All that's gold may not glitter.

• Author: Ingram, John Dwight
• Position: Montana voter initiative prevents cyanide mining

I.

INTRODUCTION

I own some common stock in a mining company called Canyon Resources, which owns (inter alia) a lease on a mine in Montana which contains 9.9 million ounces of gold and 30 million ounces of silver in mineralized rock. The mine(1) development project was in the process of obtaining the required permits in November 1998 when the voters of the State of Montana passed an initiative which prohibited any use of cyanide in a new or expanded mine operation. The practical effect of this prohibition is to make it economically unfeasible to extract the gold and silver from this mine.

II.

THE CYANIDE MINING PROCESS

One of the mining methods used in the United States involves taking low-grade metal ore, "crush[ing it,] and plac[ing it] in a pile on a leach pad."(2) The metallic minerals are then extracted "by sprinkling a leaching agent such as cyanide on top of the heap pile. As the leaching agent is drawn through the heap pile, it binds with the metallic ore and is `recovered through a system of collection channels beneath the heap'".(3) When this "solution is recovered, the metallic mineral is extracted from the solution and the leaching agent is recycled for re-use."(4) If there is "any loss or discharge of the leaching agent from the system [,it] will not only cause environmental damage but [will] also [cause] economic loss for the mining operation."(5)

This process has been widely used in mines, including several in Montana,(6) for one hundred years or more. During the ten years prior to the 1998 initiative, Canyon Resources invested $70 million in preparing to operate the mine, with the expectation of extracting gold and silver worth up to $600 million.(7)

III.

INITIATIVE 137

On November 3, 1998, the anti-cyanide mining initiative (I-137) was passed by a 52-48% vote of the Montana electorate.(8) I-137 bars the use of cyanide leaching technology at new open-pit mines. Existing cyanide operations, including any expansions, are allowed to continue.(9) So far as I can determine, this is the first statewide ban on cyanide process mining in the United States.

Not surprisingly, at least two suits have been filed by other interested parties contesting the validity of I-137, and Canyon Resources is also considering litigation, though it first pursued possible avenues in the political process.(10) The mining community feels strongly that the effect of I-137 constitutes a taking of private property for public use without just compensation,(11) in violation of the Fifth and Fourteenth Amendments.(12)

As the Supreme Court stated in the early case of Pennsylvania Coal Company v. Mahon,(13) "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."(14) "Some values incident to property" are subject to "an implied limitation and must yield to the police power [, but that] implied limitation must have its limits...."(15) When the diminution of values in property "reaches a certain magnitude, in most if not all cases there must be an exercise of eminent domain and compensation...."(16)

IV.

THE GRANDFATHER(17) CLAUSE IN I-137

I-137 provides that any mine using heap leaching or vat leaching with cyanide ore processing reagents which was operating on November 3, 1998 could continue operating under its existing operating permit, presumably until the mine was exhausted. For Canyon Resources this would have been an expected 12-14 years. Any mines already operating on that crucial date might continue their operations for much longer. Opponents of I-137 argued that cyanide had been used safely in mining in Montana and elsewhere for over one hundred years, with no harm to people, and little if any evidence of injury to flora or fauna. Strong support for this position is the fact that the proponents of I-137 included the grandfather clause. If there was any serious danger of harm to people, animals, or the environment, surely the correct action would be to stop the harmful activity immediately. Wise social policy doesn't say: "It's not a good idea for children under 18 to work in coal mines, but any children who are now working in coal mines may continue to work as long as they wish." If the danger is real and serious, the only proper answer is to stop it now. Thus, it seems clearly ingenuous for supporters of I-137 to argue that there is great danger from cyanide while at the same time allowing its use to continue far into the future.(18)

Ray Lazuk, Superintendent of Environmental and Public Affairs for the Golden Sunlight Mine, the only large-scale cyanide process mine which would have the grandfather privilege to continue, pointed out that "[c]yanide is no different than other industrial chemicals that are out there right now in Montana. Hundreds, maybe thousands, of nonmining operations use industrial chemicals."(19) In using cyanide or any other industrial chemical, "there are guidelines and operating practices that all businesses must follow to assure they don't have a release of these things."(20) Few would question the need for strong regulations governing the use of cyanide in mining, to "protect the water, air, fish, wildlife, people -- the entire environment."(21) Many such "laws are already on the books."(22) And in addition to the incentive provided by strong regulations to avoid any release of cyanide, the mining companies also have a strong self-interest to do so. The leaching agent is re-cycled for re-use, so "any loss or discharge of the leaching agent from the system ... [will cause] economic loss for the mining operation."(23)

V.

CONSTITUTIONAL ISSUES

1. The Fifth and Fourteenth Amendments

   The Fifth Amendment provides that "private property [shall not] be taken for public use ... without just compensation."(24) This prohibition has been held to apply to the states through the Fourteenth Amendment.(25) The...