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Mining firms must pay $30M
State, feds settle with four companies over Black Hills contamination
By Cody Winchester Sep. 1, 2012

The federal government and the state of South Dakota have reached a $30 million settlement with four mining companies to address the costs of longstanding environmental contamination at the Gilt Edge mine near Lead.

The former gold and silver mine now is a Superfund site that has cost taxpayers more than $100 million to clean up. State and federal lawyers filed a lawsuit Aug. 23 seeking to recover these costs from Homestake Mining Co., Cyprus Mines Corp., Cyprus Amax Minerals Co. and Blue Tee Corp.

Each company had been involved, to varying degrees, in preparing the site to be mined in the late 1970s and early 1980s. Consent decrees outlining the costs to be paid — $4.2 million for Homestake and $26 million between Cyprus and Blue Tee — were filed the same day as the complaint. None of the companies admitted liability.

“This is a step in the direction of them being held responsible for their actions,” South Dakota Attorney General Marty Jackley said.

U.S. District Judge Jeffrey Viken in Rapid City still needs to sign off on the settlement after a 30-day public comment period.

Absent from the list of defendants is Brohm Mining Co., the Canadian firm that actually operated the mine from 1986 until 1999, when it went bankrupt, forfeiting a $6.4 million mining bond and leaving behind 150 million gallons of contaminated acid water and millions of cubic yards of acid-generating waste rock.

You can read through DENR's annual mining reports here

http://denr.sd.gov/des/mm/publications.aspx

That’s when the state and the Environmental Protection Agency stepped in. In 2000, Gilt Edge became a Superfund site, the program created in 1980 to facilitate cleanup of the nation’s worst hazardous waste sites.

Superfund is one component of the Comprehensive Environmental Response, Compensation and Liability Act, the federal statute that formed the basis of the lawsuit. Under the law, states are responsible for 10 percent of Superfund cleanup costs, Jackley said.

To date, the EPA has incurred costs of more than $100 million to treat the contaminated water and acid-rock piles at Gilt Edge, plus interest, according to the complaint. The state’s costs stand at about $5.6 million.

Department of Justice spokesman Charles Miller said the settlements are fair because they represent each company’s proportional share of the cleanup costs. He said going after Brohm, the primary responsible party, was not an option because no successor company could be identified.

Additionally, he said, the government would not have been able to prove that the people who ran Brohm had operational control of the mine, or of the mineral leases, so the government could not pursue claims against them individually.

Notice of the consent agreements was published Thursday in the Federal Register. Citizens who wish to submit comments on the settlements have 30 days to do so.

Strawberry Creek a dumping ground
Prospectors began mining for gold, copper and tungsten in the Gilt Edge area in 1876, and for decades, mining operations simply dumped their toxic mine tailings into Strawberry Creek and other local waterways. When Brohm took over the Gilt Edge mine in 1986, many of the streams already were contaminated with heavy metals such as arsenic, cadmium and lead.

From 1992, the first year for which there are records, to 1999, after Brohm entered bankruptcy, the firm extracted 102,274 ounces of gold and 172,504 ounces of silver from the mine, according to annual reports filed with the Department of Environment and Natural Resources.

After remediation at the site is complete — a process that could cost another $100 million and take at least 10 years, by current estimates — it will be turned over to the state for ongoing maintenance.

Under terms of the settlement agreements, the government cannot sue to recover costs for any of the issues raised in the complaint.

“There’s risk involved, and we were willing to pay a not insignificant amount of money to obtain certainty (about future liability),” said Jerry George, who represented Barrick Gold Corp., Homestake’s parent company and the largest gold firm in the world.

Representative: 'Homestake did nothing' George called the settlement reasonable, though he downplayed Homestake’s culpability.

“If you read the complaint, Homestake did nothing,” he said. “It had purchased somebody who purchased somebody who purchased somebody.”

Homestake was the successor to Lacana Mining, which sold the site to Brohm in 1986.

“Quite frankly, virtually all of the activities that are alleged to have resulted in the contamination that EPA’s concerned about — far in excess of 99 percent of it — was the result of historical mining operations before 1940, or were the activities of Brohm,” George said. “The only reason Homestake got dragged into it this late in the game was that tenuous connection (with Lacana). ... This isn’t something Homestake did. This was a legacy they picked up.”

Jim Tell, a spokesman for Freeport-McMoRan Corp., of which the two Cyprus entities now are subsidiaries, said he could not provide answers to questions before deadline.

Representatives of Blue Tee Corp. did not return messages for comment.
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