THE CONVERGENCE OF MINING LAW AND ENVIRONMENTAL LAW
| Jurisdiction | United States |
(Apr 2011)
THE CONVERGENCE OF MINING LAW AND ENVIRONMENTAL LAW
Dennis J. Donohue
Scott M. Watson
Sarah E. Cochran *
Warner Norcross & Judd LLP
Grand Rapids, Michigan
EUGENE E. SMARY is a partner in the Grand Rapids, Michigan, office of Warner Norcross & Judd LLP, where he has practiced law since 1976. His practice concentrates on environmental and natural resources law, with a focus on policy and cross-border issues (including infrastructure), hard rock mining and power generation sectors in Michigan. He regularly provides advice to clients on legislative and regulatory developments, including most recently Michigan's new Non-Ferrous Metallic Mineral Mining law and its implementing regulations. He recently assisted a resources company in obtaining permits to construct and operate the first new underground mine in over 50 years in Michigan's mineral rich Upper Peninsula, and is assisting in other such projects. In addition, he has assisted mining companies in remediating "legacy sites" and acted as counsel for financial institutions in connection with investments in mining projects. He currently is the Chair of the International Bar Association's Environment, Health and Safety Committee, and is also a member of the IBA's Mining Committee. He is a former Chair of the American Bar Association's Section of Environment, Energy and Resources, and of the Environmental Law Section of the State Bar of Michigan. He has lectured widely in the United States and Canada on environmental and resources issues and has taught courses on environmental law at the University of Notre Dame Law School as an Adjunct Associate Professor of Law. He has been recognized in Best Lawyers in America in the area of environmental law for 20 years, and for the last several years in the area of natural resources law. Additionally he has been listed in The International Who's Who of Business Lawyers in the category of environmental law since 2005. Most recently, he was recognized in Legal Media Group's Best of the Best U.S.A. listing of the top 25 environmental lawyers in the United States based on peer evaluation. He is a member of the first class of Fellows elected to the American College of Environmental Lawyers, and is a member of the International, American, Michigan and Canadian Bar Associations. He holds his JD and MA degrees from the University of Notre Dame, and his BA from Aquinas College. Following law school graduation, he served as a judicial clerk to the Honorable John A. Danaher of the United States Court of Appeals for the District of Columbia Circuit.
INTRODUCTION
For many lawyers working in the extractive industries sector, "mining law" embraces a sector-focused, commercial practice including mergers and acquisitions, finance, real estate, etc. In other words, it is a general practice focused on a particular industrial sector. Increasingly, however, the practice of mining law is becoming the practice of environmental law. Indeed, in certain areas where new mining activity has not taken place in decades, the discovery of new economic ore bodies has resulted in a push for comprehensive legislation focused on environmental impact. For example, despite the State of Michigan's long copper mining history dating back to pre-history, Michigan had been viewed only as an iron ore mining state for the last several decades. Environmental laws forced the closure of the last operating copper mine in Michigan (the White Pine Mine) when the smelter was forced to be closed down for violations of the federal Clean Air Act. There has been a recent spate of exploration activity in the mineral rich western Upper Peninsula of Michigan that has led to the targeted exploration for base and precious metals contained in sulfide ore bodies. As mining companies began detailed preparation for pre-feasibility studies, pressure was placed on the Michigan state government by well-financed environmental groups to develop an entirely new mining law rooted in the principles of environmental law. Despite the fact that any application for a new industrial
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facility focused on mining (or any other industrial sector) would already require an air permit, a water permit, waste disposal compliance, regulatory compliance, etc., the fact that there was not a specific body of law dealing with reclamation of underground mining operations and sulfide ore mining operations in particular, led to the demand to develop a new law, and an acquiescence in this demand by political leadership of the state.
Fundamental to the development of this law was the perceived need to protect the environment from the historic legacy of mining in sulfide ore bodies--acid rock drainage. We need only look around us in certain areas of the world to see that if not properly regulated and controlled, mining can and sometimes does have a lasting adverse impact on the environment. Because of that impact, it has been argued that mining has an adverse impact on human health, particularly on indigenous populations in underdeveloped areas of the world. It is in this context that we are seeing not just the convergence, but the actual merger of mining law and environmental law. While the decision to seek to mine a particular ore body remains technically and economically driven, the effort to obtain governmental authorizations in the form of permits, licenses, or concessions is increasingly driven solely by environmental considerations. This paper will generally discuss that development with a particular focus on environmental requirements generally and in the United States and Michigan in particular. While these developments might not present the template to be replicated everywhere, they are at the very least a sign of things to come and of the need for practitioners of "mining law" to learn "environmental law."
DISCUSSION
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I. Voluntary Regulation of Mining Activity
Modern mining operations in most developed countries are subject to strict environmental laws. As discussed in this Article, the United States is an example of a country in which mining operations must comply with a complex and comprehensive environmental regulatory regime. But not all countries subject mining operations to stringent environmental laws. In some developing countries, there may be little or no environmental regulation. Or the regulations that do exist may not be consistently enforced.
To fill the regulatory gap in countries where mining regulations do not exist or are not enforced, and to supplement the regulatory regimes in countries that actively regulate mining operations, there has been a relatively recent push for international regulation and oversight of mining. This has resulted in numerous proposals for voluntary, self-regulation of mining activities. These proposals generally focus on "sustainability," one aspect of which is minimizing or mitigating environmental impact.1
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Pressure from investors and lenders has also created a quasi-regulatory framework in which mining companies must operate if they desire capital from certain sources. For example, socially responsible investing criteria and investment principles issued by the World Bank can influence legislation in developing nations, and they can also affect the operations of mining companies that wish to secure and maintain financing from participating sources.2 In
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particular, the Equator Principles, which are based on the International Finance Corporation Performance Standards on Social and Environmental Sustainability and the World Bank Group's Environmental, Health and Safety General Guidelines, are the financial industry's "gold standard" for "determining, assessing and managing social and environmental risk in project financing."3
The Equator Principles provide a "common baseline and framework for the implementation ... of [a borrower's] internal social and environmental policies, procedures and standards."4 They apply to a participating lending institution's new project financings with total project capital costs of at least $10 million, and they commit participating lending institutions in those circumstances to providing loans only to projects where the borrower will comply with its internal social and environmental policies and procedures.5
All of the above initiatives, codes, and principles are voluntary. With enough time they might evolve into standard, best-industry practice, they might be incorporated into a country's environmental statutes or regulations, and they might arguably create contractual obligations and liabilities in certain circumstances. On their own, however, they are not compulsory. In the United States, the binding, compulsory law applicable to mining operations began as property law and has since been substantially integrated into regulatory environmental law--as explained below.
II. U.S. Mining Law Before Environmental Law
A. Historical Property-Rights Focus Encouraged Development of Federal Lands
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To encourage settlement and development in the West, the United States created incentives for private farmers, settlers, and miners.6 As an initial step, the government promoted development with expansion of the railroad and grants of public right of ways.7 Creation of an efficient method of travel from East to West increased the likelihood that people would develop land in the West because farmers and others could for the first time ship their products across the country before they spoiled and without months or years of lag time.8 The railroad conducted advertising campaigns for Western land development and pioneers flocked to the West with hopes of owning and developing land, dreaming of a new life in the West.9 Later, more settlers and pioneers rushed west as minerals were discovered. By 1848 pioneers flocked west in the California Gold Rush.
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