Negotiating a Voluntary Agreement Under the Clean Water Act: the Sunnyside Experience

• Jurisdiction: United States,Federal,Colorado
• Citation: Vol. 26 No. 3 Pg. 95
• Pages: 95
• Publication year: 1997

26 Colo.Law. 95 Colorado Lawyer 1997.

1997, March, Pg. 95. Negotiating a Voluntary Agreement Under the Clean Water Act: The Sunnyside Experience

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95

Vol. 26, No. 3, Pg. 95

The Colorado Lawyer
March 1997
Vol. 26, No. 3 [Page 95]

Specialty Law Columns
Natural Resource and Environmental Notes
Negotiating a Voluntary Agreement Under the Clean Water Act The Sunnyside Experience
by Christopher G. Hayes

Column Eds.: Katherine (Joni) Teter of the Environmental Protection Agency, Denver (Environmental) - (303) 312-6553 Michael F. Browning of Porzak, Browning & Johnson LLP Boulder (Water) - (303) 443-6800; Scott W. Hardt of Ballard Spahr Andrews & Ingersoll, Denver (Mineral) - (303) 299-7386

This column is prepared by the CBA Environmental Law, Water Law, and Mineral Law Sections. This month's article was written by Christopher G. Hayes, Denver, a member of Alfers & Carver, LLC, (303) 592-7674, and William C. Robb, Denver, a partner of Dufford & Brown, (303) 861-8013. The authors represented Sunnyside Gold Corporation in the negotiations discussed in this article.

The Federal Water Pollution Control Act,1 more commonly known as the Clean Water Act ("CWA"), is the primary mechanism by which the federal and state governments regulate the impacts of human activity on surface waters in the United States. The CWA as it has been interpreted and administered since 1972 represents an effort to assert ever more stringent control over discharges related to human activity. Policy statements contained in the preamble to the CWA set as objectives the restoration and maintenance of the chemical, physical, and biological integrity of the nation's waters.2 The mechanisms chosen to achieve those objectives are, among others, the elimination of discharges of pollutants into navigable waters by 1985; the attainment nationwide of water quality goals that provide for the protection and propagation of fish, shellfish, and wildlife, and provide for recreation on and in the water, by 1983; and the immediate prohibition of discharges of toxic pollutants in toxic amounts.3

To attain these ambitious goals, state and federal agencies have pursued a legislative and regulatory course that has expanded the reach of the CWA into ever-widening areas. The mining industry is one of the areas into which regulatory agencies have sought to expand their control.4 In pursuit of greater control over water quality effects of mining activities, regulatory entities have restricted the applicability of general permits covering stormwaters and sought to put most mine-related stormwater into the same category as so-called "process water";5 have extended the definition of "waters of the United States" to include groundwater that is "hydrologically connected" to surface waters (discharges affecting such groundwaters would require a CWA permit under current interpretations of law in the Ninth and Tenth Circuits);6 and have sought to apply permit requirements to mine sites where the owner may have had no activity since before the enactment of the CWA.7

These initiatives have led to increased conflict between regulatory entities and the regulated community, as the agencies' efforts to extend their authority have collided with owners' and operators' desires to minimize operating costs and reduce uncertainty. It was in this changing regulatory climate that Sunnyside Gold Corporation ("SGC") sought to close the Sunnyside Mine and terminate the CWA permit under which it had been operating.

Background

Legal Framework: CWA and Relevant Cases

The CWA forbids discharges of pollutants to waters of the United States, except in accordance with the statute and with permits issued thereunder.8 The National Pollutant Discharge Elimination System ("NPDES") of the Clean Water Act regulates the issuance and enforcement of discharge permits.9 In Colorado, the Water Quality Control Division of the Colorado Department of Public Health and the Environment ("WQCD") exercises its delegated program authority to issue and enforce permits under the Colorado Discharge Permit System ("CDPS").10

The Clean Water Act and regulations require NPDES/CDPS (hereinafter CDPS) permits for "point source discharges" of pollutants. There are five elements of the CDPS point source discharge permit requirement: (1) addition of (2) pollutants to (3) waters of the United States (4) from (5) a point source.11

SGC did not dispute that it needed a CDPS permit to discharge from the mine as long as water flowed from it. The controversy between SGC and WQCD centered on the question of what would be SGC's permit obligations, if any, after the company completed final reclamation and stopped the flow of waters from the mine.

History of Sunnyside and Silverton Mining District

The Sunnyside Mine in San Juan County, Colorado, was once one of the largest metal producers in the state. The deposit, discovered in 1873, was worked for many years for lead, zinc, silver, and gold. The initial discovery was made above 12,000 feet in the Lake Emma Basin above Silverton; the operators ran a hoist and shaft operation from the surface that produced ore under indescribably difficult conditions. The mine also produced water, which the operators pumped to the surface of the Lake Emma Basin.12

In 1959, the owners of the Sunnyside Mine connected the lower workings of the mine to a tunnel that had previously been driven to provide access to another mine, the Gold King. This action simultaneously made the Sunnyside Mine more accessible and provided gravity drainage. Water flowed from the mine through the American Tunnel ("Tunnel") and out to Cement Creek, which in turn flows to the Animas River above Silverton. The Tunnel carried water from the mine itself and from fractures in the rock through which the Tunnel passed. The combined flow from the mine and the Tunnel averaged about 1,500 gallons per minute ("gpm"). The water was mildly acidic, with a pH of about 6, but it carried high concentrations of zinc and iron, with lesser amounts of other constituents. Prior to the enactment of the CWA in 1972,13 the water was discharged directly to Cement Creek without treatment. The operator built a water treatment plant in the 1970s, which has operated since then under a discharge permit from the WQCD.14

The Sunnyside Mine lies under Bonita Peak, which divides two tributaries of the Animas River. The mineral deposit is located in a hydrothermally altered volcanic complex, formed during the last stages of the subsidence and cooling of the Silverton Caldera. The mineralization on which the mine was built is part of a regional pattern of highly altered and mineralized rocks. There are hundreds of nineteenth century adits, tunnels, and waste piles in the upper Animas River basin, mute testimony to the efforts of prospectors and miners to find and develop the mineral wealth of the Silverton Caldera. The early miners did little to reclaim the ground once they had finished their work; many old adits and tunnels drain to this day. The upper Animas River displays a low pH and carries a significant load of metal pollution, primarily zinc and iron, as a result of natural conditions and human activity. The relative weight of these influences is difficult to quantify.15

The Sunnyside Mine, which was the first of the big mines in the upper Animas, changed hands many times during its history. The current owner, SGC, now a wholly-owned subsidiary of Echo Bay Mines Inc., acquired the mine from the bankruptcy estate of Standard Metals Corporation in 1986. SGC explored and rehabilitated the old workings for nearly five years, hoping to redevelop the property into a profitable operation. The company also made improvements to the water treatment plant during this period, to meet increasingly stringent discharge permit limitations. In 1991, SGC concluded that there were not enough remaining reserves to justify keeping the mine open, and decided to close and reclaim the Sunnyside Mine.

"SGC and the WQCD had squared off over an issue that had the potential to affect mine closures and reclamation throughout the West."

SGC's closure plan was straightforward. The company intended to reclaim all the surface facilities under its control, using reclamation plans that were reviewed and approved by the Division of Minerals and Geology ("DMG"). In general, those plans involved tearing down mine...