Potential Sources of Post-Closure Liabilities

September 05, 1999

• Author(s):
• Larry Ausherman

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Summary
Even after a mine is closed and reclamation and surety obligations addressed, potential sources of environmental liability may remain. In some instances, waste rock, overburden, ore stockpiles, tailings, and leach dumps that come in contact with waters may leach contaminants that discharge into surface watercourses or percolate into ground water. Impoundments and pits on the mine site may collect water that becomes exposed to rock or water of elevated chemical concentrations, sometimes resulting in the potential for generation of acid. Airborne contaminants or radiation may exceed standards. A mine site may have dumps or other areas containing hazardous material that may require special handling. Although appropriate closure of the site diminishes the risk of potential environmental liability, the mine operator must be aware of the possible sources of such liability to guide proper closure design and allow sound risk management decisions.

• INTRODUCTION
  

• Even after a mine is closed and reclamation and surety obligations addressed, potential sources of environmental liability may remain. In some instances, waste rock, overburden, ore stockpiles, tailings, and leach dumps that come in contact with waters may leach contaminants that discharge into surface watercourses or percolate into ground water. Impoundments and pits on the mine site may collect water that becomes exposed to rock or water of elevated chemical concentrations, sometimes resulting in the potential for generation of acid. Airborne contaminants or radiation may exceed standards. A mine site may have dumps or other areas containing hazardous material that may require special handling. Although appropriate closure of the site diminishes the risk of potential environmental liability, the mine operator must be aware of the possible sources of such liability to guide proper closure design and allow sound risk management decisions.


• Selected federal sources of environmental liability addressed in this outline are:


• Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) (CERCLA). 42 U.S.C. §§ 9601-9657.


• Resource Conservation and Recovery Act of 1976 (RCRA). 42 U.S.C. §§ 6901-6991.


• The Clean Water Act. 33 U.S.C. §§ 1251-1376.


• Other federal laws, not addressed here, that pose environmental obligations or potential liability include:


• Surface Mining Control and Reclamation Act, 30 U.S.C. §1201-1328.


• Bureau of Land Management surface management regulations, 43 C.F.R. Subpt. 3809 (1994).


• Forest Service Surface Management regulations, 36 C.F.R. § 228.


• Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA). 42 U.S.C. §§ 2011-2246.


• Selected state sources of environmental liability addressed in this outline are:


• New Mexico Mining Act. NMSA 1978, §§ 69-36-1 through 69-36-20 (Repl. Pamp. 1997).


• New Mexico Water Quality Act. NMSA 1978, §§ 74-6-1 through 74-6-17 (Repl. Pamp. 1993 & Cum. Supp. 1997).


• Common law presents another source of potential post-closure environmental liability. This outline addresses common law theories of nuisance and trespass.


• Federal and state statutes and regulations addressed in this outline are a primary source of potential environmental liability, but also important are contractual provisions that may impose or apportion environmental liability. These provisions are found in a variety of mineral development agreements, ranging from leases to joint venture agreements. Discussion of contractual sources of environmental liability are outside the scope of this outline.


• COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT (CERCLA)
  


• CERCLA provides for cleanup of sites where there are "releases or threatened releases" of "hazardous substances," or where there are "pollutants or contaminants," the release of which may present "an imminent and substantial endangerment to the public health or welfare." Eagle-Picher Industries, Inc. v. EPA, 759 F.2d 922, 925-26 (D.C. Cir. 1985). CERCLA provides various mechanisms for responding to such releases and delineates the respective powers of the federal government, states, Indian tribes, and private parties. Colorado v. Idarado Mining Co., 916 F.2d 1486, 1488 (10^th Cir. 1990), cert. denied, 499 U.S. 960 (1991).


• Under CERCLA, the federal government is authorized to perform cleanup actions or enter into cooperative agreements with other governments to conduct cleanup. Alternatively, private parties can conduct cleanup. Government entities or private parties who incur "response costs" may recover costs in a cost recovery action or an action for contribution. A potentially responsible party who incurs response costs may sue other potentially responsible parties for contribution. See Pinal Creek v. Newmont Mining, No. 9616334 (9^th Cir. July 2, 1997). There are four central elements to establish liability in a cost recovery action. 42 U.S.C. § 9607.


• The site must be of a "facility."


• There must be a "release or threatened release" of a "hazardous substance" from the site.


• The suing party must have incurred response costs.


• The defendant(s) must be within the statutory class of liable parties.


• Defenses are limited. 42 U.S.C. § 9607(b).


• Mine wastes containing hazardous constituents are not excluded from CERCLA under the Bevill Amendment of RCRA. Mine waste can be a "hazardous substance" despite the Bevill Amendment if its constituents fall within any of the subparagraphs under the definition, including those referring to substances regulated under the Clean Air Act and the Clean Water Act. In Eagle-Picher, the court rejected the argument that uranium mining wastes near Milan and Churchrock, NM and flyash from the combustion of coal in Virginia could not be hazardous substances under CERCLA. Eagle-Picher, 759 F.2d at 926-30. A January 1993 ruling in United States v. Iron Mountain Mines, Inc., 812 F. Supp. 1528 (E.D. Cal. 1992), in which the district court concluded that mine wastes are excluded from CERCLA coverage, cast some doubt over the applicability of Bevill for a short period of time. However, After Iron Mountain was decided by the District Court, the Ninth Circuit in Louisiana-Pacific Corp. v. ASARCO, Inc., 24 F.3d 1565 (9^th Cir. 1994), cert. denied, 513 U.S. 1103 (1995) decided that releases of Bevill-excluded wastes may create CERCLA liability, and the Iron Mountain court allowed plaintiffs' CERCLA claims, and the doubt created by the district court decision no longer exists.


• Because fault is not an essential element under CERCLA, it is considered a strict liability scheme. In most instances, joint and several liability may attach to individuals or entities from among four categories identified in CERCLA as follows:


• Current owner and operator of a facility.


• Any person who, at the time of disposal of a hazardous substance, owned or operated the facility at which the hazardous substance was disposed of.


• Any person who arranged for disposal or treatment of hazardous substances owned or possessed by such person.


• Any person who accepted any hazardous substances for transport to sites from which there is a release or threatened release which causes the incurrence of response costs. 42 U.S.C. § 9607(a).


• Liabilities arising from a miner's status as owner or operator of a facility are broadly defined.


• The definitions of "owner" and "operator" have been construed broadly.


• The term "facility" under CERCLA includes "any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located...." 42 U.S.C. § 9601(9). In Colorado v. Idarado Mining Co.,707 F. Supp. 1227 (D. Colo. 1989) although reversed on other grounds on appeal (916 F.2d 1486 (10^th Cir. 1990), cert. denied, 499 U.S. 960 (1991)), the court held the term "facility" included the bank of a river bend where heavy metals came to rest after being eroded and washed downstream from mine portals and tailings piles near Telluride, Colorado. 707 F. Supp. at 1241. Surface impoundments, containment ponds, reserve pits, and spent ore piles may qualify as facilities.


• The term "release" is broadly defined. 42 U.S.C. § 9601(22). Erosion of tailings, migration or leaching of contaminants, and particles blown by light winds have been held to constitute CERCLA releases. Idarado Mining Co., 707 F. Supp. at 1241 (erosion of tailings); United States v. Hardige, 761 F. Supp. 1501, 1508 (W.D. Okla. 1990) ("release" includes the presence of hazardous substances in soil and water where refinery's waste oil containing lead was deposited); United States v. Matate Asbestos Corp., 584 F. Supp. 1143, 1148 (D. Ariz. 1984) (airborne asbestos).


• The current owner of a facility may be a "responsible party," subject to limited defenses regardless of whether the current owner had any part in creating the hazard to be cleaned up or whether the current owner owned the property at the time of mining. New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir. 1985).


• Prior owners may only be liable as such if hazardous substances were "disposed of" on their property during their period of ownership. 42 U.S.C. § 9607(a)(2). However, EPA may seek to use the broad definition of "disposal" to imply liability on the part of a miner who owned the property anytime after mining occurred in which contaminants from past operations merely leached or migrated during that miner's tenure of ownership. See 42 U.S.C. § 9601(29); 42 U.S.C. § 6903(3).


• Certain ownership liability issues may arise specifically in the context of mining operations.


• Although case law is sparse, CERCLA poses potential liability for both the owner of the surface estate and the owner of the mineral estate, depending on the circumstances. Mine wastes to be remediated often rest at or near the surface, yet despite their presence at the surface, the waste consists of the by-products of exploitation of the mineral estate.


• Other forms of shared ownership interests have resulted in liability to both owners. Co-owners, tenants-in-common, lessors, and lessees have all been held liable under CERCLA. A mining leasehold interest is sufficient to give rise to ownership liability under CERCLA.


• Ownership of mining claims, whether patented or unpatented, may give rise to CERCLA liability, just as other interests in the mineral estate may. Federal lands on which unpatented mining claims are located may give rise to liability not only for the holder of the unpatented mining claim, but also for the United States, who owns the fee.


• Holders of a non-possessory interest (such as royalties, overriding royalties, production payments, or net smelter returns) may be able to avoid environmental liability under CERCLA, but some risk of liability is posed. New Mexico and some other states have held that royalty-type interests are interests in land, but the royalty interest owner does not have prospecting or mineral exploration rights, and may only share in proceeds. Christy v. Petrol Resources Corp., 102 N.M. 58, 63, 691 P.2d 59, 62 (Ct. App. 1984). Where owners of royalties or other production interests have asserted substantial control over operations, courts may be inclined to find operator liability.


• Operator liability.


• To assess the potential for operator liability in mining operations, reference should be made to the documents giving rise to operational interests.


• The key inquiry under CERCLA is the capacity to control hazardous substances released. Idaho v. Bunker Hill Co., 635 F. Supp. 665 (D. Idaho 1986).


• Particularly where a milling company arranges for disposal of tailings or other wastes or byproducts, "arranging for disposal" liability may arise.


• Responsible persons may be liable not only for response costs, but also to the United States, a state, or an Indian tribe for natural resources damages. 42 U.S.C. § 9607.


• RESOURCE CONSERVATION AND RECOVERY ACT (RCRA)
  


• Mining, milling, and processing operations involve generation and handling of overburden, waste rock, tailings, spent ore, and other wastes. RCRA is the source of federal regulation of solid waste disposal, and it imposes additional requirements on the subcategory of solid wastes that are "hazardous wastes." 42 U.S.C. §§ 9601-9657.


• Congress enacted the "Bevill Amendment" in 1980, exempting temporarily from hazardous waste regulation "solid waste from the extraction, beneficiation, and processing of ores and minerals." 42 U.S.C. § 6921(b)(3)(A)(ii). The exemption still exists, although EPA has narrowed the exemption for smelting and refining wastes. Environmental Defense Fund v. EPA, 852 F.2d 1316 (D.C. Cir. 1988), cert. denied, 489 U.S. 1011 (1989); 55 Fed. Reg. 2322 (1990). Extraction and beneficiation wastes and overburden returned to the mine site remain excluded, but current further scrutiny by EPA of exclusions may lead to efforts to further limit the types of wastes that are excluded.

• Mine wastes may not be exempt under Bevill if they independently exhibit the characteristics of hazardous materials or if the agency determines they "may present an imminent and substantial endangerment to health and the environment." 42 U.S.C. § 6973(a). Actual harm need not be shown; showing of imminent threat is sufficient. Liability attaches to anyone who has contributed to handling storage treatment or disposal that results in imminent hazard. United States v. Vertac Chemical Corp., 489 F. Supp. 870, 880-85 (E.D. Ark. 1980). Construction of the provision has on occasion been broad. United States v. Aceto Agric. Chem. Corp., 872 F.2d 1373 (8^th Cir. 1989). In Friends of Santa Fe County v. Lac Minerals (USA), Inc., 892 F. Supp. 1333 (D.N.M. 1995), the court dismissed plaintiffs' imminent and substantial endangerment claim under RCRA, on grounds of Burford abstention and primary jurisdiction in deference to related proceedings before the New Mexico Environment Department. There, the court also held that ARD from Bevill-exempt waste is not a hazardous substance regulated under RCRA. 892 F. Supp. At 1342.


• Citizens Suits.


• RCRA provides for three types of citizen suits. First, suit may be brought for violation of any permit, standard, or regulation applicable under RCRA. 42 U.S.C. § 6972(a)(1)(A). Second, suit may be brought against anyone who has contributed to past or present handling, storage, treatment, transportation or disposal of solid or hazardous waste which may present "an imminent and substantial endangerment" to human health or the environment. 42 U.S.C. § 6972(a)(1)(B). Third, suit may be brought against the EPA for failure to perform a non-discretionary act or duty under RCRA. 42 U.S.C. § 6972(a)(2).


• Citizens suits for permit violation or imminent and substantial endangerment pose risk for an active mine site. See Friends of Santa Fe County, 892 F. Supp. at 1347.


• CLEAN WATER ACT
  


• Federal regulation of discharge of pollutants into waters of the United States is conducted under the Clean Water Act. 33 U.S.C. §§ 1251-1376.


• The NPDES program of the Clean Water Act is important for owners of both active and inactive mine sites. The National Pollutant Discharge Elimination System (NPDES) requires a permit to discharge "pollutants" from a "point source" to "waters of the United States." In New Mexico, although the State sets surface water quality standards, the EPA maintains responsibility for administering and enforcing the NPDES programs.


• Mine waters can contain contaminants, and a discrete conveyance of such waters can constitute a point source if it reaches a "water of the United States." Clean Water Act jurisdiction is over "waters of the United States," which is defined very broadly. In at least one instance, EPA has asserted that ground water hydrologically connected to surface water may be covered by the Clean Water Act. 55 Fed. Reg. 47990, 47997 (Nov. 16, 1990). But the Seventh Circuit has rejected assertion by EPA of authority over ground waters. Oconomowoc Lake v. Dayton Hudson Corp., 24 F.3d 962, cert. denied, 513 U.S. 930, 115 S. Ct. 322 (1994). Intermittent streams and dry washes may constitute "waters of the United States." Quivera Mining Co. v. United States E.P.A., 765 F.2d 126 (10^th Cir. 1985), cert. denied, 474 U.S. 1055 (1986).


• EPA's 1990 storm water discharge rule for "industrial activity," includes within industrial activity "active and inactive mines." Under EPA's rule, an NPDES permit can be required where storm water touches mine wastes from old mining activity and a discharge of pollutants results.


• Citizens suits under the Clean Water Act pose risks for old mine sites. Citizens may assert Clean Water Act violations or NPDES permit violations where unpermitted discharges can be shown. Committee to Save the Mokelumne River v. East Bay Mun. Util. Dist., 13 F.3d 305 (9^th Cir. 1993), cert. denied, 513 U.S. 873, 115 S. Ct. 198 (1994). Friends of Santa Fe County v. LAC Minerals (USA), Inc., 892 F. Supp. 1333 (D.N.M. 1995).


• NEW MEXICO WATER QUALITY ACT
  


• The New Mexico Water Quality Act governs permitting of certain discharges of water contaminants, and imposes requirements for notification and cleanup of discharges that may, with reasonable probability, injure or be detrimental to human health, animal or plant life or property. NMSA 1978, § 74-6-1 thru 74-6-17 (Repl. Pamp. 1993 & Cum. Supp. 1997). Violations are subject to civil and criminal penalties. NMSA 1978, § 74-6-10.1 and 10.2 (Repl. Pamp. 1993).


• The Water Quality Act requires a "person" who intends to discharge a contaminant in the water to first obtain a permit. (NMSA 1978, § 74-6-5). Certain exclusions from the requirement for a discharge plan are provided in the regulations at 20 NMAC 6.1.I.3105. Regulations require that any person "in charge" of a facility from which an injurious discharge occurs must notify the ED within 24 hours. The term "in charge of" is not defined. 20 NMAC 6.1.I.1203.


• Discharges to surface water are generally covered by the federal Clean Water Act, which should not apply directly to ground water. However, the state of New Mexico acts to protect ground water under its Ground Water Protection Act as a function of state law.


• Discharge plans that were entered into during the operation phase of the mine may extend beyond operations into the post-closure phase. If conditions and requirements of the discharge plan are violated, the Environment Department requires compliance and, if the violation involves contamination of ground water, cleanup.


• If a discharge that is not the subject of a discharge plan develops after cessation of mining, a discharge plan may be required if the discharge is not excluded from permit requirements.


• Ground water standards are defined in the New Mexico Water Quality Regulations at 20 NMAC 6.2.III.3103.


• A key issue for compliance is defining the point of compliance. The applicant must "demonstrate that approval of the discharge plan will not result in concentrations in excess of the standards of Section 3103 or the presence of any toxic pollutant at any place of withdrawal of water for present or reasonably foreseeable future use." 20 NMAC 6.2.III.3106.C.7; see also NMSA 1978, § 74-6-5(E)(3).


• In some instances, an abatement plan may be required under the Water Quality regulations as a means to remediate contamination. 20 NMAC 6.2.IV.4104, et seq.


• Miners should seek cooperation from agencies to avoid duplicative or conflicting requirements related to prevention or remediation of ground water.


• NEW MEXICO MINING ACT
  


• The New Mexico Mining Act imposes a comprehensive regulatory permitting scheme for most non-coal mines -- both existing and new -- to promote "responsible utilization and reclamation of lands affected by exploration, mining or the extraction of minerals that are vital to the welfare of New Mexico." NMSA 1978, § 69-36-2 (Repl. Pamp. 1997).


• An "existing mining operation" is defined as "an extraction operation that produced marketable minerals for a total of at least two years," since January 1, 1970. NMSA 1978, § 69-36-3(E) (Repl. Pamp. 1997). Therefore, a "new mining operation" is one that "engages in a development or extraction operation" after the effective date of the Act. § 69-36-3(I). For operations that meet these definitions, the Act imposes permit requirements, including reclamation.


• Certain requirements of the New Mexico Mining Act extend through the life of the mine and beyond. Proper closure of a mine under the New Mexico Mining Act permitting requirements should reduce any risk of post-closure liabilities. However, criminal penalties and citizens suits are available. § 69-36-18(A), § 69-36-14(A).


• COMMON LAW CONCEPTS
  


• Public Nuisance - The New Mexico Environment Department may use public nuisance as a theory to pursue land owners who may not have participated in the release of contaminants. NMSA 1978, § 30-8-1 (Repl. Pamp. 1994). In theory, public nuisance liability could arise by virtue of simple land ownership, although statute does require "knowingly creating, performing, or maintaining" the conditions affecting citizens without lawful authority that is injurious to public health, safety, morals or welfare, or interferes with enjoyment of public rights. Either the District Attorney or citizens may also pursue nuisance actions. Polluting water can constitute a public nuisance and is a misdemeanor. § 30-8-2.


• Private Nuisance - A "private nuisance" has been defined as "a non-trespassory invasion of another's interest in the private use and enjoyment of land." Padilla v. Lawrence, 101 N.M. 556, 559, 685 P.2d 964, 967 (Ct. App.), cert. denied, 101 N.M. 419, 683 P.2d 1341 (1984).


• Nuisance exists regardless of the degree of care exercised to avoid injury, and may be intentional or unintentional. It must be "unreasonable." State ex rel. Baxter v. Egolf, 107 N.M. 315, 317, 757 P.2d 371, 373 (Ct. App. 1988).


• New Mexico courts have followed the Restatement (2d) of Torts, under which one can be liable for nuisance after he has had the opportunity to learn of a problem and reasonable chance to abate it. Restatement (2d) of Torts, § 839. However, at least one commentator has suggested that the mere ownership of property should not be enough to subject the owner to a nuisance action.


• Should the landowner be held liable for nuisance, he could be subjected to damages (diminution in value) or an injunction. Padilla v. Lawrence, 101 N.M. at 561-562, 685 P.2d at 969-70. With continuing nuisances, damages may not be adequate remedy, so that injunction or injunction plus damages may be given. Scott, 99 N.M. at 573, 661 P.2d at 65. Injunction is available in New Mexico and ED may use public nuisance as a vehicle for forcing cleanup.


• Trespass - In New Mexico, a "trespass" is a direct infringement of another's right of possession. Where there is no physical invasion of property, the cause of action is for nuisance rather than trespass. Padilla, 101 N.M. at 563, 685 P.2d at 971. Remedies for trespass are the same as for nuisance. Therefore, damages and injunctive relief may both be available.

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