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Stone v. High Mountain Mining Co.

No. 22-1340. 1/3/2024. D.Colo. Judge Tymkovich. Clean Water Act—Gold Mining—State Regulatory Scheme—County of Maui v. Hawaii Factors.

January 3, 2024

High Mountain Mining Co. (High Mountain) operates a gold mine within the South Platte River floodplain (the mine). It hauls excavated material to a processing plant, where it is washed with river water to recover gold. The wastewater is then discharged to four unlined settling ponds (ponds). High Mountain operates the mine under a permit from the Colorado Division of Reclamation, Mining and Safety (DRMS) and has no state or federal permit to discharge pollutants into the South Platte River. Plaintiffs are private parties who sued High Mountain under the federal Clean Water Act’s citizen-suit provision, 33 USC § 1365 (the CWA), alleging, as relevant here, that High Mountain violated the CWA by allowing pollutants to seep from the ponds and flow into the groundwater, which then migrated to the Middle Fork of the South Platte River. Plaintiffs asserted that because High Mountain did not have a National Pollutant Discharge Elimination System (NPDES) permit, this was a CWA violation. The district court determined that the ponds were a point source and found that High Mountain’s operation of them constituted an unpermitted discharge of pollutants into navigable waters that violated the CWA. The court penalized High Mountain $500,000 but declined to issue injunctive relief.

On appeal, High Mountain argued that the district court erred in applying the legal framework established in County of Maui v. Hawaii, 140 S. Ct. 1462, 1476 (2020), for CWA cases involving groundwater next to navigable streams. The CWA directly regulates discharges from specific point sources by setting effluent limitations. It requires anyone operating a point source that discharges pollution into a navigable stream to obtain a federal permit. The Colorado Department of Public Health and Environment, Water Quality Control Division (WQCD) administers the state’s compliance with the CWA’s NPDES permit program. The WQCD has required an NPDES permit for discharges of pollutants to groundwater that are directly connected to the surface water, but a permit is not required for discharges from impoundments when the discharge is subject to the jurisdiction of an implementing agency such as DRMS. In County of Maui, the Court stated that a discharge to groundwater can be the “functional equivalent of a direct discharge” under the CWA, depending on the interplay of the point source, seepage, groundwater, subsurface conditions, and the navigable water. The Court established an analysis for courts to determine whether a groundwater discharge was the functional equivalent of a direct discharge to a stream or river, instructing lower courts to apply nonexclusive geophysical factors to determine whether the connection between the point source and the navigable water could invoke federal regulation over local or state regulatory regimes. The Court listed seven non-exclusive factors to consider in determining whether a discharge to groundwater is the functional equivalent of a direct discharge: (1) transit time, (2) distance traveled, (3) the nature of the material through which the pollutant travels, (4) the extent to which the pollutant is diluted or chemically changed as it travels, (5) the amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source, (6) the manner by or area in which the pollutant enters the navigable waters, and (7) the degree to which the pollution (at that point) has maintained its specific identity. Here, the district court found that the first three factors supported plaintiffs’ claim, but the remaining factors carried no weight because there was either limited evidence or High Mountain presented no evidence to persuade the court that the factors should weigh in its favor. However, given the complex topography of the mine and its environment, the district court erred by concluding that the ponds were the functional equivalent of a direct discharge, primarily on the first two factors of time and distance; the court should have made additional findings on other Maui factors, including how much the pollutant is diluted or chemically changed as it travels, and the amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source. Further, rather than holding plaintiffs accountable for not providing evidence of all the geology that would establish the functional equivalent of a direct discharge to the Middle Fork, the court effectively shifted the burden to High Mountain to prove that the ponds were not the functional equivalent of a direct discharge. The district court thus ignored Maui’s caution against decisions that create serious risk of undermining state regulation of groundwater and the disruption that CWA liability could pose to Colorado’s mining regulatory regime.

The district court’s finding of a CWA violation was reversed and the case was remanded for further proceedings.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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