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Long Term “Legacy” Risks – A Mining Example Raises the Issue – Is 500 Years

How to deal with "long term" risks and costs related to business operations? A proposed new mine in Minnesota exemplifies some of the topics that arise and are receiving increasing scrutiny. According to this October 5, 2013 StarTribune article by Josephine Marcotty, the proposed new mine would operate for perhaps 20 years. A draft regulatory report apparently will conclude that the mine and a related processing facility will need pollution monitoring and treatment for 500 years after closure. Topics now under consideration include when and how address long term funding needs for the pollution work. Another question is whether 500 years of future predicted future pollution work is deemed to cause the proposed mine to follow under state laws that regulate facilities that would need "perpetual" pollution work.

Key quotes from the article are set out below and illustrate part of the debate:

"The prospect of centuries of water treatment illustrates the scope of the environmental challenges facing what would be Minnesota’s first copper-nickel mine — and why it has generated intense environmental scrutiny and divided communities on the Iron Range. PolyMet is the first of many companies lining up to tap into one of the world’s largest copper-nickel deposits. The deposits offer the promise of a new era of mining for Minnesota, but one that comes with significant ecological risks for the wildest and most treasured corner of the state.

“What they are saying is we have to treat in perpetuity,” said Dave Chambers, a geophysicist with the Center for Science in Public Participation, a Montana consulting nonprofit that has examined the PolyMet review. “And you can make mistakes. Those mistakes can and have cost a lot of money.”

A spokeswoman for PolyMet said long-term water treatment systems are a common part of modern mining operations, as operators comply with mandatory environmental standards. PolyMet expects to meet them as well, she said.

Mining regulators from the Minnesota Department of Natural Resources (DNR) declined to discuss the issue in detail because the environmental impact statement is not finished. But they said the analysis calls for “long-term” — not perpetual — treatment, potentially a crucial distinction. Moreover, final decisions on water treatment will be made when PolyMet applies for a permit, probably sometime next year, said Jess Richards, the DNR’s director of lands and minerals.

How taxpayers would be protected from any long-term cleanup costs remains an open question and one of the most contentious issues in the ongoing debate over copper-nickel mining’s future in Minnesota.

State law requires mining companies to put up financial instruments, such as bonds or insurance, in advance to pay for mine closures and any ensuing cleanups. The DNR says it will require adequate “financial assurance” before granting PolyMet a permit, and that the appropriate time to decide specifics is when the company applies for a permit.

But the U.S. Environmental Protection Agency (EPA) and other groups have urged state regulators to address that issue now, as part of the environmental review, so the public has a chance to understand what’s at stake. The release of the final environmental impact statement in November will be followed by hearings and a public comment period.

“It is a critical question for the environmental impact of this project,” said Kathryn Hoffman, an attorney with the Minnesota Center for Environmental Advocacy, a nonprofit law firm. No corporation is likely to exist for hundreds of years, Hoffman said, and accurately predicting the costs of water treatment for centuries is difficult if not impossible.

Chambers, who has studied other mining projects across the country, said even those that start with financial safeguards can end up costing taxpayers millions of dollars. The Zortman-Landusky gold mine in Montana, he said, is an example. When it went bankrupt in 1999, the operator turned off its water treatment plant and left. Some financial assurance had been built into the project, but the state had underestimated the volume of water needing treatment, and state taxpayers had to create a $34 million trust fund to pay for it.

“If you are going to agree to take that risk, then all the risk takers should be involved,” Chambers said.

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About Kirk

Since becoming a lawyer in 1983, Kirk’s over 30 years of practice have focused on advising a wide range of corporations, associations, and individuals (as both plaintiffs and defendants) on both tort and commercial law issues centered around “mass torts.”

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