Free Trial Brief - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Case No. 00-cv-02325-MSK-MEH SIERRA CLUB and MINERAL POLICY CENTER, Plaintiffs, vs. CRIPPLE CREEK AND VICTOR GOLD MINING COMPANY, ANGLOGOLD ASHANTI (COLORADO) CORP. ANGLOGOLD ASHANTI NORTH AMERICA INC. and GOLDEN CYCLE GOLD CORPORATION Defendants. and Civil Action No. 01-cv-02307-MSK-MEH SIERRA CLUB and MINERAL POLICY CENTER, Plaintiffs, vs. CRIPPLE CREEK AND VICTOR GOLD MINING COMPANY, et al., ANGLOGOLD ASHANTI (COLORADO) CORP. ANGLOGOLD ASHANTI NORTH AMERICA INC. and GOLDEN CYCLE GOLD CORPORATION Defendants.

PLAINTIFFS' CLOSING ARGUMENT

A trial on liability in this case was held from February 13, 2005 through February 22, 2005. At the conclusion of the trial this Court ordered the parties to file proposed findings of

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fact and written closing arguments. For the reasons stated herein,1 this Court should conclude that Plaintiffs have established liability on all causes of action.2 Accordingly, Plaintiffs also request that the Court enter a finding on the number of violations at each discharge location as identified in Exhibit 1 hereto. 1. INTRODUCTION This is a federal Clean Water Act ("CWA" or "Act") citizen enforcement action. 33 U.S.C. ' 1365. Defendants own and operate a large gold mining operation in Teller County, Colorado known as the Cripple Creek & Victor Gold Mine (also known as the "Cresson Project"). Ex. 295. Plaintiffs' Complaint alleges that Defendants are illegally discharging pollutants from point sources without a National Pollutant Discharge Elimination System ("NPDES") Permit, as is required by the Section 311 and 402 of the CWA. 33 U.S.C. '' 1311, 1342. The Cripple Creek & Victor Gold Mining Company ("CC&V") has been conducting gold mining operations in the Cripple Creek Mining District since at least 1976. Ex. 295, Bates 4855. The current permitted area of the Cripple Creek and Victor Gold Mine is 5,874 acres in size. Defendants' gold mine operates 24 hours a day, every day of the year. Ex. 295. Defendants mine more than 54,000 tons of earth each day. Over 12 million tons of ore are mined annually. After it is dug from the earth, the ore is crushed at a rate of 3,000 tons per hour. Ex. 295. The crushed ore is then placed in the Valley Leach Facility where a cyanide solution is dripped over the ore to extract the gold. Ex. 295. The Valley Leach Facility is located in a watershed known
1

Plaintiffs' Proposed Findings of Fact filed on March 6, 2006 are incorporated herein by reference.

2

Plaintiffs' Ninth Cause of Action and Eleventh Cause of Action are being asserted in the alternative to Plaintiffs' Eighth and Twelfth Causes of Action.

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as "Arequa Gulch". Defendants have filled a large portion of the Arequa Gulch valley with crushed ore soaked in a cyanide solution--hence the name "Valley" Leach Facility. The Valley Leach Facility will reach a total capacity of 260 million tons of cyanide soaked ore. The Valley Leach Facility will reach a height of 590 feet. The State of Colorado Water Quality Control Division ("WQCD") has issued 2 different discharge permits to CC&V for pollution discharges into local watersheds--the Carlton Tunnel Permit CO-0024562 for discharges from Outfall 002 into Fourmile Creek and the Arequa Gulch permit CO-0043648 for discharged from Outfall 001A into Arequa Gulch. At trial, Plaintiffs proved that there have been repeated violations of the terms and conditions of these discharge permits. Plaintiffs also proved at trial that there are discharges from four man-made structures at the CC&V gold mine which have not been authorized by a discharge permit--namely, the Carlton Tunnel ponds/waste rock seepage, the Roosevelt Tunnel, the Moffat Tunnel cribbing wall, and the Squaw Gulch Pond.3 2. STANDING

The federal Clean Water Act provides that, "any citizen may commence a civil action on his own behalf--against any person...who is alleged to be in violation of (A) an effluent standard or limitation under this chapter". 33 U.S.C. §1365(a)(1). The CWA defines the term "citizen" to mean, "...a person or persons having an interest which is or may be adversely affected" (emphasis added). 33 U.S.C. § 1365(g). This language chosen by Congress confers standing on a "broad category of potential plaintiffs" who "can claim some sort of injury," be it actual or threatened, economic or noneconomic. Friends of the Earth v. Gaston Copper Recycling, 204 F.3d 149, 155

3

Plaintiffs also assert in the alternative that there may have been unpermitted discharges at Arequa Gulch Outfall 001A.. See Plaintiffs' 11th cause of action.

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(4th Cir. 2000); Middlesex County Sewerage Authority v. National Sea Clammers Ass'n, 453 U.S. 1, 16-17 (1981). The CWA defines the term "effluent standard or limitation to include "...(6) a permit or condition thereof issued under section 1342...". 33 U.S.C. §1365(f)(6). This also includes the requirement to obtain a valid NPDES permit issued under 33 U.S.C. §1342(a). This section of the CWA also states that discharge permits may only be issued "after opportunity for public hearing." 33 U.S.C. § 1342(a)(1). Under Article III of the U.S. Constitution, plaintiffs prosecuting a CWA citizen suit must have standing in order to confer jurisdiction on the district court. In order to satisfy Article III's standing requirements, a plaintiff must establish4: (1) it has suffered an "injury in fact" (including the invasion of a legally protected interest) that is (a) concrete (which can be satisfied by a "geographical nexus") and (b) particularized (actual or imminent, not conjectural or hypothetical); and, (2) the injury is fairly traceable to the challenged action of the defendant; and, (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Friends of the Earth v. Laidlaw, 528 U.S. 167, 180-181 (2000) citing Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). See also, Committee to Save the Rio Hondo v. Lucero, 102 F.3d 445, 447; Ash Creek Mine Co. v. Lujan, 969 F.2d 868, 874 (10th Cir. 1992); American Wildlands v. Browner, 94 F.Supp.2d 1150, 1155 (D.Colo. 2000), affirmed in American Wildlands v. Browner, 260 F.2d 1192 (10th Cir. 2001). In proving "injury in fact", "[t]he relevant showing for purposes of Article III standing...is not injury to the environment but injury to the plaintiff." Laidlaw, 528 U.S. at 181.

Defendants have previously argued that an environmental organization must also prove that the organization formally approved of the citizen suit in order to establish standing. There is no legal authority supporting this argument. Defendants also failed produce any evidence at trial that this litigation was not formally approved by Sierra Club and Mineral Policy Center.

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See also, American Wildlands v. Browner, 94 F.Supp. 2d at 1155. "Plaintiffs adequately allege injury in fact when they aver that they use the affected area and are persons `for whom the aesthetic and recreational values of the area will be lessened' by the challenged activity." Laidlaw, 528 U.S. at 183 (quoting Sierra Club v. Morton, 405 U.S. 727, 735 (1972). Further, the "injury in fact" requirement in environmental cases is satisfied if an individual adequately shows that she has an aesthetic or recreational interest in a particular place, or animal, or plant species and that the interest is impaired by a defendant's conduct. See, Laidlaw, 528 U.S. at 183-184. See also, Oregon Natural Desert Association v. Dombeck, 172 F.3d 1092, 1094 (9th Cir. 1998); and, Ecological Rights Foundation, v. Pacific Lumber Company, 230 F.3d 1141, 1147 (9th Cir. 2000). The Supreme Court has also stated that "of course, the desire to use or observe an animal species, even for purely aesthetic purposes, is undeniably a cognizable interest for purposes of standing". Lujan v. Defenders of Wildlife, 504 U.S. at 562-563. A plaintiff need not wait until his waterbody becomes "barren and sterile or assumes and unpleasant color and smell before he can invoke the protections of the Clean Water Act." Friends of the Earth v. Gaston Copper Recycling Corp., 204 F.3d 149, 156-60 (4th Cir. 2000). Further, interference with a procedural right can also constitute an "injury in fact". Several courts have noted that, " `procedural rights' are special: The person who has been accorded a procedural right to protect his concrete interests can assert that right without meeting all of the normal standards for redressability and immediacy." Lujan v. Defenders of Wildlife, 504 U.S. at 504, footnote 7. See also, Oregon Natural Desert Association v. Dombeck, 172 F.3d 1092, 1094 (9th Cir. 1999)(citizen suit plaintiffs had standing under the Clean Water Act to challenge the lack of a water quality certification because they had suffered injury to their "procedural" rights); Committee to Save Rio Hondo v. Lucero, 102 F.3d 449 (10th Cir.

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1996)(failure to follow prescribed procedures under the National Environmental Policy Act creating an increased risk of environmental harm "may be the foundation for injury in fact under Article III."); Dubois v. USDA, 102 F.3d 1273, 1281 (footnote 10) (1st Cir. 1996)(procedural rights deserve special treatment when it comes to standing); and, Idaho Farm Bureau v. Babbitt, 900 F.Supp. 1349, 1360 (D. Id. 1995)(recognizing procedural standing under ESA). At least one circuit court has extended this analysis to procedural rights accorded by the Clean Water Act. Dubois v. U.S. Department of Agriculture, 102 F. 3d 1273, 1281, n. 10 (1st Cir. 1996). The procedural rights at issue in this case are based on Defendant's interference with Plaintiff's right to fully participate in the permitting process for unpermitted discharges from this facility, not on a constitutional violation of the 14th Amendment. See, Sierra Club v. Young Life Campaign, Inc., 176 F.Supp. 2d at 1085-1086. The burden of proving "injury in fact" is not onerous. "The injury need not be 'significant'; a 'small' stake in the outcome will suffice, if it is 'direct'." Dubois 102 F.3d 1273, 1281. In fact, the interest at stake need not be more than an "identifiable trifle". PIRG of New Jersey v. Powell Duffryn Terminals, 913 F.2d 64, 71 (3rd Cir. 1990), cert. denied, 498 U.S. 1109 (1991). The "fairly traceable" or causation requirement is satisfied when the alleged injury can be traced to the defendant's challenged conduct. See, Ecological Rights Foundation, et al. v. Pacific Lumber Company, 230 F.3d at 1152. To satisfy this element, the plaintiff need only show that a defendant's conduct contributed to the type of injuries alleged by plaintiff. The "fairly traceable" requirement ensures that there is a genuine nexus between a plaintiff's injury and a defendant's alleged illegal conduct. But traceability "does not mean that plaintiffs must show to a scientific certainty that defendant's effluent...caused the precise harm suffered by the plaintiffs... [I]f

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scientific certainty was the standard, then plaintiffs would be required to supply costly, strict proof of causation to meet a threshold jurisdictional requirement-even where, as here, the asserted cause of action do not itself require such proof". Gaston Copper, 204 F.3d at 161 (internal citations omitted). Finally, regarding the "redressability" element of standing, injunctive relief can provide redressability. Also, the Supreme Court has determined that civil penalties carry with them "a deterrent effect" that makes it "likely, as opposed to merely speculative, that penalties would redress" injuries in a Clean Water Act case. Laidlaw, 120 S.Ct. 693, 707. "To the extent that they encourage defendants to discontinue current violations and deter them from committing future ones, they afford redress to citizen plaintiffs who are injured or threatened with injury as a consequence of ongoing unlawful conduct." Laidlaw, 528 U.S. at 186. When considering "redressability," the potential assessment of attorneys fees and litigation costs under Section 505(d) of the CWA can also be considered as part of the "total deterrent effect." Id. at 178. In the context of interference with a procedural interest, "the plaintiffs need not demonstrate that the ultimate outcome following proper procedures will benefit them" in order to establish "redressability." ONDA v. Dombeck, 172 F. 3d 1092, 1094. Rather, the assertion of a procedural right "reduces plaintiff's burden of proving immediacy and redressability." Id. An association, such as Plaintiff, has standing to bring suit on behalf of its members when: 1) its members would otherwise have standing to sue in their own right, 2) the interests at stake are germane to the organization's purpose; and, 3) neither the claim asserted nor the relief requested requires the participation the participation of individual members in the lawsuit. Laidlaw, 528 U.S. at 180-181, citing Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 343 (1977). See also, Colorado Taxpayers Union, Inc. v. Romer, 963 F.2d 1394,

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1397-98 (10th Cir. 1992), cert. denied 507 U.S. 949, 113 S.Ct. 1360, 122 L.Ed. 2d 739 (1993); Sierra Club v. Young Life Campaign, Inc., 176 F. Supp.2d 1070, 1084 (D.Colo. 2001); and, American Wildlands v. Browner, 94 F.Supp.2d at 1155. Here, Plaintiff asserts standing on its own behalf, as well as on behalf of its members.5 Standing is determined on the date the action is commenced. Laidlaw, 528 U.S. at 188192. A mootness analysis would apply when events affecting standing occur after the commencement of the case. Id. However, "[a] defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice. If it did, the court would be compelled to leave the defendant free to return to his old ways." Id. at 189 (internal quotations omitted). See also, Bighorn Forest Users Coalition, Inc. v. Thompson, 170 F.Supp.2d 1091, 1093 (D.Colo. 2001). Numerous court have recognized that a plaintiff may prosecute a citizen suit when the defendant fails to obtain a valid CWA permit. Committee to Save the Mokelumne River v. East Bay Municipal Utility District, 35 ERC 1537 (E.D.Ca. 1992), affirmed in 13 F.3d 305 (9th Cir. 1993); Washington Wilderness Coalition v. Hecla Mining Company, 870 F.Supp. 983 (E.D. Wash. 1994); Beartooth Alliance v. Crown Butte Mines, 904 F.Supp. 1168 (D. Mt. 1995); Sierra Club v. Abston Construction Co. Inc., 620 F.2d 41 (5th Cir. 1980). Given that citizen suit plaintiffs may prosecute a CWA case for failure to obtain a CWA permit, it follows that

As long as one plaintiff group has standing, the court need not consider whether the other plaintiff(s) have standing in order to reach the merits. "If any of these [plaintiffs] has standing, we may reach the merits without considering whether the other two also have standing." Board of Natural Resources of the State of Washington v. Brown, 992 F.2d 937, 942 (9th Cir. 1993). The Supreme Court has consistently followed this rule. See Clinton v. City of New York, 524 U.S. 417, 431 n.19 (1998); U.S. Dept. of Labor v. Triplett, 494 U.S. 715, 719 (1990); Bowsher v. Synar, 478 U.S. 714, 721 (1986); Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 264, and n. 9, (1977); Buckley v. Valeo, 424 U.S. 1, 12 (1976) (per curiam); Mountain States Legal Foundation v. Glickman, 92 F.3d 128 (D. C. Cir. 1996), citing Watt v. Energy Action Educational Foundation, 454 U.S. 151, 160 (1981); Beartooth Alliance v. Crown Butte Mines, 904 F.Supp. 1168, 1173 (D.Mt. 1995) (Clean Water Act context).

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plaintiffs have standing to pursue such violations. Beartooth Alliance v. Crown Butte Mines, 904 F.Supp. 1168, 1171. As established herein and at trial, Plaintiffs have satisfied each of the three requirements of standing. Based on the evidence presented at trial, it is clear that Sierra Club and Mineral Policy Center have standing to bring this case. 6 Both Sierra Club and Mineral Policy Center are environmental organizations. Part of the mission of these organizations is to protect the environment from illegal pollution. The illegal discharge of pollution in this case interferes with the organizational interests of Sierra Club and Mineral Policy Center. Sierra Club and Mineral Policy Center also have standing through their members. Marilyn Fay and Kirby Hughes have been consistent members of both Sierra Club and Mineral Policy Center since before this lawsuit was filed. Ms. Fay is a part-time resident of Victor, Colorado. She owns residential property in Victor, owns and operates a business in Victor, and participates in numerous civic activities. Mr. Hughes is a resident of Colorado Springs and frequently visits the Victor area and the local watersheds. Ms. Fay and Mr. Hughes regularly use and recreate in the watersheds at issue in this case. Both Ms. Fay and Mr. Hughes are familiar with all of the discharge locations at issue in this case. Both Ms. Fay's and Mr. Hughes' use and enjoyment of the watersheds has diminished as the result of the excessive (Arequa Gulch Outfall 001A and Carlton Tunnel Outfall 002), unpermitted (Carlton Tunnel pond/waste rock seepage, Roosevelt Tunnel discharge, Moffat Tunnel Cribbing Wall discharge, and Squaw Gulch Pond seepage), and aesthetically offensive pollution being discharged from the CC&V gold mine. Ms. Fay and Mr. Hughes both have limited their use of the watersheds because of the excessive pollution being discharged and because there is no regular monitoring or pollution limits at the
6

Plaintiffs incorporate herein by reference their Proposed Findings of Fact on standing.

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unpermitted discharge locations. Both Ms. Fay and Mr. Hughes have been denied the opportunity to participate in the public comment process for the unpermitted discharge locations given that Defendants have never applied for a permit for these discharges. The injuries alleged by Ms. Fay and Mr. Hughes are fairly traceable to the Defendants given that all of the discharges either originate from the permitted boundary of the CC&V gold mine or from property owned, operated or controlled by the Defendants. Finally, this Court can remedy the harms alleged by Ms. Fay and Mr. Hughes by requiring permits for unpermitted discharges, by imposing appropriate injunctive relief to address excessive discharges at permitted locations, and/or by the imposition of civil penalties to deter future violations. Accordingly, the Court should conclude that both Sierra Club and Mineral Policy Center have standing to prosecute this citizen suit. 3. OWNERS AND OPERATORS UNDER THE CWA

The Tenth Circuit recently made clear that "owners and operators" are liable for point source discharge located on their property or operations. Sierra Club v. El Paso Gold Mines, Inc., 421 F.3d 1133, 1143-45 (10th Cir. 2005). Discharge permits have been issued to CC&V for the Carlton Tunnel Outfall 002 discharge and the 1996 Arequa Gulch Outfall 001A and thus CC&V is clearly an owner and/or operator of those discharge locations. Moreover, all of the unpermitted point sources discharges (with the exception of the Roosevelt Tunnel portal) are located within the mine permit boundary of CC&V's mining operation. Stipulations 22, 23, 28 & 47 Amended Final Pretrial Order. CC&V also owns property interests in all of the unpermitted point sources at issue in this case. Stipulations 21, 26, 30, & 46. Amended Final Pretrial Order. Since Defendant CC&V is nothing more than a partnership between AngloGold Colorado and Golden Cycle Gold Corporation ("GCGC"), all three of these entities are liable as "owners or operators" of both the permitted and unpermitted point sources at issue in this case.

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For the reasons stated below, Plaintiffs also believe that the evidence shows that AngloGold North America should be liable for all point source discharges as an "owner and operator" under the Best Foods decision or under the alternative theory of piercing of the corporate veil theory. Best Foods The U.S. Supreme Court in U.S. v. Best Foods, 524 U.S. 51 (1998) held that a parent corporation could be held liable as an "owner and operator" as defined in the federal Superfund law. The Court held that direct liability could be established under Superfund if the parent: 1) operates the facility in stead of its subsidiary or along side the subsidiary in a joint venture; 2) when an officer or employee departs from the norms of parental influence by ostensibly acting on behalf of the subsidiary but actually working for the parent; 3) when an agent of the parent with no "hat" to wear but the parent's hat is involved in management or direct activities at the facility; or, 4) where employees of the parent are directly involved in the wrong complained of. The Best Foods decision has also been addressed in the context of at least one other environmental statute with "owner/operator" liability. Sierra Club v. Tyson Foods, Inc., 299 F.Supp. 2d 693, 717 (W.D. Ky. 2003). Plaintiffs believe that the Best Foods analysis should be extended to AngloGold North America in the context of this CWA case. The Clean Water Act also recognizes "owner/operator" liability. Sierra Club v. El Paso Gold Mines, Inc. 421 F.3d 1141-1146. Moreover, most of the criteria under Best Foods exist for holding AngloGold North America liable as an "owner/operator" of the point source discharges in this case. For example, AngloGold North America employees and officers participate in the joint venture management

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committee meetings and technical committee meetings.7 In fact, one employee--Jerry Bateman--only has one "hat" to wear as a land manager with AngloGold North America yet he participates in the management committee meetings and is an alternate voting member. Moreover, Scott Lewis, environmental manager for AngloGold North America is the main point of contact for negotiating discharge permits with the WQCD--including for the Carlton Tunnel, Arequa Gulch, and Fourmile Creek Springs (a.k.a. Carlton Tunnel pond/waste rock seepage). Records show that he has been an employee of AngloGold North America since 2000. Mr. Lewis has displayed significant management control over all discharge locations at issue in this case before and after 2000. AnglGold North America simultaneously shares officers and directors with AngloGold Colorado. AnglGold North America also shares office space with subsidiary AngloGold Colorado. In fact, Herbert Hampton, officer and director of joint venture partner GCGC testified that he never knows what "hat" an employee of AnglGold is wearing at any given time. For these reasons, AngloGold North America should be considered an "owner/operator" of all discharge locations at issue in this case. Piercing the corporate veil In the alternative, and for the same reasons as state above, Plaintiffs have also established sufficient factors to pierce the corporate veil between AngloGold North America and AngloGold Colorado. As cited by Defendants during their Rule 50 arguments at trial, the Skidmore case refers to ten factors to be considered by the Court in determining whether to hold North America liable for the acts of AngloGold Colorado. Skidmore, Owings & Merrill v. Canada Life Assurance

7

Plaintiffs' Proposed Findings of Fact on AngloGold North America's "owner/operator " status are incorporated herein by reference.

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Company, 907 F.2d 1026, 1027 (10th Cir. 1990). See also Fish v. East, 114 F.2d 177, 191 (10th Cir. 1940). However, not all or even most of the ten factors need be present for the Court to find parent liability. In fact, a corporate veil has been pierced under Colorado law where only three of the factors were present. Boughton v. Cotter Corporation, 65 F.3d 823, 837 (10th Cir. 1995), citing Friedman & Son v. Safeway Stores, 712 P.2d 1128 (Colo.App. 1985). The Friedman court analyzed whether (1) the parent owned all or substantially all of the stock of the subsidiary; (2) the parent corporation financially supports the subsidiary; (3) substantially all of the subsidiary's business is with the parent corporation; and (4) whether the directors of the subsidiary take direction from the parent corporation. Friedman at 1131. The court found liability based on the parent's ownership of the subsidiary's stock, the interrelationship of directors and employees, and the fact that the subsidiary "had no business apart" from that of the parent. Id. The evidence admitted at trial shows that many of the Skidmore factors, and all of the factors found determinative in Friedman, militate in favor of piercing the corporate veil to hold AngloGold North America liable. In addition to the criteria established for the Best Foods analysis, the following criteria for piercing the corporate veil are also present: (1) AnglGold North America subscribes to and owns all of the capital stock of AngloGold Colorado. Amended Final Pretrial Order, Stipulation No. 2. (2) The parent and subsidiary corporations have simultaneous common directors or officers. (3) The subsidiary has no apparent business except with the parent or no assets but those conveyed by the parent. (4) The directors or executives of the subsidiary do not act independently. (5) Employees of the parent work for the subsidiary.

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Fish v. East, 114 F.2d at 191. Thus, some of the criteria have been demonstrated by testimony and stipulations in evidence. AngloGold Colorado is clearly the alter ego of AngloGold North America by reason of its being a solely owned subsidiary, with common directors and officers, and reliant on the parent's employees for environmental and exploration guidance and decisions. The Friedman court found parent liability when several of the criteria were met (as they are here). Boughton v. Cotter Corporation, 65 F.3d at 837; Friedman & Son v. Safeway Stores, 712 P.2d at 1131; 4. a. Legal Background In 1972, Congress enacted the Clean Water Act to "restore, and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. '1251(a). Congress= intention in adopting the CWA was to eliminate the Adischarge of pollutants into the navigable waters@ of the United States. 33 U.S.C. ' 1251. See also, United States v. Earth Sciences, Inc., 599 F.2d 368, 372 (1979). The CWA was Adesigned to regulate to the fullest extent possible those sources emitting pollution into rivers, lakes and streams.@ Earth Sciences, 599 F.2d at 373. The 10th Circuit Court of appeals has recognized that: AThe touchstone of the regulatory scheme is that those needing to use the waters for waste distribution must seek and obtain a permit to discharge the waste, with the quantity and quality of the discharge regulated. The concept of a point source was designed to further this scheme by embracing the broadest possible definition of any identifiable conveyance from which pollutants might enter the waters of the United States.@ United States v. Earth Sciences, 599 F.2d at 373 (emphasis added). Section 301(a) of the Act prohibits the discharge of any pollutant by any person unless the discharge is in compliance with the provisions of the Clean Water Act. 33 U.S.C.'1311(a). A polluter may receive authorization to discharge pollutants by obtaining a National Pollutant LIABILITY ON EACH CAUSE OF ACTION

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Discharge Elimination System Permit ("NPDES Permit") from the NPDES permitting authority-either the U.S. Environmental Protection Agency ("U.S. EPA"), or a state authorized by U.S. EPA to issue NPDES permits. 33 U.S.C. ''1342(a) and (b). The State NPDES program must "prohibit all point source discharges of pollutants ...except as authorized by a permit in effect under the state program or under section 402 of the CWA." 40 C.F.R. ' 123.2(g)(1). The requirement that all discharges covered by the CWA have a NPDES Permit "is unconditional and absolute." United States v. Tom-Kat Development, Inc., 614 F.Supp. 613, 614 (D.C. Alaska 1985) quoting Kitlutsisti v. Arco Alaska, Inc., 592 F.Supp. 832, 839 (D. Alaska 1984) reversed on other grounds in Kitlutsisti v. Arco Alaska, Inc., 782 F2d 800 (9th Cir. 1986). Thus, neither the U.S. EPA nor an authorized state has the authority under the CWA to exempt from the NPDES permit program any point source that discharges, or may discharge, pollutants. See, 33 U.S.C. ' 1311(a). See also, Committee to Save the Mokelumne v. East Bay Utility District, 35 ERC 1537, 1543 (E.D. Ca. 1992) aff'd in 13 F.3d 305 (9th Cir. 1993); Carr v. Alta Verde Industries, Inc. 931 F.2d 1055, 1060 (5th Cir. 1991)(EPA has no discretion under the CWA to except classes of point sources from the permitting requirements); Natural Resources Defense Council, Inc. v. Costle, 568 F.2d 1369, 1377 (D.C. Cir. 19770 (EPA does not have authority to exempt categories of point sources); Hudson River Fishermen's Association v. City of New York, 751 F.Supp. 1088, 1099 (S.D.N.Y. 1990)(state lacks power to grant de facto exemption from permitting procedures of CWA) aff'd without published opinion in 940 F.2d 649 (2nd Cir. 1991). In fact, at least one court has opined that the failure of a State to require an NPDES permit for a point source discharge of pollutants would constitute an ultra vires act which the federal district courts would have subject matter jurisdiction to review. See, Committee to Save Mokelumne, 35 ERC 1537, 1543 footnote 10.

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The Clean Water Act is a strict liability statute. See, United States v. Earth Sciences, 599 F.2d at 374; Student Public Interest Research Group v. Monsanto Co., 600 F.Supp. 1479, 1485 (D.N.J. 1985); United States v. Tom-Kat Development, Inc., 614 F.Supp. at 614. As such, few defenses are available to a permittee accused of violating its permit. See, State of Georgia v. City of East Ridge Tennessee, 949 F.Supp. 1571, 1579 fn. 7 (N.D.Ga. 1996)(defense of "minimal adverse impact to the affected waters" is irrelevant); Student Public Interest Group of New Jersey v P.D. Oil & Chemical, 627 F.Supp. 1074, 1085 and 1090 (D.N.J.1986) (Alaches@, Agood faith@ and Aintent@ of polluter are also irrelevant to the issue of liability); and, United States v. Amoco Oil Co., 580 F.Supp. 1042, 1050 (W.D. Mo. 1984)("good-faith" defense not available). Congress granted U.S. District Courts exclusive jurisdiction to hear citizen enforcement actions under the Clean Water Act. 33 U.S.C. ' 1365(a). Congress intended that citizen suits

would serve "an integral part of [the Clean Water Act's] overall enforcement scheme." Molokai Chamber of Commerce v. Kukui (Molokai), Inc., 891 F.Supp. 1389, 1402 (D. Haw. 1995). Congress also intended that Clean Water Act citizen suits be "handled liberally, because they perform an important public function". See, Sierra Club v. Chevron U.S.A., Inc., 834 F.2d 1517, 1525 (9th Cir. 1987). Further, the "citizen suit provisions evince a legislative intent that 'citizen[s] are not to be treated as nuisances or troublemakers but rather as welcome participants in the vindication of environmental interests.'" Proffitt v. Commissioners, Bristol Township, 754 F.2d 504, 506 (3rd Cir. 1985) quoting Friends of the Earth v. Carey, 535 F.2d 165, 172 (2nd Cir. 1976). NPDES permits issued by states are federally enforceable by U.S. EPA, as well as by citizens. 33 U.S.C. '' 1342(I) and 1365. See also, Washington Wilderness Coalition v. Hecla Mining Co., 870 F.Supp. 983, 987 (E.D. Wash. 1994) (federal citizen suits may be brought for

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violations of state-issued permits). This right of citizen enforcement includes cases where an active or historic mining operation is discharging pollutants from a point source without a NPDES permit. United States v. Earth Sciences, Inc., 599 F.2d 368 (10th Cir. 1979); Beartooth Alliance v. Crown Butte Mines, 904 F.Supp. 1168 (D.Mont. 1995); Committee to Save Mokelumne River v. East Bay Utility District, 13 F.3d 305 (9th Cir. 1993), cert. denied 513 U.S. 873, 115 S.Ct. 198, 130 L.Ed.2d 130 (1994); Washington Wilderness Coalition v. Hecla Mining Co., 870 F.Supp. 983, 986. "Obtaining a permit is itself an important effluent limitation, and private attorneys general may enforce that limitation via citizen suits." Hudson River Fishermen's Ass'n v. Westchester Cty., 686 F.Supp. 1044, 1050 (S.D.N.Y. 1988). To establish a violation of the CWA=s NPDES requirements, Plaintiffs must show that Defendants, " (1) discharged or Aadded@ (2) a pollutant (3) to navigable waters (4) from a point source (5) without a permit." Beartooth Alliance, 904 F.Supp. at 1172. The fact that the pollution may be coming from historic mining operations does not preclude a finding of liability under the CWA. Beartooth Alliance, 904 F.Supp. 1173. See also, Committee to Save Mokelumne River v. East Bay Util., 13 F.3d at 309. Further, the U.S. EPA has stated that "seeps and other ground water discharges hydrologically connected to surface water from mines, either active or abandoned, are discharges from point sources and are subject to regulation through an NPDES Permit." Ex. 71, Bates 2203-2212. This EPA guidance on NPDES permitting at mine sites has been relied upon by other courts. Sierra Club v. El Paso Gold Mines, Inc. 421 F.3d 1133, 1142 (10th Cir. 2005); Washington Wilderness Coalition, 870 F.Supp. at 988. EPA policies and guidance are given substantial deference by the federal courts. This Court should sustain EPA's policy so long as it 2

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is "based on a permissible construction of the statute." Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). In determining whether an agency's interpretation is a permissible construction of the statute, the court need not "conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding." Chevron, 467 U.S. at 843 n. 11. Instead, the court should "accord considerable deference to the agency's interpretation of the statute, and `we should not disturb [that interpretation] unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned.'" Akindemoowo v. INS, 61 F.3d 282, 284 (4th Cir. 1995) quoting Chevron 467 U.S. at 845. Federal courts have specifically recognized deference to EPA's interpretations of the Clean Water Act. As the Tenth Circuit has stated: The EPA, however, is entitled to considerable deference in its interpretation of the Clean Water Act because it is charged with administering the Act. See Chevron, 467 U.S. at 844, see also Arkansas v. Oklahoma, 503 U.S. 91, 112 (1992) (criticizing this Court for failing to afford the EPA's interpretation of the Clean Water Act "an appropriate level of deference"). City of Albuquerque v. Browner, 97 F.3d 415, 422 (10th Cir. 1996). Other federal courts have similarly stated: [I]it is the EPA, in the first instance, and not the [state agency] that is charged with the administration of the Federal Clean Water Act. And since the EPA's conclusion that chlorine, alum and alum sludge are pollutants is "sufficiently reasonable" and consistent with the language of the Clean Water Act, its construction must be upheld by this court. Hudson River Fishermen's Ass'n v. City of New York, 751 F. Supp. 1088, 1102-1103 (S.D.N.Y. 1990). See also, Committee to Save the Mokelumne River v. East Bay Municipal Utility District, 37 ERC 1159, 1174-75 (E.D. Cal. 1993), aff'd, 13 F.3d 305 (9th Cir. 1993).

3

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The WQCD has also promulgated a policy indicating that point source discharges at active and inactive mines are subject to CWA permitting. Ex. 56, Bates 2072-2074. The WQCD has required discharge permits for point source discharges at inactive mine sites in Colorado. Ex. 51. The United States District Courts have the authority to address Clean Water Act violations with injunctive relief and the assessment of civil penalties. 33 U.S.C. '1365(a). Civil penalties attach at the time of the violation, rather than at the time of the court's decision. Friends of the Earth v. Laidlaw Envtl. Servs., Inc , 528 U.S. 167, 196 (2000). Intermittent or sporadic violations of the CWA do not cease to be ongoing until the date when there is no real likelihood or repetition. Chesapeake Bay Found., Inc. v. Gwaltney of Smithfield, Ltd., 844 F.2d 170, 172 (4th Cir. 1988)(Gwaltney II); Southwest Marine, 236 F.3d at 998. Failure to obtain an NPDES permit is a continuing violation of the CWA. Carr v. Alta Verde Industries, Inc., 931 F.2d 1055, 1062. In an unpermitted discharge case, courts can impose a civil penalty for each day within the five year statute of limitations period. U.S. v. Gulf Park Water Co., Inc., 14 F.Supp. 2d 854, 857 (S.D. Miss. 1998). Where a violation of a permit limit is defined in terms of a time period longer than a day, the court may find a separate violation for each day in that time period (i.e., violation of a permit limit with a 7 day average is 7 separate violations; violation of a permit limit with a monthly average is 30 separate violations. Chesapeake Bay Found. v. Gwaltney of Smithfield, Ltd., 791 F.2d 304 (4th Cir. 1986), vacated on other grounds 484 U.S. 49 (1987); United States v. Smithfield Foods, Inc. 191 F.3d 516, 527-28 (4th Cir. 1999); Atlantic States Legal Found. v. Tyson Foods, Inc., 897 F.2d 1128, 1139-40 (11th Cir. 1990); Borden Ranch Partnership v. United State Army Corps of Engineers, 261 F.3d 810, 817-18 (9th 4

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Cir. 2001). United States v. Murphy Oil USA, Inc., 143 F.Supp.2d 1054, 1112 (W.D. Wis. 2001). See also, United States v. Amoco Oil Co., 580 F.Supp. 1042, (W.D.Mo. 1984); Public Interest Research Group of New Jersey v. Star Enterprise, 771 F.Supp. 655 (D.N.J. 1991); Natural Resources Defense Council, Inc. v. Texaco Refining and Marketing, Inc., 2 F.3d 493 (3rd Cir. 1993); U.S. v. Aluminum Co. of America, 824 F.Supp. 640 (E.D.Tex. 1993). Where Congress has entrusted the enforcement of regulatory prohibitions to an equity court, the court may invoke the full range of equitable remedies necessary "to provide complete relief in light of the statutory provisions." Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 291-292 (l960). In fashioning an injunction, a district court should focus "on the underlying substantive policy the [statutory] process was designed to effect...." Amoco Production Co. v. Village of Gambel, 480 U.S. at 531, 544 (1987). Injunctive relief issued under the CWA need only be related to a violation of the Act. Natural Resources Defense Council v. Southwest Marine, 236 F.3d at 999. A court is not limited to simply issuing an order directing the polluter to "comply with the law." Natural Resources Defense Council v. Southwest Marine, 236 F.3d at 1000. "So long as the district court's equitable measures are reasonably calculated to `remedy an established wrong', they are not an abuse of discretion." Id. b. 1.
8

Liability for each cause of action

Liability for permitted discharges-Carlton Tunnel 002 and Arequa Gulch 001A8

The Twelfth cause of action in the Amended Final Pretrial Order and the Court Exhibit 1 state that Plaintiffs are alleging violations of the daily maximum effluent limit for cadmium in the 1996 Arequa Gulch Permit. This is in error. Plaintiffs' first amended complaint and notice letters do not allege a violation of the daily maximum effluent limit for cadmium at Arequa Gulch Outfall 001A--instead, Plaintiffs only allege violations of the 30 day average limit for cadmium at Arequa Gulch Outfall 001A. Since these daily maximum violations are not alleged in the notice letters or the first amended complaint, the court should disregard the daily maximum cadmium limit in the Twelfth Cause of Action in Amended Final Pretrial Order and Court Exhibit No. 1.

5

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i.

Carlton Tunnel Outfall 002

Plaintiffs have alleged that Defendants have discharged excess flow (2nd cause of action), total suspended solids (3rd and 4th causes of action), zinc (5th and 6th causes of action), and Whole Effluent Toxicity ("WET") (7th cause of action) at the permitted Carlton Tunnel Outfall 002. There is no genuine dispute that a discharge permit (CO-0024562) was issued to CC&V in 1992 for the discharge from Outfall 002 at the Carlton Tunnel. There is no genuine dispute that CC&V violated the terms and conditions of this permit as alleged by Plaintiffs.9 Instead, the main dispute is whether the violations were "ongoing" at the time the complaint was filed on November 27, 2000. Proof of an "ongoing violation" of the Clean Water Act must be demonstrated as a jurisdictional prerequisite for a finding of liability on all of Plaintiffs' claims. In this case, Plaintiffs have demonstrated an "ongoing violation" for each claim. Established case law precedent sets forth a two-part test for a finding of "ongoing violations": [I]n order to establish jurisdiction, a citizen-plaintiff must prove at trial an `ongoing violation' that had been occurring when the complaint was filed: Citizen-plaintiffs may accomplish this [proof of an ongoing violation] either (1) by proving violations that continue on or after the date the complaint is filed, or (2) by adducing evidence from which a reasonable trier of fact could find a continuing likelihood of a recurrence in intermittent or sporadic violations. Intermittent or sporadic violations do not cease to be ongoing until the date when there is no real likelihood of repetition. Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 844 F.2d 170, 171-72 (4th Cir.1988)."
9

Defendants only real dispute is that they did not violate the WET test in the second quarter of 1997. At trial, Plaintiffs proved that there was a violation of the WET limit in the second quarter of 1997. See. Proposed Findings of Fact, 7th Cause of Action. Moreover, both EPA and the WQCD determined that CCV, AngloGold Colorado, and GCGC were liable for the WET violation in the second quarter of 1997 at Carlton Tunnel Outfall 002. Ex. 57, Bates 2078 and Ex. 73, Bates 2274. Defendants are collaterally estopped from challenging these issues in this action. See, Order dated March 12, 2004. See also, Matosantos Commercial Corp. v. Applebee's Int'l, Inc., 245 F.3d 1203, 1209 (10th Cir. 2001).

6

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American Canoe Ass'n v. Murphy Farms, 412 F.3d 536, 539 (4th Cir. 2005). See also Sierra Club v. Union Oil Co., 853 F.2d 667, 671 (9th Cir.1988). "As the use of the disjunctive makes clear, a plaintiff need not prove both that a post-complaint violation has occurred and that independent evidence proves a continuing likelihood of recurring violations. Either method of proof will suffice. See, e.g., Gwaltney II, 844 F.2d at 171-72." Natural Resources Defense Council, Inc. v. Texaco Refining and Marketing, Inc., 2 F.3d 493, 501-502 (3rd Cir. 1993). With respect to the first prong of the test, "proof of one or more post-complaint violations is itself conclusive." Natural Resources Defense Council, Inc. v. Texaco Refining and Marketing, Inc., 2 F.3d 493, 501-502 (3rd Cir. 1993) citing, Carr v. Alta Verde Industries, Inc., 931 F.2d 1055, 1065 n. 12 (5th Cir. 1991). With respect to whether Plaintiffs have satisfied the second prong: Consistent with the guidance of the Supreme Court majority and concurring opinions, the district court may wish to consider whether remedial actions were taken to cure violations, the ex ante probability that such remedial measures would be effective, and any other evidence presented during the proceedings that bears on whether the risk of defendant's continued violation had been completely eradicated when citizen-plaintiffs filed suit.

Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 844 F.2d 170, 171-172 (4th Cir. 1988). As consistently held across the circuit courts, "[t]he critical time for determining whether there is an ongoing violation is when the complaint was filed. See Atlantic States Legal Found. v. Tyson Foods, Inc., 897 F.2d 1128, 1134 (11th Cir.1990); Chesapeake Bay Found. v. Gwaltney of Smithfield, Ltd., 890 F.2d 690, 693-94 (4th Cir.1989); Hudson River Fishermen's Ass'n v. County 7

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of Westchester, 686 F.Supp. 1044, 1051 (S.D.N.Y. 1988)." Connecticut Coastal Fishermen's Ass'n v. Remington Arms Co., Inc., 989 F.2d 1305, 1311 (2d Cir. 1993). See also Carr v. Alta Verde Industries, Inc., 931 F.2d 1055, 1064 n. 8 (5th Cir. 1991). "A continuing likelihood of intermittent or sporadic violations exists until there is `no real likelihood of repetition.' Gwaltney II, 844 F.2d at 172; Union Oil, 853 F.2d at 671. A real likelihood of repetition remains so long as a discharger has failed to take remedial measures that clearly eliminate the causes of the violations. See Gwaltney I, 484 U.S. at 69, 108 S.Ct. at 387 (Scalia, J., concurring)." Natural Resources Defense Council, Inc. v. Texaco Refining and Marketing, Inc., 2 F.3d 493, 501 n.5 (3rd Cir. 1993). "[T]he Supreme Court directed in Gwaltney I that past violators ... continue to be "in violation of" the Act while there exists an actual likelihood of recurring violations, regardless of the defendant's bona fides or current subjective culpability for that risk. See Gwaltney I, 484 U.S. at 56, 108 S.Ct. 376. Therefore, the fact that the defendants had undertaken remedial efforts prior to the complaint does not ipso facto establish the absence of federal jurisdiction over a citizen suit, so long as such remedial efforts were insufficient to eliminate the "real likelihood of repetition" of past violations. Gwaltney II, 844 F.2d at 172." American Canoe Ass'n v. Murphy Farms, 412 F.3d 536, 540 (4th Cir. 2005). Taken together, these cases demonstrate that the second prong of the "ongoing violations" test is met where at the time of the filing of the Complaint, the discharger has failed to eliminate the causes of the violations, regardless of the discharger's subjective culpability or any remedial efforts it may have planned or begun prior to the filing of the Complaint. i) Carlton Tunnel WET violations 8

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With regard to the WET violations, Defendants' ongoing violation argument can be easily disposed of. Given that there have been repeated violations both before and after the complaint was filed, these WET violations are ongoing as per the Gwaltney case.10 The Defendants are also likely to argue that this Court should not find liability for the WET violations because there is an "automatic compliance schedule" that required after any violation. However, this "automatic compliance schedule" is in addition to, and not instead of, an enforcement action. See, Ex. 57, Bates 20786 and 73, Bates 2274. Defendants are also likely to argue that EPA's Policy on WET Enforcement supports an argument that liability should not be imposed for these WET exceedences. Ex. 593. This argument should be rejected because the EPA WET policy is not binding on this Court and nevertheless simply states that an enforcement action is discretionary where there is a "single exceedence of a WET limit" Ex. 593, p. 1. In this case, there have been repeated violations of the WET limit at Carlton Outfall 002 both before and after filing of the complaint. Thus, the "single exceedence" defense is not applicable here.11 ii) Carlton Tunnel zinc, flow, and TSS violations

With regard to the other parameters, for which a post-Complaint violation has not been proved, the uncontested evidence again demonstrates that Defendants had taken no remedial steps whatsoever at the time of the Complaint to "completely eliminate the cause" of the violations. With regard to the zinc, flow, and TSS violations, a reasonable trier of fact should
In addition to the WET violations in the 2nd quarter of 1996, the 1st and 2nd quarter of 1997, and the 3rd quarter of 1999, Plaintiffs also request that this Court specifically determine liability for the WET violations in the 2nd quarter of 2004 and the 2nd quarter of 2005. Plaintiffs may prosecute post-complaint violations without the need to issue a 60 day notice letter for the same type of violation that prompted the law suit.
11 10

The Defendants also failed to put on any evidence at trial that "inconclusive TRE" defense would be applicable in this case. See Ex. 593, p. 2. Thus, if this defense is raised by Defendants it should be rejected for failure to raise the defense in the Amended Final Pretrial Order and for lack of proof.

9

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conclude that there was a likelihood of continuous or sporadic violations at the time the complaint was filed because there had been a long history of such violations, the violations were seasonal in nature and predictable, and the Defendants did not take any actions to completely eliminate these violations at the time the complaint was filed. In 1992 the WQCD brought an enforcement action against CC&V for zinc exceedences at Carlton Tunnel Outfall 002.12 Despite this enforcement action, the zinc exceedences continued. For example, there were subsequent zinc violations in May and June 1994. With regard to the flow violations, the Defendants repeatedly represented to the WQCD, and to this Court, that they had no control over the flow and that the ponds were not designed to handle such flows. Despite this fact, the Defendants made no attempts to eliminate the flow exceedences as of November 27, 2000. With regard to the TSS violations, there were violations both before and after installation of the fifth pond in early 1996. Perhaps most importantly, in August 1996 the Defendants stated under oath to the WQCD that the Carlton Tunnel ponds did not provide any treatment of the discharge from the Carlton Tunnel. Given that there were no changes to the treatment capacity of the ponds from the time of the statement until this case was filed, it becomes clear that there was a likelihood of continuous or sporadic violations of zinc, flow, and TSS as of November 27, 2000. Accordingly, for the reasons stated above, this Court should conclude that a reasonable trier of fact could conclude that there was a likelihood of continuous or sporadic violations of WET, zinc, flow, and TSS on the date the complaint was filed.

12

Plaintiffs' Proposed Findings of Fact related to "ongoing violations" for the 2nd, 3rd, 4th, 5th and 6th causes of action are incorporated herein by reference.

10

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Further, Defendants' August 2001 installation of the Carlton Ponds "baffle" system occurred after the filing of the Complaint in this case, and thus cannot be used to demonstrate a lack of "ongoing violations" as of the date of the Complaint. Thus, Defendants' illustrative exhibits showing the lack of a violation post-Complaint have the benefit of hindsight. Ex. 701707. As explained by Justice Scalia, "[i]t does not suffice to defeat subject matter jurisdiction that the success of the attempted remedies becomes clear months or even weeks after the suit is filed. Subject matter jurisdiction "depends on the state of things at the time of the action brought"; if it existed when the suit was brought, "subsequent events" cannot "oust[ ]" the court of jurisdiction." Gwaltney, 484 U.S. at 69, 108 S.Ct. at 387 (Scalia J., concurring) (quoting Mullen v. Torrance, 9 Wheat. 537, 539, 6 L.Ed. 154 (1824)). Similar to a decision in the Fourth Circuit, "[Defendant] points to its record of near-perfect compliance after [the filing of the Complaint] as conclusive evidence that there was no ongoing violation at the time of trial. However, the proper point from which to assess the likelihood of continuing violations is not the present, with its advantage of hindsight but the time of the original suit." Chesapeake Bay Found. v. Gwaltney of Smithfield, Ltd., 890 F.2d 690, 693-94 (4th Cir.1989). Similarly, Defendants demonstration in this case of no post-Complaint violations for certain parameters is not sufficient to overcome Plaintiffs' proof that Defendants had taken no action as of the time of the Complaint to remedy these violations, let alone "completely eliminate" the cause of the violations. ii. Arequa Gulch Outfall 001A

Plaintiffs allege that Defendants failed to comply with the WET monitoring condition [cause of action 8(b)] and discharged excess WET [cause of action 8(a)], cyanide [9th cause of 11

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action which is plead in the alternative to 12th cause of action] and cyanide, pH, aluminum, cadmium, manganese, and zinc [12th cause of action] at the permitted Arequa Gulch Outfall 001A. There is no genuine dispute that a final discharge permit (CO-0043648) was issued to CC&V on October 11, 1996 for the discharge from Outfall 001A in Arequa Gulch. There is no genuine dispute that CC&V violated the terms and conditions of the 1996 permit at Outfall 001A as alleged by Plaintiffs.13 Instead, the main disputes are: 1) whether Plaintiffs are prevented from enforcing the terms and conditions of the 1996 Arequa Gulch Permit as a result of "stipulations" between CC&V and the WQCD that were filed in Teller County court without any public notice, public comment, or EPA review; 2) whether the alleged violations at Arequa Gulch Outfall 001A were "ongoing" on November 27, 2000; and 3) whether the renewal Arequa Gulch permit issued in 2003 "moots" all claims for relief on the 1996 permit violations.14 The Teller County "stipulations" do not effectively modify the 1996 Arequa Gulch permit First, under the terms of the 1996 Arequa Gulch Permit, the permit can only be modified after public notice and comment.15 The 1996 Permit states that the original terms of the permit may only be modified according to specific procedures, which include public participation. Ex.
13

Defendants also dispute whether there was a WET testing requirement in the 1996 permit for the Arequa Gulch Outfall 001A and whether Defendants failed to conduct the WET testing after December 31, 1996. However, the testimony at trial eliminates these disputes because the 1996 permit contains a WET testing requirement (Ex. 502, p. 5) and Defendants did not conduct WET testing after December 31, 1996. Thus, the only real dispute is whether the December 10, 1999 stipulation effectively amended the 1996 Permit retroactively without public notice or comment and whether the stipulation is binding on Plaintiffs. It is clear that the WQCD and EPA considered the WET testing provision to remain in effect because they prosecuted Defendants for failing to comply with the WET testing requirement in 2003. Ex. 57, Bates 2081 and Ex. 73, Bates 2275. Defendants are collaterally estopped from challenging these issues in this action. See, Order dated March 12, 2004. See also, Matosantos Commercial Corp. v. Applebee's Int'l, Inc., 245 F.3d 1203, 1209 (10th Cir. 2001). Defendants argue that May 6, 2002 is the operative date for Plaintiffs' eleventh and twelfth causes of action.

14

Plaintiffs' Proposed Findings of Fact with regard to "ongoing violations" for the 8th, 9th, 11th, and 12th causes of action are incorporated herein by reference.

15

12

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502. Neither the 1996 Permit, federal law, or state law allows a polluter to modify an NPDES permit by "stipulation." Instead, permit modifications are only effective after full compliance with public participation requirements. Ex. 502. The filing of a request by the permittee for a permit modification does not stay any permit condition. Ex. 502. It is undisputed that the 1996 Permit was never modified in accordance with these requirements. Defendants bear the burden of production and proof on their affirmative defense that the 1996 Permit limits were modified in accordance with federal and state law. Second, the stipulations are simply a contract between CC&V and WQCD. Ex. 592. By the express terms of the stipulations, they do not bind third parties. Ex. 592. Further, there was never any hearing of any kind in the Teller County case. Moreover, there was never any final judgment on the merits of the Teller County case or the stipulations. Moreover, under Federal law, all modifications to a NPDES permit (except for minor changes) must be subject to public notice and comment. 40 C.F.R. § 122.63. There have been numerous cases where a permittee has attempted to modify the terms of an NPDES permit without public notice and comment. The courts have almost uniformly held that the original terms of an NPDES permit can be enforced unless the permit modifications are formally adopted pursuant to the public notice and comment requirements. See, Pennsylvania Public Interest Research Group v. P.H. Glatfelter Co., 128 F.Supp.2d 747, 758-59 (M.D. Pa. 2001)("[a]s the 1989 Adjudication modified Defendant's 1984 Permit, it was necessary that proper modification procedures be followed. Modifications to permits must comport with the same procedures as the issuance of an original permit. 40 C.F.R. § 123.25(a)(22 & (25)....Because DEP in that case had not followed proper modification procedures before entering into the consent agreement, the 13

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court found that the defendants' obligations had not been altered." citing Proffitt v. Lower Bucks County Joint Mun. Auth., 1987 WL 28350 (E.D.Pa. 1987) rev'd on other grounds 877 F.2d 57 (3d Cir. 1989)); Sierra Club v. Young Life Campaign, Inc., 176 F.Supp.2d 1070, 1080-1081 (D. Colorado 2001) (Before granting a petition to modify a permit, "CDPHE would be required to comply with the procedural and substantive requirements for modifying an NPDES permit, including providing a meaningful opportunity for public comment." Id. at 1080; "Young Life has an absolute duty to comply with its NPDES permit....This duty remains regardless of oral or written representations by the permitting agency allegedly excusing compliance with permit requirements." Id. at 1081); Student Public Interest Research Group v. Monsanto Co., 600 F.Supp. 1479, 1486 (D.N.J. 1985)(request for permit modification does not stay requirement); United States v. Smithfield Foods, Inc., 191 F.3d 516, 523-524 (4th Cir. 1999) cert. denied 531 U.S. 813 (2000) ("because [the defendants] did not follow the procedures required for modification of a permit, and none of the Board's Special Orders and letters were issued in accordance with the permit modification procedures" the permit terms governed effluent discharge standards); Citizens for a Better Env't-California v. Union Oil Co. of California, 83 F.3d 1111, 1119-1120 (9th Cir. 1996)("federal courts are not precluded from addressing the issue of whether the CDO [cease and desist order] effectively modified the NPDES compliance date." Id. at 1119; "federal and state regulations govern the modification of NPDES permits. It is not disputed that these regulations were not followed in this case. These regulations, both procedural and substantive, ensure that the standards embodied in an NPDES permit cannot be evaded with the cooperation of compliant state regulatory authorities." Id. at 1120); Proffitt v. Rohm & Hass, 850 F.2d 1007, 1012 (3rd Cir. 1988)("we do not read the regulations to permit dispensing with 14

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public notice when an amendment effects a substantial change in the terms of a permit."); Proffitt v. Lower Bucks County Joint Mun. Auth., 1987 WL 28350, *1-*3 (E.D. Pa. 1987) (consent order "could not properly modify the permit limits since the proper regulatory steps were not taken to effectuate the modification." Id. at *2; States and permittees should not be allowed "to contract that public participation away" in a consent order and agreement altering original permit limits. Id.); Public Interest Research Group v. Yates Indus., Inc., 757 F.Supp. 438, 445 (D.N.J. 1991) ("Mere verbal representations by officials that certain portions of a permit will not be enforced, without formal modification in the permit, will not excuse the holder from the terms of that permit."); Culbertson v. Coats American, Inc., 913 F.Supp. 1572, 1579 (N.D. Ga. 1995)(modification order between polluter and a state does not effectively modify NPDES permit); Russian River Watershed Protection v. Santa Rosa, 142 F.3d 1136, 1143 (9th Cir. 1998)("establishment of a method of compliance with an NPDES permit does not constitute a modification of the permit."); United States v. Ohio Edison Co., 725 F.Supp. 928, 932-933 (N.D. Ohio 1989) (letters between polluter and state do not modify permit to prevent EPA enforcement); and, Public Interest Research Group of N.J. v. New Jersey Expressway Auth., 822 F.Supp. 174, 184-185 (D.N.J. 1992)("Since the MOU's [memorandum of understanding's] effluent limitations were less stringent than those in the permit, it cannot constitute an actual modification...." Id. at 185). There is no reason why CC&V and the WQCD could not have submitted the "stipulations" to public notice, comment, and EPA review and then formally incorporated the terms of the stipulations into an amended permit. The only explanation is that the CC&V was repeatedly seeking a relaxation of the 1996 Arequa Gulch Permit by intentionally (and illegally) 15

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avoiding the public notice requirements of the Permit, the CWA, and state law. As such, this Court should rule how every other court has ruled that addressed this issue--namely, that the original terms of an NPDES discharge permit may be enforced until the terms are formally amended following public notice, public comment, and EPA review. Defendants also claim that this Court should defer to EPA's and the WQCD's alleged position that the stipulations effectively amended the 1996 Arequa Gulch permit. Neither the EPA nor WQCD has specifically stated in writing that the "stipulations" effectively amend the 1996 permit thus preventing the Plaintiffs from enforcing the terms and conditions of the permit. In fact, EPA has stated quite the opposite. Ex. 4 & Ex. 65. Defendants had the opportunity at trial to elicit testimony from the WQCD and EPA on this issue--but never provided any testimony from the regulatory agencies supporting their theory. Instead, the evidence shows that the regulatory agencies viewed the original terms of the 1996 Arequa Gulch Permit as being subject to enforcement actions as late as February 2003. For example, the consent agreements with some of the Defendants state: 1) "any failure to comply with the effective WET testing requirements from the first quarter of 1997 to present [February 2003] under CDPS Permit No. CO0043648 violated the Act and regulations promulgated thereunder" Ex. 57, Bates 2081 (emphasis added); and, 2) "any failure to comply with effective WET testing from the first quarter of 1997 to present constitutes a violation of Respondent CC&V's CDPS Permit

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No. CO-0043648, and is therefore a violation of section 301(a) of the Act, 33 U.S.C. § 1311(a). Ex. 73, Bates 2275 (emphasis added).16 Thus, these regulatory determinations support for Plaintiffs' argument that the original terms of the 1996 Arequa Gulch Permit remained effective for purposes of enforcement. The Defendants have previously argued that this Court must give "full faith and credit" to the state court filed stipulations. However, since there was never a final judgment entered by the Teller County Court, the "stipulations" should not be accorded full faith and credit in this Court. Baker