This afternoon, the proceedings of the Rocky Mountain Law Institute split into two. I chose the session on environmental law as it affects mining and oil & gas. As you would expect with lawyers doing the talking, the presentations were well organized, well delivered, and fascinating. Here is my summary of the talks, but I recommend reading the proceedings for the details.
First up were two ex-EPA lawyers, Ann Klee and Chet Thompson of Crowell & Moring LLP discussing the thorny question of whether U.S. environmental laws should apply extra-territorially. The case history that emphasizes the relevance of this question to mining companies is the Teck Cominco case. For rmany years, Teck Cominco had disposed of sludge into the Canadian headwaters of the Columbia River–in full accord with Canadian law. Promopted by two Indian tribes and the State of Washington who believe they are detrimentally affected by the sludge which has washed down the river into the United States for over 150 river miles, the U.S. EPA sought to force Teck Cominco to clean up the mess in terms of CERCLA. The story is long and involved, but suffice it to say that right now, in terms of a contractual agreement (not derived from CERCLA), the mining company has embarked on a $20 million RI/FS that could well lead to a $2 billion cleanup.
The presenters did not say as much, but I conclude on the basis of what they did say, that they do not believe U.S. environmental law does or should apply outside the U.S. They appear to believe that when civilized nations like Canada and the U.S. deal with each other over pollution issues, it is probably better to invoke negotiations and existing international agreements like NAFTA. The point is ultimately that if the U.S. succeeds in imposing its environmental laws on other countries, those countries may try to impose their laws on us; not a nice thought. Which must lead one to conclude that Canadian mining companies should obey the environmental laws of foreign countries where they operate, but should not be held accountable for a failure to follow Canadian legal requirements in spirit or fact.
Next was a lively discussion in the form of a debate over a hypothetical situation where a mine sought to get at regional groundwater to support their operations. The debaters were Murray Feldman, Micheal Brennanan, and Hadassah Reimer all of Holland & Hart, LLP. The question at stake: how will the courts deal with the technical findings of local authorities regarding the adequacy of scientific and engineering studies to prove the miners could use the groundwater without detrimental impact. One debater took the position that the courts should and would defer to the local agencies regarding the technical decisions the agencies took. In practice, we know that on technical issues it is usually the mining company that puts the facts before the agencies and succeeds (or fails) in persuading them of the technical merits of their case. Thus by proxy the conclusions is that the courts would defer to the mining company’s technical studies–provided of course they are prima facie reasonable.
The other debater said no, this would not happen. He trotted out a slew of cases from both the U.S. and Canada to show that more and more the courts are getting into the technical issues. They do this, not as experts, but to establish that the EIS process has been properly implemented, and to assure themselves that shortcuts in collecting data, churning out computer models, and interpreting the results to come to conclusions that accord with reality have been followed. The lesson learnt for mining ocmpanies and for those in the oil & gas industry is that you had better do better and better studies and use more and more computer models. And you had better establish that your computer models replicate reality.
Finally two papers on global warming, or more specifically on trading carbon credits. It all got very technical. But from what I heard, if you can establish a mine that uses geothermal energy or has essentially no carbon emissions, you may be able to sell the credits for a significant sum. You might be able to make more selling the credits than mining the resource. This is an opportunity your lawyers are waiting to help you seize. Go for it. Or consult with the presenters: Joshua Epel, Assistant General Counsel, DCP Midstream, LP, and Cecilia Dalupan, a principal of the Sustainabale Development Strategies Group.
