CHAPTER 10 MAINTAINING MINING PERMITS|GOVERNMENT AUTHORIZATIONS AND WATER RIGHTS

• Jurisdiction: United States

Problems and Opportunities During Hard Times in the Minerals Industry
(May 1986)
CHAPTER 10
MAINTAINING MINING PERMITS/GOVERNMENT AUTHORIZATIONS AND WATER RIGHTS
James F. Engelking ^*
and Peter H. Evans
Saunders, Snyder, Ross & Dickson, P.C.
Denver, Colorado

Previous papers have described various aspects of bankruptcy, shadows of bankruptcy, distress, and other dire consequences which may befall mineral operators in a weakened domestic minerals industry. But miners are not doomsayers, rather they are optimists. They see opportunities during hard times, whether in their own properties, or in the properties of others, or even in properties which have lain dormant for years. This paper will introduce briefly some practical aspects of the cutback and shutdown of mining operations. It will describe procedures for maintaining some of the key authorizations required for resumption of mining operations. Finally, a preliminary permit checklist is attached.

The minerals business is high risk and cyclical. It is dependent upon favorable mineral occurrences and the availability of land, water, labor, and power. Most importantly, it requires a political environment which accepts, if not welcomes, a minerals industry. During the most recent cycle of expansion

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in the domestic minerals industry, much was written in these and similar fora about obtaining political acceptance of new mineral development in the changed climate after Earth Day. The expansion concluded resoundingly in 1982, and the shockwaves are continuing. Nevertheless, the political aspects of the mining operation's role in the community should be kept in mind in considering strategies for maintaining government approvals for suspended mineral operations today.

Sharply reducing or suspending operations had not been a part of most mining operators' 5-year plans or long-range strategic plans, let alone part of their annual budgets during the most recent crash. Having had the recent opportunities to observe major operating reductions, many of us recognize how difficult it can be for miners to comply with various permit terms and conditions, let alone plan for maintaining approvals for the future. Company management attention is directed to reducing capital spending, operating cash flow, overhead, and future obligations. Systematic or wholesale employee layoffs occur; this reduces overhead but also eliminates an employee pool of expertise and experience, often affecting the operator's ability to maintain approvals, as well as the efficiency and attitudes of employees who remain.

In a most practical sense, this is not a time when mine operators plan for tomorrow; they don't know whether there will be a tomorrow. Yet, preservation of the asset value of their properties requires a plan for maintaining specific permits and

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approvals, as well as a plan for maintaining political acceptance of the mine operation itself.

ENVIRONMENTAL PERMITS

Let's try to remember what a mining operation looks like. There are adits and shafts providing access for men and materials to underground workings, and for the removal of contaminated ventilation air and ground water from the mine. Alternatively, or conjunctively, there may be an excavation for surface mining operations, including sand and gravel production, with associated waste dumps, and facilities for removing runoff or contaminated water from the operating area. There are ore and material handling facilities and equipment of various combinations, sizes, and functions, each of which, from crusher to concentrator, to smelter, to heap leach, has associated air and water pollution discharges to the atmosphere or watershed. There are also various surface plant, boilers, equipment maintenance, offices and labor accommodation facilities, each with its assortment of industrial and domestic emissions and wasteproducing activities. Finally, there are the water diversion, storage and handling/treatment facilities, and the tailing disposal area so critical to the operation of major metal mines in the western United States.

During normal mining operations, the mining plan is carried out by the workforce on a daily basis, typically in year-round, 24-hour a day operations, and pollutant discharges and waste

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disposal are as much a normal part of those operations as the drill, blast, muck cycle. Sufficient personnel and equipment, as well as funds, are available for operation and maintenance of all waste disposal and pollution control facilities and equipment. Environmental and pollution control permits have been obtained based upon this mining plan and the normal conduct of operations. But when those operations are suspended, or cutback, and when there are insufficient personnel and funds, compliance with permit conditions can become questionable. At the very least, the operating assumptions and environmental engineering considerations upon which the permits are based may no longer apply.

Water Permits

Most exploration, mining, milling, and smelting or other processing operations will affect surface and groundwater quality. Depending upon the type and location of the operation and its potential for discharge of pollutants into state waters or waters of the United States, pollution control permits will have been issued under provisions of the Clean Water Act and other federal and state water quality laws.¹ These permits may include: 1) National Pollutant Discharge Elimination System (NPDES) permits,² 2) Dredge and Fill permits issued under § 404,³ and 3) Underground Injection Control (UIC) permits issued under the Safe Drinking Water Act.⁴

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The typical permit application will have required the operator to have submitted factual information regarding the operation, its potential to discharge pollutants, and a control plan; the application will have been reviewed by the administrative agency and the public prior to the grant of the permit.⁵ The terms and conditions of the permit will have been premised on the provisions of the control plan, and the primary requirement for maintaining the permit is compliance with the permit terms. Whether such compliance, plus an application and a fee will be the sole prerequisites to a renewal, replacement, or transfer of a permit to a successor operator may depend on how well the current operator has maintained political acceptance of the mine operation within the administrative agency and the local community.

NPDES Permits

The Clean Water Act prohibits the discharge of pollutants from any discernible, confined and discrete conveyance (point source) into the waters of the United States, except in compliance with permits issued in accordance with the Act.⁶ NPDES permits, whether issued by EPA or a state agency, generally have a five-year duration. As a practical matter, the renewability of the permits enables them to be virtually continuous and non-lapsing. If there has been an intervening delegation by EPA to a newly-approved state program, a federally-issued permit will continue to its expiration date, and a new application

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process will be required thereafter under state law.⁷ Whether the permits were issued by EPA or by the delegated state agency, maintaining a permit during a temporary cessation of operations requires compliance with the terms and conditions of the permit. This will include continued monitoring, recording and reporting of the point source discharge.

Compliance schedules, and the ability of the mine operator to control or prevent discharges during a cessation or cutback may be the determining factors in a decision to terminate or modify the permit. As with all permits necessary for a mining operation, the operator should notify the agency in advance of a change in operation, and provide information concerning changes in effluent discharge as necessary for the agency to evaluate the operator's ability to maintain permit compliance.

Provided the shutdown operation could be managed in a zero-discharge mode, the cost of maintaining compliance during a shutdown may be weighed by the operator against the risk of allowing the permit to lapse and a necessary reapplication for a permit. This evaluation will depend upon the water handling facilities of the individual operation, the operator's shortand long-term objectives, and prospects for the future. Obviously, the permit must be maintained if there is a potential for discharge.

Renewal of a permit theoretically may take as little as one month compared to the application and approval time for a new permit of six months to a year or more. The ability to resume

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operations within weeks of a business decision is a valuable asset given the world market for most commodities. Where a new permit may be needed for a new point source discharge from a mine after a temporary shutdown, that permit should be sought early in order to reduce the risk of liability, accommodate the agency workload and to retain the ability to resume operations on short notice.

The value of maintaining NPDES permits during a temporary shutdown may exceed the time and expense of applying for a new permit. The risk of not being able to receive a new permit on similarly favorable terms varies. Effluent receiving stream classifications and water quality standards may change, producing a correlative requirement to change effluent discharge limitations in the new permit. This is a particular problem in many mining areas in the Rocky Mountains due to the high quality of the mountain streams and agency resistance to "downgrading" water quality standards. Therefore, it may well be worth considerable expense to maintain an existing NPDES permit. In addition, maintenance of the permit avoids during its term the imposition of requirements and conditions which result from policy changes within the agency, such as groundwater pollution monitoring and control.

Mining operators who...