U.S. President Bill Clinton told delegates attending the recent Democratic Party convention that his administration “had saved Yellowstone Park from mining.” Next, he assured delegates that his administration is making polluters pay for damage done to the environment.
The first comment refers to a recent agreement whereby the owners of the New World gold-copper project were forced to scrap mining plans in return for federal assets worth US$65 million. The second remark would seem to refer to Robert Friedland, the financier linked to the ill-fated Summitville mine in Colorado, now the site of a costly clean-up by the Environmental Protection Agency.
The EPA maintains that Friedland “operated” Summitville and that he is therefore responsible for all cleanup costs — some US$93 million to date, plus future costs. In late August, the agency persuaded a Canadian court to freeze US$152 million in Inco securities Friedland was to receive following Inco’s takeover of the Voisey’s Bay nickel project in Labrador.
The EPA move was extraordinary in that it represents an attempt to obtain remedy for a claim before legal judgment. The proceedings also took place ex parte (that is, without Friedland’s knowledge or participation), because the EPA successfully argued that Friedland might remove assets from that jurisdiction in order to defeat any future judgment against him.
The EPA’s ongoing efforts to secure those assets will not be without risk, as it will be liable for any damages the court might award Friedland, should the claim fail, or should the injunction be found to be unjustified.
Jurisdictional challenges may also surface, namely whether or not the EPA’s main action to secure the assets can legally proceed in Canada.
While the public probably cares little about Friedland’s woes, the case does raise concerns for directors and officers of companies involved in any sort of activity that might endanger the environment. The problem here is not that the EPA is seeking to recoup the costs of the cleanup but that it is seeking to recoup all costs (past, present and future) from one individual with “deep pockets,” despite the fact that about 40 others were previously named as “potentially responsible parties.”
Friedland — and Friedland alone — is being blamed for degrading the water quality of the Alamosa River watershed, which, by all accounts, was never pristine to begin with. But because baseline studies were not required by state regulators before Summitville was permitted, no one seems to know what the proper standards were, or should be, or how to take into account natural contamination (acid rock drainage) from geologic features where erosion rates were higher than normal.
Friedland is being asked to pay for damage done by turn-of-the-century miners. Their historic workings intercepted both oxide and reactive sulphide rock, and some of the tunnels were excavated on grades that allowed ground water to flow passively from the mine to surface.
This is not to suggest that Friedland and his team are blameless, which is a matter for the courts to decide. Nevertheless, while it is no secret that Summitville was an engineering, economic and environmental fiasco from start to finish, it is well-documented that a myriad of decisions, actions, rules and procedures from within and outside the company contributed to its failure.
The EPA, too, has been criticized for wasteful spending and dubious remediation measures that exacerbated site conditions, and for rejecting all industry offers of financial and technical assistance. There are many lessons to be learned from Summitville, and one is that there should be a better way to manage environmental problems — and recoup costs — than the heavy-handed, adversarial approach currently demonstrated by the EPA.