although it is understood that one planned site is located on a tributary to Pungo Creek, which
drains to the Pungo River. It has not been demonstrated or suggested by the company that all of
the mitigation would take place within the South Creek watershed, where the impacts would
occur. Furthermore, the buffer mitigation requirements are so large that the company has
requested a flexible plan that will replace required buffer restoration with other BMPs aimed at
reducing nitrogen and phosphorus runoff. This telling fact should be clearly conveyed in the
DEIS.
The more than 2000 acres of wetlands and waters, along with the 1000 upland acres proposed to
be impacted within the South Creek watershed, comprise a contiguous and interdependent
system, which currently includes three inland primary nursery areas (PNAs). Will the resulting
mitigation of unknown acreage per mitigation site result in complete replacement of the
functions lost from the proposed wetland- and waters, within an appropriate timeline (10 years)?
Will the resulting mitigation offer the full suite of functions and protection to PNA that the
existing wetlands and upstream channels of the NCPC tract provide?
11
As compensatory wetland mitigation becomes increasingly important in the health of our aquatic
ecosystems, the research related to assessing the functional equivalency of restored or created
sites to natural conditions has also increased. The section below summarizes research conducted
on-site or in similar wetland systems found within the NCPC tract, including the success of
restoring wetland function.
Table 4. Wetland functions (combined for all wetland types) and whether such loss of functions
from mining activities can be replaced within a 10-year timeframe.
Lost / Recoverable with
Mitigation within 10-
Functions Provided ears Explanation
Loss of floodplain due to reclamation and resulting
Flood control Lost higher elevations; potential for net loss of 100-year
floodplain. Mitigation may enhance flood control
functions, but flood plain acres will be lost
Nutrient cycling Lost Aspects of complex biogeochemical cycling will not
recover within 10 years. See Section 3.1 and 3.3.
Carbon sink or source Lost Not recoverable within 10 years. See Section 3.3.
Sink for pollutants Recoverable with However, it is unlikely that mitigation will occur
mitigation upstream or adjacent to an inland PNA.
Sediment accumulation Not wholly recoverable See Section 3.3.
SOM accumulation Lost SOM content will be lower and will not recover in 10
years. See Section 3.2.

Primary Productivity Recoverable with
PP is a function of stream depth. See Section 3.4.
mitigation
Dampen wave energy Recoverable with Highly dependent on location of mitigation site. A Parker
(erosion control) mitigation
Farm-like mitigation effort will not replace functions lost
in riparian wetland systems adjacent to estuarine streams
Habitat Recoverable with
See Section 3.5.
(terrestrial & aquatic) mitigation
Nursery Recoverable with However, successful mitigation projects a function of
mitigation location. See Section 3.5.
Detritus export Lost Not recoverable within 10 years.
3.1 Denitrification:
A study comparing restored to natural BLH wetlands found that restored wetlands have lower
denitrification potentials, even though the correct hydrology and vegetation was present (Hunter
and Faulkner 2001). This study suggests that restoration of water quality functions of BLHs are
dependent on more than hydrology alone.
3.2 Soil Organic Matter (SOM):
Soil properties of created and restored wetlands systems differ from those of natural wetlands
(Verhoeven et al. 2001). In restored and created wetlands in the NC coastal plain, mean SOM
12
content for all created and restored wetlands analyzed was significantly lower than the mean
SOM content in adjacent natural wetlands for four HGM settings (headwater riverine, mainstem
riverine, non-riverine mineral soil flat, and nonriverine organic soil flat; Bruland and Richardson
2006). Bailey Creek and Parker Farm are compensatory mitigation sites for PCS located within
the South Creek watershed. The Parker Farm restored areas have only 24.2% SOM content,
whereas SOM content of the adjacent natural wetland is 77.4% (Bruland and Richardson 2006).
There was no significant difference in SOM content between the created site and natural site on
the Bailey Creek area. However, it is important to note that the natural area of Bailey Creek had
the second lowest SOM content (8.9%) out of 11 natural wetlands analyzed. Low SOM content
may hinder development of microbial communities, which are critical to wetland function
(Duncan and Groffman 1994, Bruland 2004). Bacterial communities that rely upon this organic
matter for energy provide via mineralization, inorganic nitrogen, phosphorus and carbon to the
wetland system.
3.3 In-stream and Riparian Wetland Soil Structure:
West's (2000) analysis of Project Area 2 (created estuarine creek/marsh) as compared to Jacobs,
Drinkwater, Jacks, and Tooley Creeks revealed that PA2 sediments lacked woody-detrital
covering, significant peat component, and predominance of silt and clay found in natural creek
sediments. West also pointed out that evidence is lacking for detectable accretion of these
components over a 10-year period in PA2.
Based upon a 15-year study of vegetation and soil development in the created PA2 brackish
marsh system, wetland soil formation is slower to develop than the plant community (Craft et al.
2002). Biomass of the regularly inundated Spartina alterniflora reached natural levels within
three years. Juncus roemerianus and S. cynosuroides, two species inundated less frequently,
required nine years to match natural marsh conditions, and the upland S. patens had not achieved
natural marsh equivalence after 15 years. Soil characteristics, including porosity, organic C and
total N reservoirs, along the streamside and interior areas were estimated to require 70-90 years
to reach natural marsh conditions. Wetland soil conditions of the upland border, dominated by S.
patens were estimated to require more than 200 years to recover.
3.4 Sediment Interaction
Bradshaw et al. (1985) suggested the physical attributes of South Creek tributaries strongly
influence sediment chemistry: "The large amount of metabolism per unit surface area in such
shallow waters also means that primary productivity is highly concentrated per unit area, an
important characteristic for a viable nursery. Because these creeks are so shallow, activity of the
sediments is necessarily a large proportion of ecosystem function." This is an important aspect to
consider if estuarine stream channels are to be impacted. The resulting mitigation must match not
only the hydrology, soil, and vegetation of the natural area, but stream depth as well to replace
the high productivity found in the existing NCPC South Creek tributaries.
3.5 Habitat Replacement
An assessment of nursery function of the created brackish-marsh / estuarine-stream complex
PA2 over a 10-year period found that nursery functions, as related to ichthyofauna and benthic
infauna (Rulifson 1991), were supported in the created area (West et al. 2000). West et al. (2000)
linked the success of the created area to four aspects related to its location. First, the created
13
habitat is surrounded by the same habitat it was intended to replace or mimic. Second, the
surrounding area is a large undeveloped habitat that eliminates anthropogenic sources of
pollution and other aspects that can negatively impact restoration or creation projects. Third, due
to its non-tidal nature, erosive forces are minimal. Lastly, the created area, similar to its adjacent
natural habitats, is limited in the amount of fauna it can sustain under highly variable abiotic
factors. As West et al. (2000) points out, the majority of the taxa found in the area are part of a
small subset of resilient, tolerant estuarine species. Due to the proximity of PA2 to two relatively
undisturbed natural creek systems, invertebrate recruitment pools are large and ultimately may
play an important role to the success of the PA2 mitigation site. Considering that the proposed
mining alternatives would require a much larger scaled salt marsh mitigation site, it is
questionable whether recruitment pools will be sufficient to garner similar results. The DEIS
needs to provide evidence that scaling up a project such as PA2 is feasible with a high
probability of success.
As noted above, the sediments are dissimilar between the natural creeks in the NCPC tract and
the created PA2 area, and there was no evidence of accretion of peat, woody detritus and silt and
clay over a ten-year period. Perhaps this is a function of a lack of upstream watershed, including
riparian and forested wetland habitat. However, this difference seems to play an insignificant
role in the ability of mobile benthic and fish fauna to inhabit the area; there appeared to be
enough high quality food, to account for the equality of abundances of invertebrates in created vs.
the natural system. Other potential functions of woody detrital material, such as nutrient cycling
functions, were not tested. The soil and vegetation study described in Section 3.3 estimated that
wetland soil characteristics in created brackish-marsh systems require 70-200 years to re-
establish natural conditions (Craft et al. 2002). While the West et al. (2000) and Rulifson (1991)
studies demonstrate that created marsh creek system can support fauna, these studies did not
address whether created wetlands can establish the biogeochemical, microbial and other
functions of natural wetlands.
There is also an important question related to reference sites for future mitigation. If a mining
alternative were to be permitted that would directly impact the estuarine creek systems and their
associated riparian wetlands in the NCPC tract, what wetland and streams systems would be used
as a reference for evaluating future mitigation success? Due to climate change and off-shore
evidence of shifts in range of species, it will be important to have a contemporary reference point
to evaluate future mitigation efforts. Use of a static reference point, from historical South Creek
tributary data, will not be sufficient to adequately evaluate the success of future mitigation
efforts.
Final aspects to consider are the loss of a native seed bank with the removal of wetlands under
any mining alternative, and the possibility for invasive plant species colonization. Wetland
mitigation also cannot replace seed bank loss. The DEIS fails to consider the potential for spread
of invasive plant species to peripheral and downstream wetland areas not directly impacted by
mining activities. Phragmites sp. and other invasive species are present on the current
reclamation areas.
3.6 Section III Summary
14
The proposed impacts via the AP mining alternative would directly and indirectly impact
estuarine stream and riparian wetland ecosystem health and function. As evaluated in Section II,
the AP alternative would result in significant degradation of the aquatic environment. Section III
analyzes the potential for functional equivalence between restored or created wetland systems to
natural conditions. While some functions, such as aquatic habitat, may be restored within 10
years, many other functions and natural wetland characteristics will only be restored with a
significant lag period on the order of decades. Furthermore, the DEIS fails to demonstrate the
feasibility of reliably scaling up mitigation efforts (compared to much smaller past projects) that
would yield a high probability of success.
The proposed brackish marsh mitigation will be similar to PA1 and 2 located between Jacobs
and Drinkwater Creeks on the west side of South Creek. The loss of the salinity/ freshwater
interface by mining through a major portion of South Creek tributary's drainage basins will not
be recovered through this type of mitigation. The complexities of the systems located within the
NCPC tract cannot be replicated through mitigation without an associated significant lag time as
mentioned. Existing riparian wetlands within the NCPC tract provide quality protections for the
inland PNAs, and resulting mitigation must also provide this protection. Many individual
functions of the wetlands and stream channels located within the NCPC track are interdependent.
Replacing a contiguous wetland/stream system with smaller, fractured mitigation sites will result
in the loss of interdependent functions, the interaction of upland, flat and riparian wetlands and
coastal streams, and the complexity of the system presently occurring within the NCPC tract.
IV) CONCLUSIONS
The applicant has failed to demonstrate that mining activities within the NCPC tract, especially
within riparian wetlands and stream channels, will not cause significant degradation of the
aquatic environment. Furthermore, the applicant has failed to demonstrate that appropriate
mitigation will take place in a timely manner to replace the functions lost through the excavation
of wetlands and waters. Situations identified in this document that would lead to a significant
adverse impact to the aquatic environment include:
- Elemental enrichment of estuarine streams from mining and reclamation activities,
including cadmium and fluorine, as well as phosphate enrichment, that would cause
adverse biological effects.
- Hydrologic alterations due to drainage basin reductions that would result in
downstream salinity changes.
- Hydrologic alterations that would result in increased anaerobic conditions in riparian
wetland areas resulting in changes to the nutrient cycling.
- Loss of freshwater habitat due to drainage basin reductions from mining.
- Changes to the carbon cycle due to the removal of mature watersheds that are
potentially significant sources of organic carbon to the estuary.
- Loss of headwater stream function and their associated wetlands that would result in
the loss of water quality filtration.
- Direct sedimentation and metal contamination impacts from dyke construction across
estuarine streams.
15
Therefore, it is our determination that mining riparian wetlands and streams, including sections
of three designated inland PNAs within the NCPC tract will result in adverse impacts on the
aquatic ecosystem that cannot be appropriately mitigated and would constitute significant
degradation under 404(b)1 guidelines.
V) REFERENCES
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Wetlands and Adjacent Uplands in Virginia. Soil Science Society ofAmerica Journal 63:1019-
1031.
Bales, J.D. and D.J. Newcomb. 1999. North Carolina Wetland Resources. Raleigh, NC: US
Geological Survey Water Supply Paper 2425.
Bradshaw, H.D., M.M. Brinson, E.A. Matson, and G.J. Davis. 1985. Composition and
Metabolism of Sediments in Irregularly Flushed Estuarine Creeks in North Carolina. Journal of
the Elisha Mitchell Scientific Society 101(2): 52-75.
Brinson, M.M., H.D. Bradshaw, and M.N. Jones. 1985. Transitions in Forested Wetlands along
Gradients of Salinity and Hydroperiod. Journal of the Elisha Mitchell Scientific Society 101(2):
76-94.
Brouwer, M., D.E. Engel, J. Bonaventura, and G.A. Johnson. 1992. In Vivo Magnetic Resonance
Imaging of the Blue Crab, Callinectes sapidus: Effect of Cadmium Accumulation in Tissues on
Proton Relaxation Properties. The Journal of Experimental Zoology 263:32-40.
Bruland G.L. 2004. An observational, geostatistical, and experimental assessment of edaphic
properties and process in created, restored, and natural wetlands of the southeastern coastal plain.
Ph.D. dissertation. Duke University, Durham, North Carolina, USA.
Bruland, G. L. and C.J. Richardson. 2006. Comparison of soil organic matter in created, restored
and paired natural wetlands in North Carolina. Wetlands Ecology and Management 14:245-251.
Burkholder, J.M. 2002. Cyanobacteria, pp. 952-982. Invited, peer-reviewed contribution for the
Encyclopedia of Environmental Microbiology, by G. Bitton (ed.). Wiley Publishers, New York.
Burkholder, J.M., D.A. Dickey, C. Kinder, R.E. Reed, M.A. Mallin, G. Melia, M.R. McIver,
L.B. Cahoon, C. Brownie, N. Deamer, J. Springer, H. Glasgow, D. Toms and J. Smith. 2006.
Comprehensive trend analysis of nutrients and related variables in a large eutrophic estuary: A
decadal study of anthropogenic and climatic influences. Limnology and Oceanography 51:463-
487.
Craft, C., S.Broome, and C. Campbell. 2002. Fifteen years of vegetation and soil development
after brackish-water marsh creation. Restoration Ecology 10(2): 248-258.
16
CZR Incorporated, R.W. Skaggs, and D.W. Stanley. 2005. NCPC Tract stream monitoring
program for PCS Phosphate Company, Inc. Year seven (2004) end-of-year report.
Davis, G.J, H.D. Brasdshaw, M.M. Brinson, and G.M. Lekson. 1985. Salinity and Nutrient
Dynamics in Jacks, Jacobs, and South Creeks in North Carolina, October 1981-November 1982.
Journal of the Elisha Mitchell Scientific Society 101(2): 37-51.
Dorney, J. April 5, 2006. Memo: Background information on the water quality and aquatic life
values of headwater streams and headwater wetlands. Wetlands Program Development Unit. NC
Department of Environment and Natural Resources.
Dorney, J., D. Hugget, and R. Ferrell. 2004. State Wetland Programs: North Carolina. Windham,
ME: Association of State Wetland Managers. Available at
http://wN,?Av.aswm.org/swp/northcarolina9.htm,
Duncan C.P. and P.M. Groffman. 1994. Comparing microbial parameters in natural and
constructed wetlands. Journal of Environmental Quality 23: 298-305.
Gemperline, P.J., K.H. Miller, T.L.West, J.E. Weinstein, J.C. Hamilton, and J.T. Bray. 1992.
Principal Component Analysis, Trace Elements, and Blue Crab Shell Disease. Analytical
Chemistry 64(9): 523-531.
Havens K.J, D. O'Brien, D. Stanhope, K. Angstadt, D. Schatt, and C. Hershner. 2004. Initiating
development of a forested headwater wetland HGM model for wetlands management in Virginia.
Center for Coastal Resources Management; Virginia Institute of Marine Sciences. Final Report
to The U.S. Environmental Protection Agency (CD #983596-01).
Hunter R.G., and S.P. Faulkner 2001. Denitrification potential in restored and natural wetlands.
Soil Science Society ofAmerica Journal 65: 1865-1872.
Hupp, C.R. 2000. Hydrology, geomorphology and vegetation of Coastal Plain rivers in the south-
eastern USA. Hydrological Processes 14: 2991-3010.
Lugo A.E, S. Brown and M.M. Brinson. 1988. Forested wetlands in freshwater and salt-water
environments. Limnology and Oceanography 33(4 part 2), 894-909.
Mitsch, W.J and J.G. Gosselink. 1993. Wetlands, 2"d Edition. John Wiley & Sons, Inc. New
York.
Riggs, S.R., E.R. Powers, J.T. Bray, P.M. Stout, C. Hamilton, D. Ames, R. Moore, J. Watson, S.
Lucas, and M. Williamson. 1989. Heavy metal pollutants in organic-rich muds of the Pamlico
River Estuarine System: Their concentration, distribution, and effects upon benthic environments
and water quality. Albemarle-Pamlico Estuarine Study. Project No. 89-06.
17
Rulifson, R.A. 1991. Finfish Utilization of Man-Initiated and Adjacent Natural Creeks of South
Creek Estuary, North Carolina Using Multiple Gear Types. Estuaries 14(4): 447-464.
Street, M.W., A.S. Deaton, W.S. Chappell, and P.D. Mooreside. 2005. North Carolina Coastal
Habitat Protection Plan. NC Department of Environment and Natural Resources, Division of
Marine Fisheries.
Sun, G., S.G. McNulty, D.M. Amatya, R.W. Skaggs, L.W. Swift Jr., J.P. Shepard, and
H.Riekerk.2002. A comparison of the watershed hydrology of coastal forested wetlands and the
mountainous uplands in the Southern US. Journal of Hydrology 263:92-104.
United States Army Corps of Engineers (USACE). 2006. Draft Environmental Impact Statement
for the PCS Phosphate Mine Continuation, Aurora, North Carolina.
United States Environmental Protection Agency (USEPA), 2001. Sustainable Communities.
Office of Water document number EPA843-F-01-002k.
United States Environmental Protection Agency (USEPA), 2001.Functions and Values of
Wetlands. Office of Water document number EPA843-F-01-002c.
Verhoeven J.T.A., D.F. Whigham, R. van Logtestijn, and J. O'Neil. 2001.A comparative study
of nitrogen and phosphorus cycling in tidal and non-tidal riverine wetlands. Wetlands 21: 210-
222.
Verry, E.S. 1997. Hydrological processes of natural, northen forested wetlands. In: Trettin, C.C.,
Jurgensen, M.F., Grigal, D.F., Gale, M.R. Jeglum, J.F. (Eds.). Northern Forested Wetlands,
Ecology and Mangament. Lewis, New York, pp. 163-188.
Wakefield, Z.T. 1980. Distribution of cadmium and selected metals in phosphate fertilizer
processing. TVA Publication Y-159.
Weinstein, J.E., T.L. West, and J.T. Bray. 1992. Shell Disease and Metal Content of Blue Crabs,
Callinectes sapidus, from the Albemarle-Pamlico Estuarine System, North Carolina. Archives of
Environmental Contamination and Toxicology 23:355-362.
West, T. L. 1990. Benthic Invertebrate Utilization of Man-Made and Natural Wetlands. Report to
Texasgulf Chemicals, Inc. Aurora, North Carolina 27896.
West T.L., L.M. Clough, and W.G. Ambrose Jr. 2000. Assessment of function in an oligohaline
environment: Lessons learned by comparing created and natural habitats. Ecological
Engineering 15: 303-321.
Wharton, C.H., W.M. Kitchens, and T.W.S.E.C. Pendleton. 1982. The ecology of bottomland
hardwood swamps of the southeast: a community profile. U.S. Fish and Wildlife Service,
Biological Services Program, Washington, D.C.
18
Attachment 5
SELC PTRF
401 Certification Comment Letter
07/07/2008
e??
NCDENR
North Carolina Department of Environment and Natural Resources
Michael F. Easley, Governor Division of Marine Fisheries Dr. Louis B. Daniel III, Director
William G. Ross Jr., Secretary
MEMORANDUM
To: Melba McGee
Through: Anne Deaton
From: Sean McKenna
Date: June 27, 2008
Subject: PCs Phosphate mine advance, Beaufort County
The following comments by the North Carolina Division of Marine Fisheries (NCDMF) on the Final
Environmental Impact Statement (FEIS) are offered pursuant to G.S. 113-131. The Potash Corporation of
Saskatchewan Phosphate Division (PCS), Aurora Operation has applied for a Department of the Army
authorization to continue its phosphate mining operation on the Hickory point peninsula adjacent to the
Pamlico River and South Creek, north of Aurora, in Beaufort County. The applicant's purpose and need is
to continue mining its phosphate reserve in an economically viable fashion. More specifically, the
applicant's purpose and need is to implement a long-term systematic and cost-effective mine advance
within the project area for the ongoing PCS phosphate mine operation at Aurora (Beaufort county), North
Carolina. The mining method is "open pit." The upper soil layers are completely removed to reach target
phosphate ore at varying depths. All surface features, including topography, vegetation, and waters, are
destroyed, when mining occurs, and the soils and surface features are rebuilt in an altered fashion some
years later.
On April 25, 2008 the PCS requested that it's application be modified to request a permit for
Alternative L. Based on information provided by the applicant this alternative would provide approximately
37 years of mining at current production levels (5M tons of concentrated phosphate rock per year).
Alternative L avoids all areas regulated by CAMA. Alternative L is an 11,909-acre project area with direct
mining impacts to 4,135 acres of wetlands and 20 acres of open waters (8 acres of streams and 12 acres
of ponds). There will also be drainage basin reduction to a number of creeks and streams in the project
area. Impacted waters include Whitehurst Creek (4%), Jacks Creek (68%), Jacobs Creek (54%),
Drinkwater Creek (61 %), Tooley Creek (46%), and 45% of the unnamed tributaries of South Creek. These
creeks drain into South Creek, a MFC designated Special Secondary Nursery Area, and their loss will have
significant adverse impacts on the function of the downstream nursery area. Huddles Cut and Huddy Gut
drainage basins would be permanently reduced by 63% and 58% respectively. An unnamed tributary of
the Pamlico River would be reduced by 45%. In the Bonnerton Tract, Porter Creek would be reduced by
70%, Durham Creek would be reduced by two percent, and Bailey Creek would see a 3% reduction.
Drainage reductions in the S33 Tract include Bailey Creek (40%), Broomfield Swamp (72%), and Cypress
Run (75%). Jacobs, Tooley, Jacks and Porter creeks are designated inland PNAs by the NC Wildlife
Resources Commission.
Based on the discussion below, the NCDMF finds this FEIS to be inadequate. Therefore, it is not
suitable for use as a decision support document in its current form. Furthermore, if this document were to
be utilized as the primary support document for issuance of a permit for the requested mine advance, the
NCDMF would be opposed to Alternate L or any alternate that involves further mining in the NCPC tract
due to the significant negative adverse impacts to estuarine fisheries resources, fish habitats, water quality,
and public trust waters in the Pamlico River system. Impacts would include both direct and indirect effects.
Direct effects would be seen through drainage basin reductions, sedimentation, and loss of habitat.
3441 Arendell Street, P.O. Box 769, Morehead City, North Carolina 28557 One
Phone: [phone] \ FAX: [phone] Internet: www.ncdmf.net NorthCarolina
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North Carolina Department of Environment and Natural Resources
Michael F. Easley, Governor Division of Marine Fisheries Dr. Louis B. Daniel III, Director
William G. Ross Jr., Secretary
Indirect effects would include negative impacts to Essential Fish Habitat (EFH) and Habitat Areas of
Particular Concern (HAPCs), impacts associated with heavy metal contamination, drainage basin
reductions, impacts to commercial and recreational fisheries, long-term water quality impacts from the
mining activity, and loss of wetland functions.
As noted in Section 1.6 (Areas of Controversies and Unresolved Issues) of the FEIS;
"Areas of potential controversy include avoidance, minimization, and/or mitigation of
impacts to wetlands and waters; overall level and extent of impacts to aquatic
resources; direct, indirect, and cumulative impacts to surface and groundwater
quality, air quality, and terresitrial and aquatic communities; elevated cadmium
concentration in reclaimed lands; and length of the authorized permit activities."
The NCDMF raised concerns about these unresolved issues in our comments on the Draft EIS
[DEIS (2/2/07)] and the supplement to the DEIS (12/4/07), and is very disappointed that the CORPS chose
not to adequately address them in the FEIS. Not only were our concerns not fully addressed, but the
CORPS never contacted the NCDMF to talk about these issues during the preparation of the FEIS. The
NCDMF understands that this is a CORPS document and ultimately they have the final say on the
adequacy and content of the document. However it is important to remember that this document will also
be used to satisfy the requirements of the State Environmental Policy Act, and the NCDMF is the state
agency charged with the stewardship of the marine and estuarine resources of the State of North Carolina
and is responsible for the management of all marine and estuarine resources. Therefore the NCDMF
believes that our concerns merit full consideration by the CORPS since the proposed action will have
significant negative adverse impacts to estuarine fisheries resources, and fish habitats of the state, based
on the information provided.
In addition to significant concerns with the proposed mining activity and the inadequacy of the FEIS,
the mitigation plan only addresses direct impacts. According to the National Environmental Policy Act of
1969 (NEPA) "Effects include: (a) Direct effects, which are caused by the action and occur at the same
time and place. (b) Indirect effects, which are caused by the action and are later in time or farther removed
in distance, but are still reasonably foreseeable. Indirect effects may include growth inducing effects and
other effects related to induced changes in the pattern of land use, population density or growth rate, and
related effects on air and water and other natural systems, including ecosystems. Effects and impacts as
used in these regulations are synonymous. Effects include ecological (such as the effect on natural
resources and on the components, structures, and functioning of affected ecosystems), aesthetic, historic,
cultural, economic, social, or health, whether direct, indirect, or cumulative. Effects may also include those
resulting from actions which may have both beneficial and detrimental effects, even if on balance the
agency believes that the effect will be beneficial." (40 CFR 1508.8). Mitigation under the NEPA process
(40 CFR 1508.20) includes "(a) Avoiding the impact altogether by not taking a certain action or parts of an
action. (b) Minimizing impacts by limiting the degree or magnitude of the action and its implementation. (c)
Rectifying the impact by repairing, rehabilitating, or restoring the affected environment. (d) Reducing or
eliminating the impact over time by preservation and maintenance operations during the life of the action.
(e) Compensating for the impact by replacing or providing substitute resources or environments." Based
on these NEPA requirements the NCDMF feels that the mitigation plan must also address indirect impacts.
Indirect impacts to EFH/HAPC total 3,349 acres (Table 1). Since there are no suitable habitats to mitigate
3441 Arendell Street, P.O. Box 769, Morehead City, North Carolina 28557 One
2 Phone: [phone] \ FAX: [phone] \ Internet: www.ncdmf.net NorthCarolina
An Equal Opportunity /Affirmative Action Employer - 50 % Recycled 110% post Consumer Paper ?atura! Y
NCDENR
North Carolina Department of Environment and.Natural Resources
Michael F. Easley, Governor Division of Marine Fisheries Dr. Louis B. Daniel Ill, Director
William G. Ross Jr., Secretary
for these losses the NCDMF feels that the only option available is avoidance and minimization. To that end
over 88% of the impacts to EFH/HAPC can be avoided by not allowing any further mining on the NCPC
tract, by avoiding these areas impacts to EFH/HAPC would be minimized to 13%. In view of the fact that
indirect impacts were not accounted for in the mitigation section of the FEIS the NCDMF finds this section
FEIS to be inadequate, and requests that no action be taken on this permit until such time as a complete
mitigation plan is developed that provides mitigation for both direct and indirect impacts as required by
NEPA. Additionally, the mitigation plan needs to include a contingency plan and financial assurances to
address potential long-term increased metal concentration in the aquatic and terrestrial environment from
mining and reclamation activities. Also, if the CORPS determines that indirect impacts do not need to be
mitigated for, then a contingency plan and financial assurances for these indirect impacts needs to be
provided.
Table 1. Alternative L impacts (total acres) to Essential Fish Habitat (EFH) and Habitat Areas
of Particular Concern (HAPCs) by area.

EFH/HAPC Area im
NCPC pacted (acres)'
Bonnerton
S33
Tidal freshwater (palustrine)
emergent wetlands 46 2 0
Tidal palustrine forested areas 15 0 0
Estuarine wetlands 87 0 0
Unconsolidated bottom (soft
sediments) 38 0 0
Tidal creeks 38 0 0
Tidal freshwater 1 0 0
Estuaries 130 0.5 4
Mixing and seawater zone of the
Pamlico River 87 0 0
Primary nursery Areal 28.8 70.8 0
Special Secondary Nursery Area3
Tidal freshwater SAV 1 0 0
Estuarine SAV 33 0 0
Submerged rooted vascular plants
(seagrasses) 31 0 0
Total EFH/HAPC impacts 535.8 73.3 4
Percent of EFH/HAPC impacts 87.39% 11.96% 0.65%
Data provided in the FEIS by the applicant
z FEIS states that there are only 22 acres of impacts, but they only included the portion of the PNA in the
Public trust areas. Also Designation of PNAs is done entirely under state authority; however, the South
Atlantic Fishery Management Council includes North Carolina's PNAs as Essential Fish Habitat by
reference.
3441 Arendell Street, P.O. Box 769, Morehead City, North Carolina 28557 One
3 Phone: [phone] \ FAX: [phone] \ Internet: www.ncdmf.net NorthCarolina
An Equal opportunity/ Affirmative Action Employer- 50 % Recycled 110% post Consumer Paper ?atura!!t?
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Michael F. Easley, Governor Division of Marine Fisheries Dr. Louis B. Daniel III, Director
William G. Ross Jr., Secretary
3 Total SSNA in the South Creek Complex total 2,736 acres, all of which would be indirectly impacted by
this project.
CONCERNS/DEFICIENCIES:
4.1.3.1 Elemental Contaminant Issues
"There are many interactions between and among metals, the species of metals, and
the physical environment (pH, salinity). Some factors enhance uptake while others
inhibit or moderate absorption. Some metals have greater effects on invertebrate
organisms, while other metals affect vertebrates more acutely. Fish and wildlife are
often used as sentinel species and bioindicators during ecological risk studies (Peakall
and Burger 2003). The elemental contaminants within the reclamation areas and found
in plant and animal tissues at PCs are cadmium, arsenic, chromium, and zinc.
Cadmium is a teratogen, a carcinogen, and a possible mutagen. Arsenic is also a
carcinogen and disrupts production of the multifunctional nucleotide ATP involved with
intracellular energy transfer. While chromium and zinc are considered essential trace
elements, health effects from chromium depend upon its oxidation state. Zinc as a free
ion in solution is highly toxic for fish and invertebrates and can suppress copper and
iron absorption. Other determining factors in the bioavailability of metals are host, age,
gender, size, genetic characteristics, behavior (food chain relationships), and the
interactions and synergies between all factors. Indirect effects of contaminants are
difficult to determine and are likely to disrupt aquatic populations at several trophic
levels (Fleeger et al. 2003)."
A review of the CZR Incorporated (1999) report indicates the following:
1. Clay, produced during the initial processing of the phosphate rock, has elevated concentrations of silver,
arsenic, cadmium, chromium, manganese, uranium, zinc, phosphorus, total organic carbon, and calcium
carbonate.
2. Sand tailings, produced with clay during the initial processing of the phosphate rock, have elevated
concentrations of arsenic, cadmium, uranium, and phosphorus.
3. Bucket wheel spoil, overburden removed from above the main phosphate rock deposit has a slightly
elevated concentration of silicon.
4. Gypsum, a byproduct of the reaction of sulfuric acid with phosphate rock, showed levels of arsenic, at or
above the average level for continental rock. Cadmium levels were enriched, on average, 156 times above
background. Levels of uranium, zinc, and phosphorus were also significantly elevated.
5. Blend, composed of clay (1 part) and gypsum (2 to 4 parts), is used in the reclamation process. Blend
showed elevated concentrations of silver, arsenic, cadmium, manganese, uranium, zinc, phosphorus, and
total organic carbon.
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6. Concentrations of metals in the sediment of R-3 North and R-3 South showed elevated concentrations of
silver, arsenic, cadmium, chromium, copper (R-3 North), molybdenum, selenium, and zinc. Levels of
cadmium and chromium (R-3 South) on the sampled reclamation sites (R-3 North and R-3 South)
exceeded the effects-range-median value which is defined as the concentration above which harmful
effects would occur frequently. Levels of silver, arsenic, copper, and zinc exceeded the effects-low-range
value which is defined as the concentration below which adverse effects would occur only rarely.
7. Dissolved metal concentrations in surface waters of R-3 North and R-3 South showed
elevated levels of arsenic, cadmium, molybdenum, and zinc. Particulate metals for these
sites was high in arsenic, cadmium, chromium, molybdenum, and zinc (R-3 South only).
These sites exceed chronic freshwater water quality criteria for cadmium and chromium
(R-3 North).
The transfer of toxic chemicals through marine food chains can result in bioaccumulation in fishery
resources. Ecological concerns of contamination in the marine environment include changes in species
distributions and abundance, habitat alterations, and changes in energy flow and biogeochemical cycles.
The toxic effects of chemical contaminants on marine organisms are dependent on bioavailability and
persistence, the ability of organisms to accumulate and metabolize contaminants, and the interference of
contaminants with specific metabolic or ecological processes. Accumulation of contaminants in biological
resources may occur through aqueous, sedimentary and dietary pathways.
The FEIS must thoroughly address the movement, metabolism, bioaccumulation, fate, and short-term and
long-term impacts of these substances (silver, arsenic, cadmium, chromium, copper, molybdenum, selenium,
manganese, uranium, phosphorus, zinc, total organic carbon, and calcium carbonate) on commonly occurring
estuarine organisms important in the estuarine food chain, as well as in vertebrate and invertebrate fishes
taken in the commercial and recreational fisheries of the Pamlico River system and other areas to which fishes
from that area may migrate and support the food chain or be harvested. This analysis is important given that
section 3.6.2.9 (Bottom Sediments) of the FEIS states "In the 1997 study and NCPC monitoring, arsenic,
cadmium, molybdenum, selenium, and zinc were found to be elevated above the level in the continental crust
in most, if not all, of the sampling stations (CZR Incorporated, Trefry, and Logan. 1999)." This analysis should
look at direct, indirect, and cumulative impacts.
The importance of the elemental contaminant issues cannot be understated given the potential
biological, and economic impacts. In 1987 a severe outbreak of shell disease (complete breakdown of the
crystalline matrix of the endocuticle) in blue crabs in the Pamlico River was investigated (McKenna et. al.
1990). The majority of diseased crabs were caught between Durham and South creeks. Possible causes of
this outbreak were cadmium and/or fluoride (McKenna et. al. 1990). The authors of this study concluded, "The
association between Texasgulf and the outbreak of shell disease in the Pamlico River cannot be dismissed as
a fortuitous event and warrants further investigation." This outbreak had significant biological impacts to the
blue crab resource in the river by causing mortalities of effected crabs, and resulted in local and national
concern about potential human health concerns related to eating seafood from this system, and to a lesser
extent consumption of all seafood caught in North Carolina. Fishermen and dealers were not able to sell their
product, resulting in lost income and markets. No further outbreaks of this disease have been seen since the
completion of the plants water recycling system in 1992. However, this event does show the need to examine
the direct, indirect, and cumulative impacts of these toxins. This is especially important given the uncertainty
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Michael F. Easley, Governor Division of Marine Fisheries Dr. Louis B. Daniel III, Director
William G. Ross Jr., Secretary
surrounding the current method of capping overburden (see section 4.1.3.1). As noted at the end of section
4.1.3.1 "Any permit issued by the Corps for further mining at the Aurora operation will necessarily include
conditions to successfully address the cadmium and other heavy metals issue. The specific conditions will
be developed after considering the success of capping methods employed to date. The conditions will
also likely include a monitoring program and contingency plans." The NCDMF feels that the ecological
consequences warrant delaying action on this permit until this issue is resolved.
4.2.1.2 Soils
"Due to the nature of open pit mining, removal of the overburden, or all soils and
stratigraphic units overlying the ore, would result in the unavoidable loss of soils in the
area of impact under any of the mining boundaries. The soil character would be
irreversibly altered.
Impacts to existing wetlands within the mine perimeter are permanent. The
purpose of reclamation is not to restore wetland (or upland) functions of soils
but to safely fill the excavated area according to state/federal laws; however,
additional goals of reclamation are the establishment of both upland and
wetland habitat that will invite and support wildlife."
The direct, indirect, and cumulative impacts of these losses must be examined as to there affect on
downstream waters.
4.2.1.6 Surface Waters
"Long-term water quality impacts from the mining activity are more difficult to assess.
Once mining is completed, PCs will be required by the North Carolina Division of Land
Resources to reclaim the area mined, pursuant to an approved reclamation plan. The
areas reclaimed may or may not function as wetlands. Once this area is reclaimed,
drainage will also be restored, resulting in run-off from the reclaimed land entering the
creeks. Potential long-term impacts to water quality in primary nursery areas include
the permanent loss of the filtering and flow moderation benefits of the wetlands
through which this run-off would otherwise drain. Although compensatory mitigation
within the same hydrologic unit would be required, it would not be at the location of the
impacted wetlands, and those wetlands would not be available to provide functions lost
at this particular site.
"In addition, there is a potential for long-term water quality impacts resulting from the
use of the gypsum-clay blend materials in the reclamation effort. Particular concern
over the potential for cadmium, found in the gypsum-clay blend, entering the receiving
waters has been expressed."
Changes in the drainage basin will affect freshwater inflow and salinity patterns in South Creek. The
impact of phosphate mining on streamflow in Florida was examined by Schreuder et al. 2006. This study
indicated that mined basins have increased overall stream flow. The analyses also showed that flood-flows
from mined basins were reduced by mining operations, while median and base-flows were significantly
increased. Mueller and Matthews (1987), Browder et al. (2002), and Galindo-Bect and Glenn (2000) showed
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William G. Ross Jr., Secretary
that changes in freshwater inflow affects salinity patterns, which in turn affects shrimp growth, survival, and
subsequent recruitment and stock size available for harvest. Estuarine animals exist in a community
assemblage; thus, the influence of salinity on one species can be extended either directly or indirectly to affect
other species (Pottillo et al. 1995). The cumulative effects of even small changes in an estuary may have a
total systemic effect on the marine resources and the economic activities that depend on them (Monaco and
Emmett 1988; Bulger et al. 1990; Orland et al 1993). Since 1994 the commercial harvest of finfish and
shellfish in North Carolina has averaged 160,564,051 pounds with a average dockside value of $94,999,172
(NC DMF Trip Ticket data 1994-2005). Effects of drainage basin reductions on the production of marine
fisheries resources must be addressed.
Besides its effect on fish production, reduction in the drainage basin area will result in increased
sedimentation and turbidity, which are significant contributors to declines in populations of North American
aquatic organisms (Henley et al. 2000). The direct effects of sedimentation and turbidity at various trophic
levels are mortality, reduced physiological function, and avoidance. Sedimentation can clog the gills of fish,
reducing respiratory abilities. This stress, may in turn, reduce tolerance levels to disease and toxicants, and to
changes in dissolved oxygen concentrations and salinity, compromising the health of local fisheries resources.
Elevated levels of sediment (typically over background) may be harmful to fish (i. e., acutely lethal, or elicit
sublethal responses that compromise their well-being and jeopardize survival), and negatively impact their
habitat (DFO 2000). Decreases in primary production are associated with increases in sedimentation and
turbidity and produce negative cumulative effects through depleted food availability to zooplankton, insects,
freshwater mollusks, and fish. Decreases in available food at various trophic levels also result in depressed
rates of growth, reproduction, and recruitment (Henley et al. 2000). These effects lead to alterations in
community density, diversity and structure. The effects of changes in sedimentation on marine resources and
primary and secondary production must be addressed.
Reduction of the drainage basin area will eliminate contiguous sheet flow and decrease the buffering
capacity of the system. These changes will likely increase the amount of sediments, nutrients, and toxics
entering the system. Nitrogen and phosphorus can accelerate eutrophication resulting in algal blooms,
reduced water clarity, shifts in algal and fish populations, and fish kills. Currently South Creek is stressed, with
water quality problems including algal blooms and increases in suspended solids. While these existing
problems are probably not the result of current mining activities, reduction in buffering capacity of the
tributaries from further mining north of NC Highway 33 will only exacerbate existing conditions. Many hypoxic
zones in the world have been caused by excess nutrients exported from rivers, resulting in reduced
commercial and recreational fisheries production (Council for Agricultural Science and Technology 1999). The
effects of cadmium and other heavy metals and the reduction in buffering capacity must be examined.
4.2.1.9 Wetlands and Open Waters (Section 404 Jurisdictional Areas)
"All of the proposed locational mine continuation boundaries except the No Action
alternative boundary would result in the disturbance or loss of wetland communities.
The resulting ecological consequences include the loss or disruption of the following
wetland functions: groundwater discharge and recharge, surface water storage,
organic matter production and export, sediment capture and retention of
pollutants, wildlife habitat including EFH/HAPC, and nutrient accumulation, cycling
and transformation. Drainage area reductions for area creeks also would potentially
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impact adjacent Section 404 jurisdictional wetlands by altering the input of freshwater
into these systems. Intact wetlands outside of the boundaries of the proposed mine
continuation boundaries would potentially be affected by changes in water quality, as
well as by diminished input from runoff upstream."
Wetlands have many functions including high net primary production; fish and wildlife habitat;
retention of nutrients, sediments, and toxins; shoreline protection; attenuation of flood waters; recharge of
groundwater aquifers; and nutrient cycling. A review of wetland functions can be found in the North Carolina
Coastal Habitat Protection Plan (Street et al. 2005) and Section 4.2 of the Compensatory Section 404/401
Mitigation Plan. Specific wetland issues relating to this FEIS can be found elsewhere in this document.
Hydrologic processes control the formation, persistence, size, and function of wetlands, while soils and
vegetation alter water velocities, flow paths, and chemistry (Carter 1997). Wetlands restoration and creation
projects do not consistently replace lost wetland structure and/or function (Erwin et al. 1997; Minello 2000;
Streever 2000). In addition, there is evidence showing that some wetland attributes of natural and restored
or created wetlands may be similar, while others may be different, and that different wetland attributes
develop at different rates (Galatowitsch and van der Valk 1996; Minello and Webb 1997; Simenstad and
Thom 1996; Streever et al. 1996; Streever 2000). Densities of both fishes and decopod crustaceans were
lower in created salt marshes (2 to 15 yr in age) then in natural marshes (Minello and Zimmerman 1992;
Minello and Webb 1997).
4.2.1.11.2 Aquatic Wildlife Communities
"Removal of open water habitat also would result in localized losses of aquatic
organisms and their habitat and would remove some EFH/HAPC communities.
However, no commercially important species are likely to be directly affected. Loss of
aquatic habitat and loss of aquatic fauna will be offset over time by mitigation activities
including restoration of open water and by reclamation activities through restoration
and creation of additional open water habitats and other aquatic habitats as
appropriate with current reclamation practice and geomorphic constraints. Aside from
the AP alternative boundaries, the proposed mine continuation alternatives would
excavate upper headwater intermittent or perennial streams, not brackish marsh and
estuarine creeks (Section 4.2.2.11.2). Although these headwater reaches provide
important support functions, they do not support the large diverse aquatic communities
associated with deeper downstream reaches."
Nursery areas are those portions of estuarine waters most critical to the early life history stages of
marine and estuarine organisms. Early development of the post larval stages of many fish and shellfish
species occurs in Primary Nursery Areas (PNAs). More than 90% of North Carolina's commercial fisheries
harvest and 60% of the sport fisheries harvest consists of species dependant on estuarine nursery areas.
Direct impacts to nursery areas include drainage basin reductions, and loss of wetlands and open water
habitat. As noted in Section 4.2.1.20 "..lost resources include permanent loss of existing topography and
soils, and potentially permanent losses of currently existing wetlands and open water, biotic communities,
and fish and wildlife habitat quality within the project area." The cumulative effects of even small changes in
an estuary may have a significant systemic effect on the marine resources and the economic activities that
depend on them (Monaco and Emmett 1988; Bulger et al. 1990; Orland et al, 1993). There is a high
probability that the various restoration projects will be unsuccessful in fully restoring natural process. Some of
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North Carolina Department of Environment and Natural Resources
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William G. Ross Jr., Secretary
the affected waters are PNAs, and all the waters support various aquatic organisms that contribute to the
estuarine food chain, and ultimately to fisheries production. This section must address the effects on
estuarine species, both direct and indirect, through the loss of open water habitat.
"Within the project area, as in other estuaries, salinity is highly variable due to wind
tides and rainfall. Therefore, although optimum salinities likely exist for many species
(Peterson et al. 1999; Secor et al. 2000; Specker et al. 1999), estuarine fishes at all life
stages are adapted to a wide range of salinities (Malloy and Targett 1991; Banks et al.
1991; Limburg and Ross 1995; Buckel et al. 1995). Even if salinity was affected by
mining, impacts to fisheries are unlikely because many studies have demonstrated the
insensitivity of estuarine fishes, especially at post-larval stages, to drastic changes in
salinity (Crocker et al. 1983; Zydlewski and McCormick 1997; Nordlie et al. 1998;
Estudillo et al. 2000)"
While estuarine species are able to tolerate temporary fluctuations in salinity, a permanent change in
salinity patterns will likely result in a total change in species assemblages.
"Similarly, monitoring data collected during NCPC monitoring suggest that mining
activity would not impact fish and benthos"
The sample intensity and the parameters measured are inadequate to support such a broad generalization.
The statement should be deleted unless the applicant can show with a high degree of statistical certainty that
it is true.
Section 4.2.1.17.9 Recreational Resources
Recreational fishing, especially with hook and line, is growing within coastal North Carolina. On
January 1, 2007 the State of North Carolina required all people (over the age of 16) fishing in coastal and
joint waters for recreational purposes to purchase a coastal recreational fishing licenses. Revenues from
license sales are used to manage, protect, restore, develop, cultivate, conserve, and enhance the marine
resource. The FEIS must address probable mining effects on such fisheries. Data are available from a
number of sources, and the applicant has the ability to conduct appropriate studies, as needed.
4.2.1.21 Cumulative Impacts
"The Council on Environmental Quality (CEQ) regulations for implementing the
National Environmental Policy Act (NEPA) define cumulative effects as the impact on
the environment which results from the incremental impact of the action when added to
other past, present, and reasonably foreseeable future actions regardless of what
agency (federal or non-federal) or person undertakes such other actions (40 CFR
1508.7). The document further states that, by definition, cumulative effects must be
evaluated along with the direct effects and indirect effects (those that occur later in
time or farther removed in distance) of each boundary. The range of alternatives
considered must include the No Action boundary as a baseline against which to
evaluate cumulative effects of the AP or EAP alternative boundary. The range of
actions that must be considered includes not only the project proposal but all
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connected and similar actions that could contribute to cumulative effects. Specifically,
NEPA requires that all related actions be addressed in the same analysis (Council on
Environmental Quality 1997)."
The NCDMF concurs with the need for this assessment and finds the information in the FEIS to be
deficient. Significant revisions must be done to meet the federal NEPA requirements. This section should use
the Council on Environmental Quality 1997 document "Considering Cumulative Effects Under the National
Environmental Policy Act" as a guide in the preparation of this section.
4.3.1.4.3 Watershed Acreages and Hydrologic Regimes
"There is no evidence to support that any adverse impacts will occur. Conversely,
there is evidence to show that 1) salinity levels will not be significantly affected by
reduction in drainage area (and thus reduction in freshwater flow), 2) the creeks will
continue to have their salinity levels determined by the Pamlico River/South Creek
system, 3) the creeks will continue to function as nursery areas, and 4) no adverse
impacts should occur from sediments or run-off during construction, mining, or
reclamation activities (CZR Incorporated 1994)."
The referenced studies are not adequate (short duration, areas had only minimal drainage impacts,
the study area has been significantly impacted since 1968 and current dewatering practices affect surface
and sub-surface flow in both the study and control sites thus masking any effects) to support the above
conclusions. The FEIS needs to provide a review of the scientific literature. For example, a quick review of
the literature showed that restoration and creation projects do not consistently replace lost wetland structure
and function (Erwin et al. 1997; Minello 2000; Streever 2000). In addition, there is evidence showing that
some wetland attributes of natural and restored or created wetlands may be similar, while others may be
different, and that different wetland attributes develop at different rates (Galatowitsch and van der Valk 1996;
Minello and Webb 1997; Simenstad and Thom 1996; Streever et al. 1996; Streever 2000). Densities of both
fishes and decopod crustaceans were lower in created salt marshes (2 to 15 yr in age) then in natural
marshes (Minello,. Zimmerman 1992, Minello and Webb 1997), and these are the fisheries resources of
greatest importance in coastal North Carolina.
The NCDMF also strongly recommends that existing water quality monitoring programs be
maintained and/or expanded, depending on the final selected alternative. In addition to water quality
monitoring, programs should be designed and implemented to sample fishery resources, and heavy metal
contamination.
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WDENR
North Carolina Department of Environment and Natural Resources
Michael F. Easley, Governor Division of Marine Fisheries Dr. Louis B. Daniel III, Director
William G. Ross Jr., Secretary
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3441 Arendell Street, P.O. Box 769, Morehead City, North Carolina 28557
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NCDENR
North Carolina Department of Environment and Natural Resources
Michael F. Easley, Governor Division of Marine Fisheries Dr. Louis B. Daniel III, Director
William G. Ross Jr., Secretary
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