Idaho Conservation League v. Atlanta Gold Corporation

          MEMORANDUM DECISION AND ORDER RE: SUBSTANTIAL COMPLIANCE

          HONORABLE RONALD E. BUSH CHIEF U.S. MAGISTRATE JUDGE.

         SUMMARY OF DECISION

         This decision resolves the issue of whether Defendant Atlanta Gold Corporation (“Atlanta Gold”) has substantially complied with the terms of an environmental permit as required by a prior order of this Court, relating to Clean Water Act violations at a mining site near Atlanta, Idaho.

         On September 15, 2017, this Court held that Atlanta Gold was liable for violations of the Clean Water Act stemming from excessive iron and arsenic in the treated effluent flowing from the company’s mine holdings, specifically at the 900 Level Adit^[1] (the “Adit”). The levels of iron and arsenic in this discharge exceeded at times the amounts allowed under Atlanta Gold’s National Pollutant Discharge Elimination System (“NPDES”) permit (the “Permit”). (Dkt. 159.) This Court also held Atlanta Gold in civil contempt and ordered it to pay $251,000 to the District Court; however, the imposition of that order was held in abeyance until September 30, 2018 to give Atlanta Gold an opportunity to purge its civil contempt by achieving substantial compliance with its NPDES Permit. The order stated that the civil contempt payment would be rescinded if Atlanta Gold was successful in such efforts. Atlanta Gold was ordered to file periodic status reports detailing its attempts to reach substantial compliance and reporting the results achieved. Atlanta Gold timely filed such status reports. (Dkts. 164, 169, 172, 173, 174, 180.)

         After the end of the abeyance time period, Plaintiff Idaho Conservation League (“ICL”) and Atlanta Gold each submitted written argument and related materials to the Court concerning whether Atlanta Gold had achieved substantial compliance. (Dkts. 181, 182, 183.) An evidentiary hearing was held on January 9, 2019. (Dkt. 186.)

         After a careful consideration of the entire record, the Court concludes that Atlanta Gold has not achieved substantial compliance. The treatment system remains incapable of treating the higher volumes of water associated with annual snow melt or other high-water events, such as heavy rains. Progress has been made in reducing the number of violations of the Permit requirements and reducing the severity of the violations, but an improvement upon an abysmal record of non-compliance does not equal substantial compliance with what is required of Atlanta Gold by the NPDES Permit. Additionally, Atlanta Gold repeatedly represented in its status reports that it had plans to begin improvements, or implied that it had already started making such improvements. However, most of such described improvements were not implemented. Indeed, some of the improvements Atlanta Gold discussed in the filings and testimony leading to this Decision are the same improvements Atlanta Gold has discussed, but has never implemented, dating back at least seven years.

         However, Atlanta Gold has succeeded in reducing the frequency and magnitude of Permit exceedances, and although those improvements do not rise to the level of substantial compliance they do justify a reduction in the amount of the civil contempt penalty. Accordingly, the $251,000 civil contempt penalty Atlanta Gold was previously ordered to pay if it failed to achieve substantial compliance is reduced to $125,500. The case will be closed, but the Court will retain jurisdiction to ensure compliance with its orders.

         BACKGROUND^[2]

         Gold was first discovered near Atlanta, Idaho in 1863 and mining has been occurring in that area, off and on, since then. Simmons Aff. ¶ 2 (Dkt. 20-5). Atlanta Gold is a mining company pursuing mineral exploration and development; it has extensive ownership interests in a historic mining site (the “Project Site”) located at the top of Atlanta Hill. Id. at ¶ 3. The Project Site was once known as the Talache Mine and consists of various patented and unpatented mining claims, lode claims, and mill site claims, which total approximately 2,159 acres. Id. at ¶ 4.

         The 900 Adit was first opened in 1917, as an ore haulage tunnel. Id. at ¶¶ 6 & 7. The Adit is situated alongside Montezuma Creek, which flows downstream through the town of Atlanta and into the Middle Fork of the Boise River. Compl. ¶ 33 (Dkt. 1). The Middle Fork joins with two other forks of the Boise River and eventually flows through the city of Boise and other areas of southwest Idaho, with its waters eventually reaching the Snake River.

         Atlanta Gold first obtained an interest in the Adit site in 1985. Simmons Aff. ¶ 2 (Dkt. 20-5). Atlanta Gold never has processed or produced ore at the Adit site; however, it has over the years done exploration through core drilling and excavation. Id. at ¶¶ 2, 5. Beginning in 1988, Atlanta Gold reopened about 200 feet of the previously collapsed Adit. Glaspey Aff. ¶¶ 8–11 & Hawley Decl., Exh. 26 (Dkt. 22-5). In 1994, in a joint venture with Ramrod Gold USA, Atlanta Gold submitted a Plan of Operation, approved by the Forest Service, for exploration at the Project Site to include opening and further excavation of the 900 Adit. Id. at ¶ 19.

         Once that further excavation was completed, the Adit portal was to be kept open to allow for future exploration. Id. at p. 21. In 1998, the Forest Service approved a Plan of Operation to conduct exploratory drilling. Hawley Decl., Exh. 26 (Dkt. 22-5). Under both the 1994 Plan and the 1998 Plan, the Forest Service required Atlanta Gold to treat the polluted water flowing from the Adit to meet applicable state and federal water quality standards. Id.

         For many years, Atlanta Gold dealt with pollution in Adit waters either by piping the water through a single settling pond to filter out suspended solids or by using a land-application system of disposal. Glaspey Aff. ¶¶ 9, 15, 19–21 (Dkt. 20-12); Hawley Decl., Exh. 26 (Dkt. 22-5). In 2005, the company worked with the Environmental Protection Agency (“EPA”) to draft a Consent Order covering various discharges within the Project Site, including those from the 900 Adit. Simmons Aff. ¶¶ 8–10 (Dkt. 20-5). However, before a Consent Order was finalized, the Idaho Conservation League filed a lawsuit alleging that Atlanta Gold was illegally discharging pollutants from the 900 Adit in violation of the Clean Water Act. See Idaho Conservation League v. Atlanta Gold Corp., Case No. 1:05-cv-212-EJL. This prior litigation between ICL and Atlanta Gold resulted in a Consent Decree in which Atlanta Gold agreed to construct a Pilot Water Treatment Facility (the “PWTF”) to treat the waters issuing from the 900 Adit. Simmons Aff. ¶ 12 & Exh. A (Dkts. 20-5, 20-6). Further, Atlanta Gold agreed to apply to the EPA for an NPDES permit that would authorize discharge of pollutants from the 900 Adit subject to specific limits. Id., Exh. A, (Dkt. 20-6). The EPA issued the Permit on August 6, 2009, with an effective date of July 1, 2007, placing limits of no more than 10 μg/L (micrograms per liter) for arsenic and no more than 1,000 μg/L for iron in treated effluent. Hawley Decl., Exh. 1 (Dkt. 22-1).

         The PWTF consists primarily of two lined settling ponds and associated pipework. Contaminated water coming out of the Adit is routed through these ponds and then remains long enough for the pollutants to precipitate out, a process that is aided by the addition of a chemical coagulant mixture. After being treated in the settling ponds, the waters are discharged into Montezuma Creek. Simmons Aff., Exh. 1, p. 9 (Dkt. 20-6).

         Monitoring of the arsenic and iron levels in the effluent is required by the Permit. Torf Decl. ¶¶ 8–9 (Dkt. 25). Atlanta Gold records that data once each week and sends it to the EPA in monthly “Discharge Monitoring Reports” (“DMRs”). Id. ¶ 10. The PWTF has never been able to consistently treat the polluted waters to meet the requirements of the Permit. For example, the effluent data collected between August 2009 and January 2012 showed that the arsenic levels in the discharge waters had ranged from three-hundred to four-hundred times greater than the 10 μg/L daily effluent limitation. See Id. ¶¶ 7–17, 21; Benner Decl. ¶¶ 14–19 (Dkt. 63). On average, each day the treated Adit effluent released into Montezuma Creek contained 265 μg/L of arsenic – over twenty-six times the maximum allowable amount. Benner Decl. ¶ 16 (Dkt. 63). The highest measured level of arsenic during that period was 3,070 µg/L. Id. The situation with iron was similar, as the monthly DMRs for the period beginning in August of 2009 showed levels far exceeding the 1,000 μg/L Permit limit. Torf Decl. ¶ 13 (Dkt. 25); Hawley Decl., Exhs. 16–21 (Dkt. 22-3).

         In 2009, the Idaho Department of Environmental Quality designated certain waters of the Middle Fork of the Boise River as “impaired,” because of arsenic pollution in Montezuma Creek. Hayes Decl., Exhs. 3, 4 (Dkt. 22-1); Third Hayes Decl. ¶ 18 (Dkt. 62). The 900 Adit is one source of this problem, but not the only source. The Adit site is adjacent to the Talache Mine Tailings Reclamation Site, a Superfund site which Atlanta Gold describes as an additional source of direct discharges into Montezuma Creek containing arsenic contamination. Simmons Aff. ¶ 33 (Dkt. 20-5). People living in Atlanta use the creek’s waters to irrigate their crops and lawns. Third Hayes Decl. ¶ 29 (Dkt. 62). Some of the flow of the creek is diverted into open irrigation ditches that run directly through the town. Id.

         The state of Idaho regulates water quality in both Montezuma Creek and the Middle Fork of the Boise River to protect certain beneficial uses of their waters. For Montezuma Creek, one such beneficial use is “primary contact recreation” which requires “water quality appropriate for prolonged and intimate contact by humans or for recreational activities when the ingestion of small quantities of water is likely to occur.” IDAPA 58.01.02(100)(02)(a). In addition, Idaho’s water quality standards recognize that Montezuma Creek could be used as an agricultural water supply and, therefore, the “water quality [must be] appropriate for the irrigation of crops or as drinking water for livestock.” IDAPA 58.01.02.100.03(b).

         Water quality standards for the Middle Fork of the Boise River also protect designated uses, including primary contact recreation and the protection of aquatic life. IDAPA 58.01.02(140)(09). Additionally, the Middle Fork carries a “domestic water supply” designation, which means that water quality must be appropriate for drinking supplies. Third Hayes Decl. ¶ 19 (Dkt. 62); see also IDAPA 58.01.02(140)(09), 58.01.02(100)(03)(a).

         When it was constructed, the PWTF was not intended to be a permanent solution to arsenic and iron pollution from the 900 Adit. See Atlanta Gold’s Statement of Material Facts at pp. 8–9 (Dkt. 20-2); see also Fereday Aff., Exh. F (Dkt. 20-11) and Hawley Decl., Exh. 13. p. 2 & Exh. 14, p. 6 (Dkt. 21-2). The treatment facility is able to remove significant amounts of pollutants from the Adit waters at times; however, it was never designed to meet the applicable arsenic effluent limitation of 10 μg/L contained within the NPDES Permit. Simmons Aff. ¶ 27 (Dkt. 20-5). In fact, Atlanta Gold originally intended to operate the PWTF only until November 15, 2008, after which time it anticipated constructing a more permanent water treatment facility. Simmons Aff. ¶¶ 19, 20 (Dkt. 20-5) & Exh. E at p. 33 (Dkt. 20-6).

         In the years after the PWTF was built, Atlanta Gold told governmental agencies that more permanent steps would be taken to address contamination at the 900 Adit. For example, in the 2006 Supplemental Plan of Operations (upon which the Forest Service authorized the construction and operation of the PWTF), Atlanta Gold promised construction of a permanent treatment facility by November 2008. Id. In October 2009, Atlanta Gold said in its Quality Assurance Project Plan submitted to the EPA and the Idaho Department of Environmental Quality that “the PWTF was built as a temporary structure which will be replaced in the near future by a permanent WTF.” Hawley Decl., Exh. 14 at p. 6 (Dkt. 22-2 at p. 30).

         Atlanta Gold never did install such a permanent facility. It did, over a period of years, obtain proposals from contractors and engineers designed to address water treatment issues on a more permanent basis. Third Reuther Decl., Exhs. 43–49 (Dkt. 64). Some predate the construction of the PWTF and some do not. In 2005, Atlanta Gold had a company known as Blue Water Technologies do a study involving bench-scale tests of water samples taken from the Project Site, which succeeded in lowering arsenic levels to less than the applicable 10 μg/L standard. Id. at Exh. 46, pp 1–3. Then, in 2009, a company known as “AdEdge” tested a temporary filtration system which Atlanta Gold said was able to treat the Adit discharge to arsenic levels “between non-detectable and 10 ppb.” Id. at Exh. 47, p. 6, ¶ 8. This temporary filtration system was installed at the Adit site and operated approximately eight hours a day for three weeks, with these comments about the results:

The current treatment process employed using coagulation/lime addition and gravity settling (using the impoundments as clarifier(s)) does appear to provide some benefit for reducing arsenic from the raw Adit 900 water. However, this treatment alone is clearly not achieving the desired targets. Additional or substitutionary treatment is needed. [Atlanta Gold] could elect to utilize a combination of this existing treatment system coupled with the AdEdge AD26/E33 integrated system for a total solution or eliminate the pretreatment altogether if desired.

Id. at pp. 4, 5.

         In 2009, Atlanta Gold purchased a water treatment plant from another mining company. Referred to as “the Newmont Plant,” Atlanta Gold told the EPA that the plant would be installed by 2012. Third Ruether Decl., Exh. 52, pp. 18–20 (Dkt. 67-2). That never happened. Atlanta Gold said there were too many obstacles to installing the Newmont Plant. Id. at pp. 17–37.

         As would be expected, each option for treating the water involved some lesser or greater degree of challenge in getting something accomplished.^[3] However, when Atlanta Gold has discussed an anticipated construction of the more permanent water treatment facility, it also anticipated the start of active mining operations. Third Ruether Decl., Exh. 51 at p. 14 (Dkt. 67-1); see also Simmons Aff. ¶ 20 (Dkt. 20-5). Indeed, the company has insisted that long-term water treatment can only be a component of a mine plan. Simmons Aff. ¶ 43 (Dkt. 20-5). For instance, in 2006 Atlanta Gold said that it would construct a more permanent water treatment facility to replace the PWTF as part of its plan to conduct a heap leach mining operation. Its Plan of Operations submitted to the Forest Service at that time represented that the permanent treatment facility would be working by November 2008. Simmons Aff. ¶ 20 (Dkt. 20-5). However, in 2008, Atlanta Gold withdrew that plan. Id. ¶¶ 20, 22.

         Plaintiffs filed this lawsuit on April 18, 2011. Compl. (Dkt. 1). Ten days later, Atlanta Gold said it would not exercise its option to purchase the mining claims upon which the 900 Adit is located. Points Aff. ¶¶ 2–4 (Dkt. 20-3). Atlanta Gold then attempted to terminate its NPDES Permit on May 2, 2011, saying it no longer had any interest in the site. Id. ¶ 6 & Exh. B. In a letter dated June 9, 2011, the EPA informed Atlanta Gold that the Permit “does not automatically terminate upon notification.” Hawley Decl., Exh. 25 (Dkt. 22-5). On June 19, 2012, Atlanta Gold told the EPA that it would continue operation under the Permit and “request[ed] extension of coverage of that permit for an unspecified period of time.” (Dkt. 86). The EPA granted this request on June 28, 2012. Plfs.’ Notice of Factual Development (Dkt. 85.)

         On May 1, 2012, Atlanta Gold submitted a Supplemental Plan of Operations to the Forest Service (“the 2012 Supplemental Plan”) proposing to close the Adit and reclaim the site. This plan also contained a new proposal for treating the Adit waters until the adit closure and reclamation work was completed. Third Simmons Decl., Exh. A (Dkt. 77). The plan also said Atlanta Gold could bring the discharged effluent into compliance with the terms of the NPDES Permit by October 2012 by: (1) diverting Montezuma Creek above the 900 Adit to reduce the flow of water through the Adit;^[4] (2) constructing another settling pond to increase holding capacity and settling times at the PWTF so that more arsenic and iron could precipitate out; and (3) adding a layer of sand to the floor at the mouth of the Adit to assist in the removal of toxins. Third Simmons Decl., Exh. A, pp. 1–2 (Dkt. 77-3). At the same time, Atlanta Gold would install a bulkhead to seal off the Adit by 2013, with reclamation of the site to be complete by 2014. Id. Finally, this plan provided that “[i]f the proposed settling pond and sand filtration system are unable to meet required water quality parameters, a future filtration system will be constructed downstream of the ponds.” Id. Atlanta Gold referred to this potential future filtration system as a “contingency filter.”

         The 2012 Supplemental Plan was approved, in part, and Atlanta Gold performed some, but not all, of the work it said it would do. Simmons Decl. ¶ 2 (Dkt. 103-1). Specifically, Atlanta Gold installed a Zero Valent Iron filtration system but did not install a third sedimentation pond at the PWTF for weather-related reasons. Id. Mr. Simmons said in December 2012 that Atlanta Gold would begin implementation of the remaining parts of the approved portions of the 2012 Supplemental Plan in Spring 2013. Id. However, that did not happen. Indeed, Atlanta Gold’s subsequent filings, including status reports, say nothing about the other work promised in the 2012 Supplemental Plan. (Dkts. 106, 111, 117.)

         In July 2012, the Court issued its Memorandum Decision on Plaintiffs’ Motion for Remedies (Dkt. 87),^[5] granting an injunction and ordering Atlanta Gold to pay a partial penalty of $2,000,000. The Court noted that, because of “the longstanding, serious, and ongoing nature of the violations, and considering [Atlanta Gold’s] history of attempting to delay compliance until it had its mine up and running, an injunction may well be the only way to ensure that the company complies with the CWA in a timely fashion.” Id. at 18. The Court entered an Injunction Order (Dkt. 88) on July 27, 2012 requiring Atlanta Gold to bring arsenic and iron concentrations into compliance with its NPDES Permit by October 31, 2012. The Court retained jurisdiction over the matter to enforce the injunction order.

         The compliance deadline was extended, first through the end of November 2012 (Dkt. 96) and then again until December 15, 2012 (Dkt. 87). Atlanta Gold reported in a status report filed on December 6, 2012 (Dkt. 103) that “through the installation of the Zero Valent Iron passive filtration system” Atlanta Gold had “achieved compliance with the referenced effluent limits” as of November 8, 2012 and had “maintained compliance with the NPDES permit since that time with few exceptions.” After reviewing this status report, the Court required Atlanta Gold to file a subsequent status report on June 1, 2013 so that the Court could “determine whether the fixes implemented by [Atlanta Gold] continue to be effective, and in particular, to determine whether they remain effective during the spring run-off season.” (Dkt. 105).

         For its part, ICL filed a status report pointing out that Atlanta Gold’s own monitoring established that the maximum permitted arsenic levels had been exceeded in 16 of 19 weekly samples taken between December 15, 2012 and April 31, 2013. (Dkt. 113.)

         Atlanta Gold’s June 2013 status report reported what it called “substantial compliance” with the arsenic and iron effluent limits in its NPDES Permit. (Dkt. 111.) The status report included invoices, timesheets, and spreadsheets documenting Atlanta Gold’s expenses incurred in treating the Adit discharge. It also included a Discharge Monitoring Report from April 2013 indicating that there were two weekly exceedances (each of 12 µg/L) that month. Atlanta Gold said it had “recently experienced some clogging issues in the [Zero Valent Iron] Filter, which have resulted in some ‘spikes’ in test results from the discharge. In order to address these issues and to further improve removal of arsenic and iron from the treatment of water, [Atlanta Gold] plans to install a supplemental solids filter to remove additional suspended solids from the effluent prior to the water being routed into the final Filter.” (Dkt. 111 at 3.) Atlanta Gold also said the “Filter” was working as designed, but that the volume of solids entering the Filter from the settling ponds had shortened the anticipated life expectancy of the Filter media due to clogging. It described a plan to decrease the solids entering the PWTF by performing maintenance on the settling ponds and installing two solids removal filters in June 2013. Id. The Court required an additional status report, filed in August 2013, which contained DMRs for May and June 2013 (Dkt. 117). That status report indicated that there were no arsenic exceedances in May 2013 and two arsenic exceedances (of 13 µg/L and 11 µg/L) in June 2013.

         Ultimately, the Court did not impose additional penalties and entered final judgment in the previously-assessed amount. (Dkts. 122, 125.) The case was then closed in September 2013.

         A little more than three years later, in November 2016, Plaintiffs moved to reopen the case and asked the Court to hold Atlanta Gold in civil contempt for additional Clean Water Act violations related to arsenic contamination (Dkts. 127, 128). Plaintiffs alleged at least 497 identified daily violations (represented by 71 weekly exceedances, alleged as seven daily violations) and sought enforcement remedies, additional Clean Water Act civil penalties, and civil contempt sanctions. An evidentiary hearing was held in April 2017 (Dkts. 155, 156). Before a decision on Plaintiffs’ motion was issued, Plaintiffs filed a Notice of Continuing Violations (Dkt. 157). That Notice alleged 16 weekly arsenic exceedances between March and July 2017, including exceedances as high as 807 µg/L in May 2017 and 409 µg/L in June 2017. It also alleged seven weekly iron exceedances in May and June 2017, including exceedances as high as 7,230 µg/L in May 2017 and 3,130 µg/L in June 2017.

         A Memorandum Decision and Order on Motion for Civil Contempt was issued on September 15, 2017 (Dkt. 159), ordering Atlanta Gold to pay $251,000 in additional Clean Water Act penalties and an additional $251,000 for civil contempt. The civil contempt amount, however, was held in abeyance until September 30, 2018 to allow Atlanta Gold an opportunity to comply with its NPDES Permit and with the Court’s orders and thereby purge its civil contempt. If Atlanta Gold achieved substantial compliance, the civil contempt payment would not be owed. Atlanta Gold was to file periodic status reports “detailing the steps it has taken to reach compliance with the terms of the Permit and the results achieved (including all relevant DMRs).” A Second Injunction Order (Dkt. 166) and Judgment (Dkt. 167) were subsequently issued.

         Atlanta Gold filed periodic status reports, the contents of which are discussed in detail below. This Decision resolves the question of whether Atlanta Gold has achieved substantial compliance with its NPDES Permit and whether, therefore, the reason for the $251,000 civil contempt penalty has been purged, such that the contempt order should be rescinded or amended.

         LEGAL STANDARD

         Congress enacted the Clean Water Act, 33 U.S.C. §§ 1251 et seq., “to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters,” including by regulating the discharge of pollutants. 33 U.S.C. § 1251(a). Such regulation is done through a permitting process called the National Pollutant Discharge Elimination System (NPDES), implemented at 33 U.S.C. § 1342, and corresponding regulations appearing in Title 40 of the Code of Federal Regulations. Atlanta Gold sought and received an NPDES permit allowing discharges of pollutants from the Adit to Montezuma Creek, subject to specific limits. (Dkt. 22-1.) Among other things, the water ...