EHS Administration, Enforcement and Inspection

Colorado Federal Judge Orders Mining Operation to Pay $500,000 CWA Fine

After reviewing the evidence presented in Pamela Stone, et al. v. High Mountain Mining Company LLC et al., Colorado Federal Judge William J. Martínez ordered High Mountain to pay $500,000 in fines for Clean Water Act (CWA) violations.

Wyoming-based High Mountain owns and operates the Alma Placer Mine, a gold placer mine located near Alma, Colorado.

Plaintiffs Pamela Stone; Twyla Rusan; M. Jamie Morrow; and the South Park Coalition, Inc., sued High Mountain, alleging the company’s operations were discharging pollutants into the Middle Fork of the South Platte River, which feeds into the Missouri River. The lawsuit, which sought a $1 million penalty and permanent injunction against the company, also claimed High Mountain was operating without a National Pollutant Discharge Elimination System (NPDES) permit—in violation of Sections 301 and 402 of the CWA.

A placer mine is a mine that typically locates minerals in softer ground near the earth’s surface. Operations such as High Mountain first dig a hole, then transport the contents from that hole to the processing plant. When the material arrives at the processing plant, it is put onto a conveyor and fed into the plant. Once inside, water is applied, and screens and sluices are used to separate materials by size and weight. Products produced include sand, gravel, and gold.

The sluices separate gold particles from other small-diameter materials. In this particular operation, after the sifting process, the leftover materials flow from a large pipe to discharge into Pond 1, the first of 4 settling ponds. As the water from the plant flows from Pond 1 to Pond 2, the heaviest particles, like fine sand, sink to the pond’s bed. As the water flows from Pond 2 to Pond 3 and from Pond 3 to Pond 4, particles continue to fall to the pond beds so that by the time the water reaches Pond 4, it contains much less suspended material. The water in Pond 4 is then recycled back to the processing plant, and the process repeats.

Burden of proof for CWA violations

To prove CWA violations, plaintiffs are required to prove that the alleged offender discharged a pollutant into navigable waters from a point source without an NPDES permit.

High Mountain conceded it did not have a federal- or state-equivalent NPDES permit and also conceded the Middle Fork was a navigable water of the United States, according to court documents.

In its defense, the company attempted to prove its settling ponds had impenetrable clay liners sealing the ponds, meaning the ponds were not capable of leaking polluted discharges.

Expert testimony presented evidence in the case proving the settling ponds did not have effective clay liners.

The court found that all four settling ponds were discharging pollutants to groundwater and, based upon expert testimony, that the groundwater would flow into the Middle Fork.

“The Court finds that the Settling Ponds are point sources because they are discrete conveyances that channel pollutants into the Middle Fork by way of groundwater,” the court documents state. “The water contained by the Settling Ponds meets the definition of pollutant because it is industrial waste produced as a byproduct of the mining process.”

Determining CWA fines

Section 309 of the CWA provides that “[a]ny person who violates … any permit condition or limitation … shall be subject to a civil penalty … for each violation.”  The purposes of the civil penalty provision are restitution, deterrence, and retribution.

Section 1319(d) provides a maximum penalty of $56,460 per day. In this case, the court found High Mountain had 2,922 days of violations, meaning the court could have imposed a monetary penalty as high as $165 million.

In determining civil monetary penalties, the guidance followed by courts calls upon the court to utilize either a “top down” or a “bottom up” approach.

Under the “top down” approach, the court first determines the maximum civil penalty from the total number of violations, and if the court chooses not to impose the maximum penalty, the penalty may be reduced in accordance with certain statutory factors.

The CWA instructs courts to consider the following factors in assessing penalties:

  1. The seriousness of the violation or violations
  2. The economic benefit (if any) resulting from the violation
  3. Any history of such violations
  4. Any good-faith efforts to comply with the applicable requirements
  5. The economic impact of the penalty on the violator
  6. Such other matters as justice requires

Alternatively, under the “bottom up” approach, the court first determines the economic benefit the violator has realized by failing to comply with the CWA and then adjusts the penalty upward or downward based on the remaining five statutory factors.

In this matter, the court and plaintiffs agreed that the “bottom up” approach was the most judicious to determine High Mountain’s civil monetary penalty.

The court found “the economic benefit enjoyed by High Mountain was the ability to avoid taking the necessary steps to install competent liners in the ponds that discharge into the Middle Fork.” And, based upon testimony provided by High Mountain’s expert, the cost of installing liners in all 4 ponds is approximately $500,000. “In conclusion, the Court finds that a penalty should be imposed on High Mountain in the amount of $500,000.”

Lastly, according to the court’s findings of fact, Martínez wrote that the plaintiffs failed “to offer any meaningful arguments to support their request” for injunctive relief and had waived this question, and even if the question had not been waived, the court “found that a permanent injunction is inappropriate under these circumstances.”

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