Aztec Minerals Corp. v. Romer, 95CA1108
| Decision Date | 24 October 1996 |
| Docket Number | No. 95CA1108,95CA1108 |
| Citation | 940 P.2d 1025 |
| Parties | AZTEC MINERALS CORPORATION, Gray Eagle Mining Corporation and South Mountain Minerals Corporation, Plaintiffs-Appellants, v. Roy ROMER, Governor, State of Colorado; Patricia Nolan, Executive Director, Colorado Department of Public Health and Environment; James L. Lochhead, Executive Director, Colorado Department of Natural Resources, Defendants-Appellees. . IV |
| Court | Colorado Court of Appeals |
Gablehouse & Epel, P.C., Timothy R. Gablehouse, Debra L. Smith, Karina M. Thomas, Denver, for Plaintiffs-Appellants.
Gale A. Norton, Attorney General, Stephen K. ErkenBrack, Chief Deputy Attorney General, Timothy M. Tymkovich, Solicitor General, Gregg E. Kay, First Assistant Attorney General, Stephen M. Brown, Assistant Attorney General, Denver, for Defendants-Appellees.
Opinion by Justice ERICKSON. *
Plaintiffs, Aztec Minerals Corporation, Gray Eagle Mining Corporation, and South Mountain Minerals Corporation, appeal from a judgment of the district court dismissing their complaint with prejudice. Defendants are the State of Colorado; Roy Romer, Governor; the Colorado Department of Public Health and Environment (CDPHE); Patricia Nolan, Executive Director; the Colorado Department of Natural Resources (DNR); and James L. Lochhead, Executive Director (collectively the State). We affirm.
I.
The Background and Operation of the Summitville Mine
Plaintiffs are the principal owners of the surface and mineral estates to property that encompassed what is commonly known as the Summitville Mine. The Summitville Mine is located in the Summitville Mining District (District) at the headwaters of the Rio Grande on the northeast flank of South Mountain within the San Juan Mountain Range. The mine site, which is heavily mineralized, covers approximately 1,400 acres ranging in altitude from 11,400 to 12,500 feet. It is located within two miles of the Continental Divide and is subject to severe weather, including heavy winter snows.
Gold was discovered in the District in 1870 and was initially mined using placer techniques. Underground gold mining commenced following lode discoveries in 1872. Significant lode and placer activity took place from 1875 to 1887. Mining activity subsequently declined with the depletion of high-grade ores. The District, however, experienced some periods of renewed activity in the decades preceding the development of the Summitville Mine.
In 1976, the General Assembly enacted the Colorado Mined Land Reclamation Act to provide a procedure for allowing the extraction of minerals and the reclamation of mine sites for a beneficial use, while protecting the environment. Section 34-32-101, et seq., C.R.S. (1995 Repl.Vol. 14). Reclamation standards established in the Act include prevention of acid mine drainage, maintenance of the hydrologic balance in the watershed, maintenance of water quality and quantity, soil stabilization on the mine site to prevent landslides or erosion, and, where practical, revegetation with self-sustaining plant species. Section 34-32-116(7), C.R.S. (1995 Repl.Vol. 14).
In 1984, plaintiffs leased the property on which the Summitville Mine is located to Galactic Resources, Inc., (GRI) and its subsidiary, Summitville Consolidated Mining Company, Inc. (SCMCI). Shortly thereafter, SCMCI/GRI submitted an application to the Mined Land Reclamation Division (MLRD) (now known as the Division of Mines and Geology (DMG)), which was approved by the Colorado Mined Land Reclamation Board (MLRB) for a limited impact, open-pit, gold mining operation. The operation was designed to test the feasibility of extracting gold utilizing a cyanide heap leaching process. Plaintiffs were required to provide a performance bond to obtain approval of their application for a permit.
As the pilot project proceeded, SCMCI/GRI submitted an application in August 1984 for a large scale cyanide heap leaching operation at the Summitville site. The MLRB approved SCMCI's/GRI's application in October 1984 and construction of the mine, including the heap leach pad and liner, commenced in August 1985 and continued through the winter.
The heap leach pad liner was composed of an impermeable plastic membrane underlaid by a sand layer. The sand layer incorporated a leak detection system and was underlaid in part by a geotextile membrane which rested on top of a clay liner. A "french drain" system, consisting of crushed rock, collected groundwater that flowed under the liner. The purpose of the liner in addition to permitting the collection of the gold bearing cyanide solution for processing was to prevent the solution from entering into the surrounding environment.
Difficulties SCMCI/GRI encountered during the winter construction resulted in the liner being ripped and torn. While SCMCI/GRI made repairs to the liner prior to loading the heap leach pad with ore, leaks were detected between the upper and lower liners within a week after SCMCI/GRI began heap leaching operations in June 1986. Shortly thereafter, it was discovered that the lower liner was also leaking and that the cyanide solution was entering the french drain system.
As a result of the cyanide leaks, SCMCI/GRI proposed to the MLRB that it be allowed to pump water from the leak detection system and the french drain back onto the heap leach pad. This additional water, however, exacerbated a problem, which later became apparent, concerning the amount of water that could be contained by the heap leach pad without processing. The mine was originally conceived as a "zero discharge" facility.
Commencing in June 1987, the Summitville mine experienced a number of system failures which resulted in cyanide contaminated water being discharged into a nearby creek and into settling ponds on the site. To handle the increased volume of water in the heap leach pad, SCMCI/GRI entered into negotiations in 1988 with the Water Quality Control Division (WQCD) to obtain a point source discharge permit. A permit was subsequently approved by the WQCD in May 1989.
In 1989, SCMCI/GRI also obtained approval from the DMG and the MLRB to construct a process water treatment plant. The plant, however, could not sufficiently treat the water to the standards required by the WQCD.
SCMCI/GRI then sought and obtained permission from the MLRB to allow for land application of the water. The land application system called for SCMCI/GRI to spray contaminated liquid on surrounding lands where it would evaporate and percolate at a controlled rate into the ground. However, because of problems associated with this process, contaminated water flowed into the Wightman Fork and Cropsy Creek, tributaries of the Alamosa River.
In 1991, SCMCI/GRI, the MLRB, and the WQCD entered into a settlement agreement to address SCMCI/GRI's continuing problems at the site. The settlement agreement, which was amended in 1992, provided that SCMCI/GRI would submit a comprehensive plan to remedy its violations.
On December 4, 1992, approximately two weeks after SCMCI/GRI submitted its cleanup plan in which it estimated the cost of cleanup at $20 million, SCMCI/GRI declared bankruptcy and gave notice that it would no longer fund its operations at the site after December 15. Immediately thereafter, the Colorado Department of Health sought the assistance of the Environmental Protection Agency (EPA) to undertake an emergency response action at the site if one became necessary.
On December 15, 1992, the day SCMCI/GRI abandoned the site, the State obtained a temporary restraining order (TRO) against SCMCI/GRI to require continued operation of the water treatment facilities. Less than two weeks later, on December 28, the State obtained a preliminary injunction against SCMCI/GRI extending the TRO.
On December 16, 1992, the EPA entered the site pursuant to its authority under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), § 42 U.S.C. 9601, et seq., (1994), began operating the water treatment facilities, and sought to stabilize the site conditions. The State and the EPA subsequently entered into several response action contracts (Cropsy Phase I and Phase II agreements) to remedy the environmental damage at the site. The agreements sought to eliminate the need for long-term treatment of hazardous substances releases from the Cropsy waste rock pile, reduce the subsurface infiltration of water through the mine pit, and improve the quality of the effluent from the Reynolds Adit. Pursuant to the agreements, the State agreed to fund a portion of the response costs using the financial warranties forfeited by SCMCI/GRI. As a result of problems associated with the Summitville site, the EPA, on May 31, 1994, listed Summitville on its National Priorities List, which catalogs the nation's most polluted sites.
II.
Plaintiffs' Complaint
In December 1994, plaintiffs brought this action against defendants seeking damages under four separate claims. Attached to and incorporated into the complaint were numerous exhibits pertaining to the site. Plaintiffs alleged that: (1) defendant CDPHE, acting through the WQCD, was negligent in failing to inform plaintiffs of the potential risks and liabilities associated with environmental contamination based upon SCMCI/GRI's activities at the Summitville Mine; (2) defendant DNR, acting through the MLRB and the MLRD/DMG, was negligent in failing adequately to regulate the mining operation, including evaluating and granting the mining permit; (3) all defendants, by assisting the EPA in moving the Cropsy waste rock pile and in plugging the historic tunnels and shafts at the Summitville site, trespassed on plaintiffs' property resulting in a taking of and damage to both the surface and mineral estates without just compensation in violation of Colo.Const. art. II, § 15; and (4) all defendants, by engaging in the action described in claim 3 above, have...
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