EPA, DOJ and Mining Companies Reach $3 Million Settlement for Lava Cap Mine Cleanup

March 10, 2009
The U.S. District Court for the Eastern District of California approved a $3 million settlement with the U.S. Department of Justice on behalf of EPA, the California Department of Toxic Substances Control (DTSC) and settling defendants Newmont Capital Ltd. and Newmont Mining Corp. of Canada Ltd. to resolve liability at the Lava Cap Mine Superfund Site in Nevada County, Calif.

EPA and DTSC will split the settlement proceeds based on their proportionate share of total past and future costs to cleanup the site – estimated at just under $50 million, with $1.86 million to be paid to the United States and $1.14 million to be paid to DTSC.

To date, EPA has spent more than $21 million at the site to clean up mine tailings and waste rock, collect and treat contaminated water from the mine and divert the flow of clean surface water around contaminated tailings.

“Taxpayers are still paying for the legacy of the California gold rush – the contaminated land and water that remain and continue to pose a health risk,” said Keith Takata, the EPA’s Superfund Division director for the Pacific Southwest region. “The EPA stepped in to clean up the mine waste, and we’re pleased that Newmont is taking responsibility for its portion of the costs to repay the taxpayer's money.”

Newmont Capital Ltd. and Newmont Mining Corp. of Canada Ltd. – two associated corporations – owned and controlled the mine from 1983 to1986 in a failed attempt to reopen the mine. Based on the Newmont entities' limited 3-year association with the site and lack of active mining or exploration projects, the United States and DTSC believe that the $3 million settlement is fair and reasonable and consistent with the goals of the Comprehensive Environmental Response, Compensation and Liability Act, also known as the Superfund.

In other efforts to recover cleanup costs at this site, the United States and DTSC filed a lawsuit against alleged former owner and operator Canadian-based Sterling Centrecorp Inc., and current owners Stephen P. Elder and Elder Development Inc., seeking to recover the EPA's and DTSC's combined past costs of over $22 million as well as their future costs associated with the mine cleanup.

The Lava Cap mine, located 5 miles southeast of Nevada City, Calif., began gold and silver mine operations in 1861. From 1934-1943, the mine was one of the largest gold mines operating in California, producing approximately 300-400 tons of ore a day. The mine was shut down in 1943 by Executive Order from the War Production Board, which prohibited production of non-strategic metals during World War II.

The mining operations resulted in waste rock and a mill tailings pile at the site. Mill tailings, also known as rock flour, are extremely fine-grained materials with high concentrations of arsenic that easily are suspended in water and susceptible to being carried downstream.

In January 1997, the upper half of the log dam built on the property to hold the mill tailings in place collapsed – discharging over 10,000 cubic yards of arsenic-contaminated tailings into Little Clipper Creek, which spread downstream to Clipper Creek and Lost Lake and accumulated in the sediment and surrounding soil.

EPA conducted a removal action in 1997 and 1998 to address the tailings release, stabilize the remaining tailings pile, and improve drainage. The Lava Cap Mine site was placed on the Superfund National Priorities List in January 1999. The NPL is the EPA's list of hazardous waste sites potentially posing the greatest long-term threat to public health and the environment.

In September 2004, EPA issued its cleanup plan for the mine area and has since removed the tailings and sediment along Little Clipper Creek and consolidated this waste with the existing mine tailings, constructed a cap for the tailings pile and replaced the failed log dam with a rock buttress. EPA recently issued its cleanup plan to address the arsenic-contaminated drinking water wells, which will be implemented in 2009. EPA also expects to issue its proposed plan in 2009 to address the large tailing-deposits located along a mile and a half stretch of the creek downstream of the mine.

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