Chapter 11A Roles and Responsibilities in a "Big" Natural Resources Litigation Case—Putting the Pieces Together

• Jurisdiction: United States

Chapter 11A Roles and Responsibilities in a "Big" Natural Resources Litigation Case—Putting the Pieces Together
Neil G. Westesen Crowley Fleck PLLP Helena, MT

NEIL G. WESTESEN is a Litigation Partner in Crowley Fleck's Helena office. He graduated from the University of Colorado School of Law in 1991 and has been with Crowley Fleck ever since. Neil was the firm's Managing Partner from 2011 through 2016 and served on the Firm's three person Executive Committee for several years before that. Neil's litigation practice includes significant environmental litigation arising out of the 2015 Gold King Blowout in Colorado. His construction practice involves the representation of architects, engineers, owners, contractors, and sureties. In addition, he has a significant Indian law practice representing industry clients in negotiations with and litigation against Indian tribes. He has also represented several attorneys in legal malpractice defense matters. He has tried cases in Montana and Wyoming and also has an extensive appellate practice.

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I. INTRODUCTION

On August 5, 2015, while investigating a collapsed gold mine in Southwestern Colorado, an EPA On Scene Coordinator and two EPA contractors triggered the release of over 3,000,000 gallons of mine impacted water from the Gold King Mine. The water scoured away a BLM owned waste pile, picked up metal laden sediment from Cement Creek, turned the creek bright orange, and then flowed into the Animas and San Juan rivers, eventually dumping several hundred thousand pounds of metal in the bottom of Lake Powell. The event gathered national and international media attention and sparked numerous congressional hearings, inspector general investigations, and eventually spawned complex multi-district litigation. My firm was retained to represent Sunnyside Gold Corporation (SGC), the owner of a nearby mine, and I basically spent the last five years working on the ensuing litigation. This paper will outline the underlying case, the roles of the various attorneys working on the case, the best role for junior lawyers in that process, and offer a few overall "big case" management suggestions.

II. BACKGROUND

SGC acquired the Sunnyside Mine from the Standard Metals Company on November 19, 1985. The Sunnyside Mine is located approximately two miles from the Gold King Mine and the two mines are not connected. Standard Metals had operated the Sunnyside Mine since 1960, but they eventually went bankrupt. In 1985, the Sunnyside Mine was not commercially producing and was under a cease and desist order resulting from violations of its mining permit and two of its three water discharge permits. Following acquisition, SGC brought all discharge permits into compliance, re-designed the mining operation, and completed a substantial mine permit amendment in cooperation with Colorado regulatory agencies. On February 29, 1988, the Colorado Mined Land Reclamation Division awarded SGC the 1987 Mined Land Reclamation "Most Improved Site" Award. The Director wrote, "Our congratulations and appreciation for the outstanding job you have accomplished." SGC received a similar award in 1994 following mine closure.

SGC's original mine reclamation permit included the following requirement from its Colorado regulators: "Indefinite mine drainage treatment is not acceptable as final reclamation. Please devise an alternate reclamation plan." In September of 1986, the Colorado Mined Land Reclamation Division (MLRD) and SGC discussed conceptual plans to bulkhead the American Tunnel, which served as both drainage and access for the Sunnyside Mine, as part of ultimate mine closure and environmental remediation. In January of 1987, long-term plans for mine closure, including the use of bulkheads, were included in SGC's permit documents. SGC's permit application notes, "As discussed with the MLRD staff at the September 18, 1986 meeting, it is anticipated that, to alleviate the need for indefinite mine drainage treatment, a hydraulic seal will be installed in both the Terry and American Tunnels. The seal will act to prevent substantial releases of underground waters from the tunnels to the ground surface."

In August of 1991, SGC closed the Sunnyside Mine and shifted its activities to a purely reclamation and remediation focus. SGC and the State of Colorado agreed on a comprehensive watershed approach in which SGC would be released from all further reclamation obligations if

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SGC would install engineered concrete bulkheads to address mine drainage from the Sunnyside Mine and complete numerous other reclamation projects in the region. Many of these projects were on property SGC never owned or operated. SGC retained experts to evaluate area geology and hydrology and to consider design options for bulkheading the interior workings of the Sunnyside Mine and the American Tunnel. The experts concluded that the bulkheads would serve to re-establish the pre-mining natural hydrology in the region and the State agreed.

Before installing the bulkheads, and cognizant of the possibility that bulkheading might lead to increased seeps, springs, and adit discharge as regional groundwater flows returned to their pre-mining natural pathways, SGC and the State of Colorado discussed how those restored flows would be handled. Initially, Colorado contended that any additional flows would require their own discharge permit and would be SGC's responsibility to treat. SGC disagreed and eventually filed suit to have a Court resolve the issue. SGC and Colorado ultimately reached a settlement and entered into a Consent Decree that a Colorado District Court approved on May 8, 1996. The parties clearly articulated the purpose of the 1996 Consent Decree:

[T]o resolve this dispute, to allow SGC to proceed with final reclamation of the Sunnyside Mine, to provide for closure of the American and Terry Tunnels by hydraulic seals, to provide for mitigation of certain other historic mining conditions, to protect the waters of the State of Colorado, and to provide for the final termination of CDPS Permits No. CO-0027529 and CO-0036056, the parties agree to the terms and conditions of this Consent Decree.

The Consent Decree, including four separate amendments, required completion of various bulkheads and, by 2003, the collective bulkhead network had decreased the American Tunnel discharge from approximately 1,600 gpm to less than 100 gpm. The remaining American Tunnel discharge is near surface water unrelated to the Sunnyside Mine.

SGC's bulkheading conduct was reviewed and approved by not just the State of Colorado but also by EPA. An internal EPA memorandum at the time noted that with respect to the Sunnyside Mine, SGC "took over after an environmental disaster caused the original company to go bankrupt. Sunnyside did not make a profit at the mine and started shutdown procedures approximately 5 years ago." EPA's own independent expert concluded that bulkheading was the best option for the site. "Technically, the plan makes sense and has merit, and I encourage its implementation without further, long-term discussion."

After its internal review and expert evaluation, on April 5, 1996, EPA congratulated both SGC and the State of Colorado on the Consent Decree:

The Environmental Protection Agency (EPA) commends both the State of Colorado and Sunnyside Gold Corporation (SGC) on your innovative approach to problems encountered in final closure of the Sunnyside Gold Mine. Further, the EPA is pleased that Colorado has chosen to use a watershed/trading approach as one step toward achieving the goals of improving water quality in the Animas River. As active members of the Animas River Stakeholders Group, EPA

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understands and supports the concepts of community based environmental protection.

Eventually, after the expenditure of millions of dollars in remediation costs, the installation of numerous bulkheads, and the completion of other cooperative projects designed to improve regional water quality, the State of Colorado agreed that the conditions for termination of the Court's jurisdiction relative to the 1996 Consent Decree had been met. SGC, with EPA's blessing, successfully completed the work required to remediate and obtain "final closure" of the Sunnyside Mine and considered its reclamation obligations satisfied. Things continued in roughly that fashion for the next dozen years, until August 5, 2015.

III. THE GOLD KING...