Idaho Conservation League et al v. Atlanta Gold Corporation
MEMORANDUM DECISION AND ORDER ON MOTION FOR CIVIL CONTEMPT granting 128 Motion to Hold Defendant in Civil Contempt. A new injunction imposing the new compliance deadline of 8/30/2018 will be issued as a separate order. Counsel for each party are instructed to lodge a proposed draft of such injunction and any related orders, with a copy to be served upon opposing counsel on the business day after such lodging, by Friday, 9/22/2017. Alternatively, counsel can submit a stipulated form of pro posed injunction, and any related orders, by the same date. The Court orders Defendant to pay additional Clean Water Act penalties, in the amount of $251,000, plus interest, to the United States Treasury no later than 12/31/2017. Defendant is ordered to pay an additional amount of $251,000 for civil contempt,to be paid to the United States District Court for the District of Idaho; provided, however, that this portion of the Order is held in abeyance until 9/30/2018 , to allow Defendant an opportunity to comply with the terms of this decision and its related injunction and other orders, to include substantial compliance with the Permit. Should substantial compliance be achieved, this portion of the Order wil l be rescinded nunc pro tunc. Atlanta Gold shall file periodic status reports: 10/31/2017, 2/1/2018, 6/1/2018, & 8/1/2018.Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs) Modified on 9/15/2017 to reflect emailed to jd, sw & hg in Finance (cjs).
UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO
IDAHO CONSERVATION LEAGUE and
Case No.: 1:11-cv-00161-REB
AND ORDER ON MOTION
FOR CIVIL CONTEMPT
ATLANTA GOLD CORPORATION,
This decision resolves a Motion for Civil Contempt, filed by Plaintiffs Idaho
Conservation League and Northwest Environmental Defense Center (collectively, “ICL”).
(Dkt. 128). This is a re-opened Clean Water Act case, first filed in 2011. The case, and
the pending motion, concern discharges of water containing arsenic and iron from a
mining adit into Montezuma Creek, a tributary stream of the Middle Fork of the Boise
River, located near Atlanta, Idaho.
Previously, this case was presided over by U.S. Magistrate Judge Mikel L.
Williams. In 2013, Judge Williams entered an injunction requiring the Defendant,
Atlanta Gold Corporation (“Atlanta Gold”), to bring the arsenic and iron pollutants into
compliance with the terms of the applicable Clean Water Act permit. ICL contends,
however, that the waters flowing from the mining tunnel adit still contain levels of arsenic
and iron in excess of the Clean Water Act permit that requires Atlanta Gold to treat the
MEMORANDUM DECISION AND ORDER- 1
water coming from the adit. In the pending motion, ICL requests that Atlanta Gold be
held in civil contempt under Rule 70(e) of the Federal Rules of Civil Procedure.1 The
Court has carefully reviewed the briefing and affidavits submitted in connection with this
motion, as well as Judge Williams’ prior orders. The Court also conducted an evidentiary
hearing on April 25 and 26, 2017. Being fully advised, the Court now enters the
I. SUMMARY OF DECISION
In this second round of litigation, the Court must decide whether to impose
additional penalties for continued violations of the Clean Water Act, whether to impose
sanctions for contempt of court, and whether to issue a new injunction requiring Atlanta
Gold to bring the adit waters into compliance with the terms of its Clean Water Act
permit by a date certain. The situation at the adit has improved significantly compared to
several years ago, in that Atlanta Gold has been able to treat the effluent water so that it
meets all requirements of the permit about eighty percent of the time. Further, when
violations do occur, levels of both arsenic and iron are often lower than they were when
this lawsuit was initiated in 2011. Nevertheless, violations of the allowable arsenic and
iron levels continue to occur with some regularity. Of those, large “spikes” in the amount
of iron and arsenic passing out of the treatment system frequently occur during the spring
and summer months, when the amount of water flowing out of the adit is particularly
This case, upon being reopened, was assigned to the undersigned. Judge Williams is no
longer managing a civil case docket.
MEMORANDUM DECISION AND ORDER- 2
high. Violations in lesser amounts, but still exceeding permit limits, also have occurred
on a regular basis over the last several years.
In defending against the current contempt motion, Atlanta Gold argues that it has
done everything it reasonably can do to remove arsenic and iron from the adit waters, and
that the geographical and climate challenges of the site (e.g. its small footprint, its
remoteness, sometimes unreliable power sources, and sometimes severe weather
conditions) make further improvements impossible. In the context of a civil contempt
motion, it is Atlanta Gold’s burden to prove that further compliance is not reasonably
After hearing testimony on this issue, the Court is not persuaded by Atlanta Gold’s
assertions that it is unable to treat the contaminated water more effectively such that full
compliance with the terms of the Permit could be achieved. The Court is mindful that
there are logistical challenges and additional expense that will be incurred in improving
the existing water treatment facilities. But the fact that such improvements may require
site-specific engineering solutions and the associated expense needed to implement such
solutions does not mean that such improvements are impossible, and does not mean that
Atlanta Gold would be unable to accomplishment such improvements. Testimony at the
evidentiary hearing established that there are reasonable means for Atlanta Gold both to
expand the capacity of the current treatment system and to better control the flow of
contaminated water into and through the treatment system. The Court also concludes that
Atlanta Gold has not diligently and sufficiently pursued additional solutions that could
MEMORANDUM DECISION AND ORDER- 3
bring the treatment system into full compliance with the terms of the Clean Water Act
permit, despite the significant improvements that have occurred in recent years.
The Court rules in this decision:
(1) that a new injunction will issue requiring that Atlanta Gold make
improvements to its treatment system so as to bring the system into compliance with the
Clean Water Act permit no later than August 30, 2018;
(2) that additional penalties for Clean Water Act violations are imposed upon
Atlanta Gold in the amount of $251,000; and
(3) that monetary sanctions in the amount of $251,000 are imposed upon Atlanta
Gold, in the form of a civil contempt order, for Atlanta Gold’s failure to comply with
Judge Williams’ prior orders on these matters, with payment of that amount held in
abeyance to allow Atlanta Gold the opportunity to fully comply with the Clean Water Act
This case centers around discharges of arsenic and iron-contaminated water issuing
from a historic mining tunnel known as the 900 Level Adit (“the 900 Adit” or “the Adit”).
Atlanta Gold is a mining company in the business of mineral exploration and
development and has ownership interests in a mining site near Atlanta, Idaho, of which
the 900 Adit is a part. First drilled as a haulage tunnel in 1917, the 900 Adit is part of the
historic Talache Mine. (Id. at ¶¶ 6 & 7, Dkt. 20–5). Next to the 900 Adit is Montezuma
Creek, a stream which flows through the town of Atlanta approximately a mile
MEMORANDUM DECISION AND ORDER- 4
downstream, and then into the Middle Fork of the Boise River. (Complaint at ¶ 33, Dkt.
1). The Middle Fork of the Boise River combines with other tributaries to form the main
Boise River, which is itself a tributary of the Snake River.
Historically, the Adit waters have contained very high levels of pollutants,
specifically arsenic and iron. Other sources of pollution exist in the same vicinity.
Testing of waters upstream of the Adit have routinely shown elevated levels of arsenic,
and a Superfund site tied to the old Talache Mine is located nearby.
Atlanta Gold obtained its ownership interests in the mining claims and mine
operations that include the Adit site in 1985. Atlanta Gold has never processed or
produced gold ore at the Adit site, but it has conducted exploratory activities. For a
portion of the period that Atlanta Gold has conducted activities at the site, it treated water
flowing from the Adit either by piping the water into a single settling pond to filter out
suspended solids (including arsenic and iron), or by using a land-application system of
The water flowing from the Adit was the subject of a lawsuit brought in 2005 by
the ICL against Atlanta Gold under the Clean Water Act. That lawsuit ended in a Consent
Decree in which Atlanta Gold agreed to construct a Pilot Water Treatment Facility (the
“PWTF”) to treat the waters coming from the Adit. Further, Atlanta Gold agreed to apply
for a discharge permit under the National Pollutant Discharge Elimination System
(NPDES) provisions of the Clean Water Act, that would authorize discharges of certain
levels of pollutants into Montezuma Creek. An NPDES permit issued on August 6, 2009
MEMORANDUM DECISION AND ORDER- 5
with an effective date of July 1, 2007 (the “Permit”), which is implicated by the present
litigation. The Permit puts a ceiling on arsenic levels at 10 micrograms/liter and iron
levels at 1,000 microgram/liter.2
Atlanta Gold constructed two additional settling ponds in an effort to bring the 900
Adit discharges into compliance with Permit limits. However, operation of the PWTF did
not result in full compliance with the Permit limits; hence, in 2011, the Idaho
Conservation League brought suit again, along with the Northwest Environmental
In the 2011 lawsuit, Judge Williams first considered a motion for summary
judgment on standing issues, and ruled in favor of ICL. Judge Williams then ruled upon a
Motion for Remedies. On July 19, 2012, Judge Williams granted injunctive relief
requiring Atlanta Gold to take the necessary actions to bring the 900 Adit discharge
waters into compliance with the terms of the Permit. He imposed upon the company a
$2,000,000 penalty for violations of the Clean Water Act. In his decision, Judge Williams
also said he would consider imposing additional penalties if Atlanta Gold did not bring
the Adit discharge waters within applicable effluent limitations.
The injunction issued on July 27, 2012. (Dkt. 88). It required that Atlanta Gold
bring the Adit site into compliance with the applicable Permit standards by October 31,
2012. The Court did not specify how Atlanta Gold was to achieve compliance, intending
10 µ/L equates to about 10 parts per billion.
MEMORANDUM DECISION AND ORDER- 6
to leave the method by which compliance would be obtained to the decisions and actions
of Atlanta Gold.
Following Judge Williams’ decision, Atlanta Gold began to undertake steps to
comply with the court’s decision and order. Those efforts ran into impediments,
however. In the late summer and early fall of 2012, a large forest fire known as the
“Trinity Ridge Fire” was burning near Atlanta, making access to the Adit site extremely
difficult if not impossible. Atlanta Gold asked for additional time in which to comply with
the terms of Judge Williams’s injunction, and this additional time was granted by the
court. The deadline for compliance was extended to December 15, 2012. (Dkt. 97). The
deadline for payment of the monetary penalty was also extended to July 31, 2013. (Dkts.
Atlanta Gold described its compliance efforts in a status report filed in December
of 2012. The report indicated that compliance with the Permit effluent limits was
achieved in the prior month (November 2012) – for the first time. Because there had only
been one month of compliance in that time span, Judge Williams ordered that the
compliance efforts would be monitored for several more months to see if there would be a
record of consistent and steady compliance. Atlanta Gold’s second status report, made in
June of 2013, showed some permit violations. However, the report also showed dramatic
improvement from the fall of 2012 to the spring of 2013 in treatment results and a steady
downward trend in both arsenic and iron levels. The last month of records provided to the
Court also showed no violations for either arsenic or iron.
MEMORANDUM DECISION AND ORDER- 7
Judge Williams then issued a final judgment on September 12, 2013. (Dkt. 125).
The case was administratively terminated, but the Court retained jurisdiction for purposes
of enforcing the injunction.
Since that time, Atlanta Gold’s compliance record has been uneven. The company
has made progress in treating the Adit waters since the case was first filed and the overall
situation has improved. Even so, there have been 567 violations of the injunction
requirements and the Permit since December of 2012. (Exhibit 1008).3 Many of these
violations have been caused by arsenic concentrations of 11 or 12 parts per billion – just
over the allowable limits of 10 µ/L. But many other violations were much higher. For
example, during the months of July through September of 2013, weekly measurements of
arsenic were recorded at 24, 57, 41, and 31 µ/ liter.4 Much higher arsenic levels were
measured during certain parts of 2014, 2015, and 2016. Such high measurements
Under the terms of the permit, Atlanta Gold is required to test obtain measurements of
the amount of arsenic and iron in the effluent waters on a weekly basis, and to report the results
to the Environmental Protection Agency in monthly “Discharge Monitoring Reports,” or
“DMRS.” This process was generally described in the testimony of Becky Shull, an Atlanta Gold
employee who is responsible for preparing the DMRs. Under the Clean Water Act, “where a
violation is defined in terms of a time period longer than a day, the maximum penalty assessable
for that violation should be defined in terms of the number of days in that time period,” rather
than treated as only one day of violation. Chesapeake Bay Found. v. Gwaltney of Smithfield,
Ltd., 791 F.2d 304, 314 (4th Cir. 1986), vacated on other grounds, 484 U.S. 49 (1987). See also
Sierra Club v. City & Cnty. of Honolulu, 486 F.Supp.2d 1185, 1190–91 (D. Haw. 2007) (“a
violation of a monthly average will be counted as a violation of every day of the month.”).
Atlanta Gold does not contest ICL’s proposed method of calculating the number of violations,
and this approach is also consistent with how the Court has calculated the number of violations
at earlier stages of this litigation. Following this approach, the Court finds that there have been
some 567 separate violations as of February of 2017.
The information reflecting these spikes in the early summer of 2013 was not in the
record before Judge Williams at the time the case was administratively terminated.
MEMORANDUM DECISION AND ORDER- 8
occurred with regularity during the spring and early summer months, when Atlanta Gold
said (and common sense would suggest) that water reaching the Adit from snow melt and
rain was at its most plentiful. The Discharge Monitoring Reports (“DMRs”) for May and
June of 2014 showed arsenic levels at 659 and 1216 µ/ liter – 65 and 120 times the
allowable amount. Dramatically high arsenic levels also occurred at other times in the
period of 2014 through 2016. For example, other DMRs reflect that the arsenic levels of
310, 342, and 179–also much higher than then 10 µ/L allowed under the Permit. The
DMRs also reflect similar spikes in iron levels around these times.5
When ICL filed its Motion to Reopen, it filed a Motion for Civil Contempt the
same day. The Court set an evidentiary hearing, which took place on April 25, 2017 and
at which testimony of multiple witnesses was presented upon a variety of subjects,
including the number and relative seriousness of the violations that have occurred since
the July 27, 2012 injunction was imposed, the work already undertaken by Atlanta Gold
to treat the water coming from the Adit, and the nature and practicality of possible
additional steps that could be undertaken to bring the company’s operations into
compliance with the Permit. Testimony included discussion of whether additional
treatment capacity could be added to the existing treatment facility, and whether a literal
“plug” could be placed into the tunnel at some distance from the Adit entrance, which
The information contained in this Decision concerning compliance with Permit limits is
tied to the records presented to the Court prior to the evidentiary hearing date. Obviously, there
is a portion of time between when the case was briefed and argued to the Court and the date of
the Decision which is not reflected in the Record nor accounted for in this Decision.
MEMORANDUM DECISION AND ORDER- 9
would either stop or lessen the passage of contaminated water out of the mine through the
III. LEGAL STANDARDS
Civil contempt consists of a “party’s disobedience to a specific and definite court
order by failure to take all reasonable steps within the party’s power to comply.” In re
Dual Deck Video Cassette Recorder Antitrust Litigation, 10 F.3d 693, 695 (9th Cir. 1993).
The party seeking the contempt order has the burden of showing by clear and convincing
evidence that the opposing party violated a prior order of the Court. Once the moving
party makes this demonstration, the burden then shifts to the opposing party to
demonstrate why it was unable to comply. See, e.g. FTC v. Affordable Media, 179 F.3d
1228 (9th Cir. 1999). Impossibility, or an inability to comply with a court’s prior order is
an affirmative defense to a contempt action. Id. (quoting United States v. Rylander, 460
U.S. 752, 757 (1983)). Technical or minor violations of an order may fall short of
contempt where perfect compliance is not necessary to achieve the goals of the order.
However, technical violations are not excused unless the party has taken “all reasonable
steps” to achieve compliance. Id.
IV. ANALYSIS AND RULINGS
AGC Has Violated Both the Injunction and the Terms of the Permit
That Atlanta Gold has violated the terms of the Permit and the Court’s prior
injunction, is established by clear and convincing evidence. The DMRs show that
concentrations of arsenic and iron exceeded allowable levels on multiple occasions.
MEMORANDUM DECISION AND ORDER- 10
Atlanta Gold admits to such violations, as it is their own record keeping (required of them
under the terms of the Permit) that evidences such violations in the period dating back to
the December 15, 2012 compliance deadline imposed by Judge Williams.
However, the Court also considers Atlanta Gold’s explanations as to why it
allegedly was unable to comply, and the company’s assertion that nothing more can
reasonably be done to improve the situation. In essence, Atlanta Gold contends that it has
substantially complied with Judge Williams’ orders, and that complete compliance with
the Permit may be impossible.6
Atlanta Gold raised an additional argument, which the Court will address before
turning to the issues of substantial compliance and impossibility. Specifically, Atlanta
Gold contends that there is naturally occurring arsenic in Montezuma Creek above the
Adit in an amount already several times higher than the effluent limit requirements of the
Permit. Hence, according to Atlanta Gold, it is required to make the water flowing out of
the Adit cleaner than the upstream waters.
Atlanta Gold contends that because of the naturally occurring arsenic, it is
inequitable to require that Atlanta Gold comply with the Permit and the Court’s prior
orders structured around the Permit. Such an argument is misplaced. The Permit requires
treatment of the discharges from the 900 Adit, not treatment of any waters otherwise
carried by Montezuma Creek. Atlanta Gold may feel burdened by its responsibilities
under the Permit (responsibilities it undertook as part of an earlier consent judgment), but
the route to change such responsibilities is to request that the permit conditions be
modified. There was reference during the hearing that Atlanta Gold is apparently
attempting to do so. But whether the stream is already polluted, or whether the Permit
requires the 900 Adit effluent waters to be made cleaner than the stream they run into, is
not a legal defense to the contempt motion. The circularity of such an argument should be
MEMORANDUM DECISION AND ORDER- 11
Summary of Hearing Testimony
This issue of whether further steps are available to improve the situation at the
Adit was addressed extensively at the evidentiary hearing through the testimony of
several witnesses: Ernest Simmons (Atlanta Gold’s CEO); Jeff Gabardi (an engineer with
the United States Forest Service); and ICL’s expert witness James Kuipers, (a mining
engineer with Kuipers & Associates in Butte, Montana).
Testimony of Ernest Simmons
As the CEO of Atlanta Gold, Mr. Simmons has been directly involved in the
actions taken since 2012 to treat the effluent issuing from the 900 Adit. He testified
extensively about difficulties he said that the company has faced in those endeavors. He
detailed the existing treatment method and the changes the company has made to that
system over the years.
Mr. Simmons said that Atlanta Gold’s existing method of treating the
contaminated water consists of several steps. First, a “spider plate” located a short
distance into the mouth of the Adit regulates the flow of water. Second, a “filter” of sand
and rock placed in the mouth of the Adit at the location of the spider plate helps remove
some sediments. Third, after passing the spider plate and its related filter, the
contaminated water leaving the Adit flows into one of two settling ponds. Those ponds
allow the filtering of additional precipitate. Then, the water leaves the settling pond and is
piped into one of several tanks containing filters that further remove arsenic and iron.
From there, the water goes into a discharge pipe that empties into Montezuma Creek.
MEMORANDUM DECISION AND ORDER- 12
Mr. Simmons said that practical and logistical difficulties at the 900 Adit site
inhibit the company’s ability to make further progress in meeting the Permit
requirements. These factors include the site’s remoteness, large temperature variations
between the seasons, large amounts of rainfall, significant spring runoff, a sometimes
unreliable power source at the Adit Site, and terrain conditions that make it difficult to
obtain a sufficient hydrostatic head for effective water treatment.
Other problems with water treatment, according to Mr. Simmons, relate to the
inability to control the flow of water coming out of the mouth of the 900 Adit. Mr.
Simmons said “no one in this room could control the water.” He also testified to a plan of
his creation that he said would control the water flow by installing a bulkhead, or “plug,”
in the Adit. Mr. Simmons said that such a bulkhead would not completely stop the flow
of water out of the Adit, but would significantly reduce it, to the point where the
remainder could be “land applied” rather than returned to Montezuma Creek. Such a plug
or bulkhead, he went on to say, would require safety valves in order to prevent water from
building up behind it, because a plug without such valves could eventually collapse.
Mr. Simmons also testified that the 2011 lawsuit (which began this case) had
prevented the company from being able to raise capital and that Atlanta Gold has been in
a financially perilous condition ever since.
Jeff Gabardi’s Testimony
Jeff Gabardi, a mining engineer with the U.S. Forest Service, testified that Atlanta
Gold faces some unique challenges at the 900 Adit site in treating the contaminated water
MEMORANDUM DECISION AND ORDER- 13
effectively enough to routinely meet the terms of the Permit. Mr. Gabardi said a huge
amount of arsenic must be removed from the water because the Adit is located in the
midst of a large “shear zone” in which the earth has been extensively disturbed. As did
Mr. Simmons, Mr. Gabardi testified that the site’s small footprint made expansion of the
capacity of the current system problematic. Mr. Gabardi testified that the site is “boxed
in” by Montezuma Creek on one side and Forest Service land on the other. Mr. Gabardi
also described arsenic removal treatment operations at certain other mining sites in Idaho,
and testified that such other systems are rudimentary compared to Atlanta Gold’s system
at the Montezuma Creek site.
Mr. Gabardi said that “on the whole,” he believed that Atlanta Gold has been
“pretty successful” in removing the arsenic from the water. He said that controlling the
flow of water was key to bringing the Permit violations under control. Mr. Gabardi was
skeptical, however, that a plug or bulkhead in the 900 Adit would solve the problem of
high water flows. It would be unusual to block a mining tunnel that carries flowing
water, Mr. Gabardi said, and even if a bulkhead were put in place, it would have to be a
“stopper with a faucet,” and not just a simple plug, in order to avoid the possibility of a
collapse. Despite his skepticism about the bulkhead idea, Mr. Gabardi stated that the
Forest Service would consider whatever design that Atlanta Gold might submit.
Summary of James Kuipers’ Testimony
ICL’s expert witness, James Kuipers, is a mining engineer who works as a
consultant to both industry and environmental organizations. Mr. Kuipers agreed that the
MEMORANDUM DECISION AND ORDER- 14
current water treatment system at the 900 Adit was effective about 80% of the time, but
disagreed with Mr. Simmons that an 80% compliance rate represented success. In order to
completely fix the problem, which he said was primarily related to high water flows, Mr.
Kuipers testified that Atlanta Gold would need to take more substantial steps. Those
steps, according to Mr. Kuipers, would require (1) commissioning a site characterization
study, preferably from an independent engineer, in order to better understand
inefficiencies in the system; (2) identifying a method of either storing or minimizing the
high flows of water that occur regularly in the spring and summer months; and (3)
installing a final “polishing” filter, possibly consisting of a nano-filter or reverse osmosis
filter, to remove excess arsenic from the water.
In his rebuttal testimony, Mr. Kuipers addressed Mr. Simmons’ claim that nothing
can be done to control the flow of water and that a better level of compliance is
essentially impossible. Mr. Kuipers identified a number of steps that Atlanta Gold could
take, despite the limited size of the PWTF’s ground footprint and other difficulties posed
by the site. According to Mr. Kuipers, Atlanta Gold could create a new settling pond or
ponds down gradient, or simply increase the capacity of the existing ponds. Mr. Kuipers
testified that during high flows coming from the adit, Atlanta Gold could capture the
overflow at the mouth of the Adit and then direct it down stream to a surge pond, where it
could be stored indefinitely. This excess water could then be pumped back up to the
existing tanks during periods of low water flow. Additionally, he said that Atlanta Gold
MEMORANDUM DECISION AND ORDER- 15
could purchase additional filters or replace the existing filters with more efficient
Mr. Kuipers also explained that the small footprint of the Adit site was no obstacle
to further improvement of the treatment facilities because the necessary equipment could
be placed on pillars, or the filters could be stacked one above the other. Mr. Kuipers
characterized the site limitations described by Atlanta Gold as largely “self-imposed”
rather than insurmountable obstacles.
V. ANALYSIS AND RULINGS
The Court has carefully considered the entirety of the evidentiary record, to
include the affidavits, declarations and other documentary evidence presented with the
briefing prior to the hearing. (Dkts. 128-3 & 132-1). On that record, as enlarged and
supplemented in the evidentiary hearing, the Court holds that Atlanta Gold has violated
the terms of the Permit, that Atlanta Gold has violated the requirements of this Court’s
prior orders requiring that it bring its water treatment system into compliance with the
Permit, and that Atlanta Gold has failed to carry its burden of demonstrating that it has
done everything that reasonably could have been done to accomplish compliance with the
Court’s prior orders and the Permit. This is true not only with respect to controlling the
flow of water to bring the large spikes of arsenic under control, but also with respect to
seeking to eliminate the lower level permit violations that occur throughout the year.
In reaching those conclusions, the Court is aware that there has been improvement
in the treatment of the contaminated waters from the Adit compared to several years ago,
MEMORANDUM DECISION AND ORDER- 16
and Atlanta Gold’s efforts in accomplishing those improvements are commendable. The
Court acknowledges as well that the task before Atlanta Gold is arguably challenging, for
the reasons described in the testimony of Mr. Simmons and Mr. Gabardi. Mr. Gabardi’s
testimony in this regard was particularly helpful because Mr. Simmons’s testimony on
those matters was at times disjointed and difficult to follow. Nevertheless, the Court is not
persuaded by Mr. Gabardi’s agreement with Mr. Simmons that, as a practical matter,
there is not much more that Atlanta Gold can do to treat the water more effectively. Mr.
Gabardi’s duties have never required him to study carefully whether further measures are
possible. Rather, his duties are to consider and evaluate the improvement measures
Atlanta Gold might propose. Hence, his opinion, though completely relevant, is not
persuasive. Further, the Forest Service may inherit the problems that exist at the 900 Adit,
should the site be abandoned – a prospect, so to speak, that the Forest Service no doubt
would prefer not to face.
On the whole, the Court finds Mr. Kuipers’ testimony more persuasive on the most
important question at issue in this motion, which is the extent to which additional
treatment options are available to Atlanta Gold. The Court reaches that conclusion
despite the fact that Mr. Kuipers’ demeanor on the stand was at times heated with the tone
of an advocate rather than an independent expert, and his credibility suffered as a result.
Nevertheless, in sorting through the engineering possibilities described by Mr. Kuipers
against the practical impediments described by Mr. Simmons and seconded by Mr.
MEMORANDUM DECISION AND ORDER- 17
Garbardi, the Court is persuaded by Mr. Kuipers’ testimony that additional measures
reasonably can be taken to improve the treatment of the 900 Adit effluent waters.
Atlanta Gold would say that further improvement is not a reasonable assignment or
even possible. The sum of the evidence, however, persuades the Court that even though
further improvements may present some logistical and financial challenges, such
improvements are nonetheless achievable. Such a conclusion is based in part upon the
Court’s assessment of the relative credibility of the testimony of Mr. Kuipers in relation
to the testimony of Mr. Simmons and Mr. Gabardi, but also upon particular credible
details of that testimony. To begin, it is not a surprise that the system as currently
designed cannot handle high volumes of water. Mr. Kuipers testified that it is entirely
predictable that the current system only works about 80% of the time, and that significant
permit violations have been occurring during the spring/summer months for several years.
Common sense supports that testimony, because it is the nature of Idaho’s climate that the
mountain freshets would carry the greatest amount of snowmelt in the spring and early
summer months, and these months also have the greatest likelihood of significant rainfall.
Further, there is a fundamental disconnect between Atlanta Gold contending on
one hand that it cannot control the flow of water and then contending on the other that it
has a plan for a bulkhead to achieve precisely that result. Atlanta Gold has described a
proposed bulkhead as a viable solution for the ongoing problems at the Adit. However,
Mr. Simmons’ plans for such a bulkhead or plug appear nearly as inchoate now as when
Atlanta Gold first floated such an idea five years ago. As Mr. Simmons admitted on crossMEMORANDUM DECISION AND ORDER- 18
examination, the bulkhead idea was raised as early as 2012 in the Supplemental Plan of
Operations Atlanta Gold submitted to the Forest Service. Yet, at least as of the date of the
contempt evidentiary hearing, no detailed engineering proposals for such a bulkhead had
been submitted. The record does contain a somewhat rudimentary drawing prepared by
Mr. Simmons. But, the record also indicates that no planning was undertaken until after
Atlanta Gold received an April 19, 2016 letter from ICL stating an intent to seek
contempt sanctions for Atlanta Gold’s alleged failure to comply with Judge Williams’
prior orders. (Dkt. 128-2 & Defendant’s Exhibits 2003 & 2004). These facts, together
with Mr. Kuipers’ testimony detailing the options available for improving the current
treatment facilities, indicate that Atlanta Gold’s approach to solving the treatment
problems at the 900 Adit site has been dilatory, and not proactive.
Civil contempt consists of a “party’s disobedience to a specific and definite court
order by failure to take all reasonable steps within the party’s power to comply.” In re
Dual Deck Video Cassette Recorder Antitrust Litigation, 10 F.3d 693, 695 (9th Cir. 1993).
The party seeking the contempt order has the burden of showing by clear and convincing
evidence that the opposing party violated a prior order of the Court. Once the moving
party makes this demonstration, the burden then shifts to the opposing party to
demonstrate why they were unable to comply. See, e.g. FTC v. Affordable Media 179
F.3d 1228 (9th Cir. 1999). Impossibility, or an inability to reasonably comply with a
court’s prior order is an affirmative defense to a contempt action. Id (quoting United
States v. Rylander, 460 U.S. 752, 757 (1983)). Technical or minor violations of an order
MEMORANDUM DECISION AND ORDER- 19
may fall short of contempt where perfect compliance is not necessary to achieve the goals
of the order. However, technical violations are not excused unless the party has taken “all
reasonable steps” to achieve compliance. Id.
On balance, based upon the full record, the Court is persuaded that more can be
done by Atlanta Gold, and that more should have been done before now. Among other
things, there needs to be an engineered means of receiving and containing a greater
amount of water, so that high flows from the Adit do not overwhelm the treatment
system. Further, additional treatment mechanisms can be added, and improvements in the
process may be available for the system already in place. In sum, Atlanta Gold has not
met its burden of persuading the Court that there is nothing more that reasonably can be
done to increase the capacity of the treatment system to contain and treat contaminated
water, or that there is nothing more that reasonably can be done to increase the
effectiveness of the treatment process. So long as opportunities are present to do so, then
Atlanta Gold must seek out and implement additional means to come into compliance
with the Permit requirements.
For these reasons, the Court finds that there is clear and convincing evidence that
Atlanta Gold has disobeyed specific and definite requirements of Judge Williams’ prior
orders, specifically his Injunction of July 27, 2012 (Dkt. 88), his October 10, 2012 Order
extending the time for compliance (Dkt. 97), and the Final Judgment retaining jurisdiction
for purposes of enforcing the original injunction. (Dkt. 125). Further, the Court finds that
Atlanta Gold has not met its burden of persuasion upon the affirmative defense of
MEMORANDUM DECISION AND ORDER- 20
impossibility or inability to comply with such order. Finally, the Court is not persuaded
that any of the violations are so technical or minor in nature such as not to constitute
contempt because perfect compliance may not be necessary to achieve the goals of the
order. The Court makes this latter ruling because Atlanta Gold has not taken all
reasonable steps to achieve compliance with the Permit.7
In making these rulings, the Court focuses on the continuing Permit violations, not
on Atlanta Gold’s failure to make payments to the U.S. Treasury on the previous
$2,000,000 penalty. The previous penalty has already been reduced to judgment, and
interest is accruing at the rate set by statute. The United States as a judgment creditor is
represented by the U.S. Attorney’s office. There is nothing in this procedural context for
the Court to consider as to that prior penalty or any failure to make payment upon the
Having made the rulings described above, the Court must then address the
question of remedies. Specifically, the Court must decide whether a new injunction
should issue, whether additional Clean Water Act penalties should be imposed, and
whether a monetary sanction should be imposed for civil contempt of court.
Such a ruling does not preclude the possibility that the Court might rule on a different
record in the future that technical or minor violations would not constitute contempt, if such
violations occur after such improvements are in place.
MEMORANDUM DECISION AND ORDER- 21
ICL requests three separate types of remedies: (1) additional Clean Water Act
penalties of $1,000 per violation per day;8 ( 2) penalties for contempt of court in the same
amount, which can be held in abeyance in order to give Atlanta Gold time to bring the
Adit site into compliance with the Permit, and thus purge its contempt; and (3) additional
“enforcement remedies” stemming from the civil contempt. As for enforcement remedies,
ICL requests that the new injunction include a new compliance deadline, and a new plan
for compliance, prepared by a certified engineer, describing how the existing treatment
facilities are to be updated. This plan, according to the ICL, should also include “an
operations and maintenance plan,” which would demonstrate that Atlanta Gold has
adequate resources to treat the water and how it will utilize those resources to maintain
the water treatment facilities. Finally, ICL requests that the Court require Atlanta Gold,
every six months, to provide ICL with all reporting data required under the Permit.
Financial Penalties–Legal Framework
Regarding penalties, the basic approach advocated by the ICL – i.e. imposing
additional monetary sanctions both for violation of the Clean Water Act and for civil
contempt, but holding the latter in abeyance – is generally sensible and consistent with
applicable law. Clean Water Act penalties are mandatory. In contrast, courts may take a
different approach when imposing monetary sanctions for civil contempt, because civil
contempt sanctions are employed primarily to coerce compliance with a court’s prior
Specifically, ICL requests Clean Water Act penalties under 33 U.S.C. § 1319(d)
in the amount of $567,000, for the 567 violations up through February of 2017.
MEMORANDUM DECISION AND ORDER- 22
order. Whittaker Corp. v. Execuair Corp., 953 F.2d 510, 517 (9th Cir. 1992).9 Therefore,
sanctions “must always give to the alleged contemnor the opportunity to bring himself
into compliance, [and] the sanction cannot be one that does not come to an end when he
repents his past conduct and purges himself.” Id.
The Court agrees that the approach proposed by ICL is appropriate to these
circumstances, but the Court will set a different penalty amount than that proposed by
ICL. In making that decision, the Court evaluates a number of factors in deciding the
civil penalty amount, including: (1) the seriousness of the violation or violations, (2) the
economic benefit (if any) resulting from the violation, (3) any history of such violations,
(4) any good faith efforts to comply with the applicable requirements, (5) the economic
impact of the penalty on the violator, and (6) other such matters as justice may require. 33
U.S.C. § 1319(d). Factors three and four cut in opposite directions, in that while Atlanta
Gold does have an extensive history of violations, it has also made progress over the last
several years and there now is less arsenic entering Montezuma Creek as a result. As for
factor two – the economic benefit accruing to Atlanta Gold as a result of continued
noncompliance – there is no information in the record as to the cost to bring the existing
system into full compliance with the terms of the CWA Permit.
Contempt sanctions may also be imposed to compensate a complainant for losses
occasioned by the violation of the order. Whittaker Corp., 953 F.2d at 517. However, that
particular rationale is not present in a citizen lawsuit where, as here, the ICL cannot make a
claim for damages in its own right distinct from penalties payable to the U.S. Treasury.
MEMORANDUM DECISION AND ORDER- 23
As to the economic impact consideration called for in factor five, the evidence is
equivocal. Atlanta Gold contends it is in imperiled financial circumstances. However, it
has some $48 million in assets and is engaged in exploration activities in various
locations and is engaged in joint business ventures with other entities. The Court cannot
and will not presume on this record that Atlanta Gold’s book assets are illusory, nor
presumably would Atlanta Gold want to argue such to the Court. The Court
acknowledges that book assets can be illiquid, but on the existing record the Court is not
persuaded that no financial avenue exists for Atlanta Gold to pay additional penalties.10
“Where a violator cannot show that a penalty will have a ruinous effect, the economic
impact factor under [Clean Water Act] Section 309(d) will not reduce the penalty.”
United States v. Gulf Park Water Co., Inc., 14 F.Supp.2d 854, 868 (S.D.Miss.1998); see
also United States v. Smith, 1998 WL 325954, at *3 (4th Cir. Feb. 27, 1998) (holding that
burden is on violator “to show an inability to pay the penalty”); Sierra Club v. El Paso
Gold Mines, Inc., 2003 WL 25265873 at *11 (D.Colo. Feb. 10, 2003) (“Defendant bears
the burden of proving its inability to pay a civil penalty”). United States v. Mountain State
Carbon, LLC, 2014 WL 3548662 (N.D. W. Va. 2014).
The Court previously struck the Affidavit of Peili Miao, which discussed Atlanta
Gold’s financial condition in more detail and purported to explain why the approximately $48
million dollars in assets listed on the company’s balance sheets would be difficult to turn into
capital. This Court struck that affidavit because allowing it would have meant that the ICL would
not have the benefit of cross-examination, but Atlanta Gold was given the opportunity to call
Miao as witness. Atlanta Gold did not call Miao at the hearing.
MEMORANDUM DECISION AND ORDER- 24
For all these reasons, the Court concludes that most important factor in setting a
penalty for the most recent permit violations is the relative seriousness of those violations.
Calculation and Amount of Penalties
Clean Water Act Penalties
ICL arrives at its suggested per violation penalty of $1,000 by dividing the total
penalty imposed by Judge Williams in 2012 (i.e. $2 million) by 2,004–which is the
number of violations on record at the time that penalty was imposed. This approach yields
an average per day violation figure of $998, which the ICL has rounded up to $1,000.
This method, even if useful as a starting point, does not account for the fact that not all of
Atlanta Gold’s violations were of equal severity. Arsenic in water is obviously of
significant concern at any level; however, the violations involving arsenic concentrations
of one or two micrograms per liter above allowable limits are not comparable to the larger
spikes involving much greater concentrations of up to 120 fold the allowable amounts.
In considering these distinctions, the Court specifically relies upon the testimony
of ICL Program Director Justin Hayes. Mr. Hayes explained at the hearing that an
amount of 150 µ/L – called the “chronic aquatic life criteria” – is the maximum
concentration of arsenic that a stream can bear and still support healthy aquatic life.
(These criteria are set by regulations promulgated by the Idaho Department of
Environmental Quality). According to Mr. Hayes, arsenic levels above this amount “can
kill aquatic life all the way downstream.” In an earlier written declaration, Mr. Hayes
explained that the chronic aquatic life criteria of 150 µ/L was developed to protect aquatic
MEMORANDUM DECISION AND ORDER- 25
life from the harmful impacts of a four day exposure to a toxic substance. If exposure to
arsenic at these levels does not occur more than once every three years, aquatic life
receives adequate protection. Conversely, failure to comply with the chronic criteria
results in significant harm to aquatic life. (Hayes Decl., Dkt. 62, ¶ 11).
In this case, the effluent waters after treatment have exceeded the chronic aquatic
life criteria five times from May 2014 through June of 2016. In other words, the effluent
water coming from the Adit still has arsenic levels sufficient to interfere with the health
of the stream’s aquatic life. Therefore, considering the severity of the violations, the
impact of the violations upon in-stream aquatic life, the circumstances that affect the
treatment system, and the other evidence in the record, the Court will impose a $1,000 per
day penalty for violations on those days where the arsenic in the effluent waters spiked to
concentrations in the amount of or in excess of 150 µ/L.
The Court finds that there were 35 arsenic violations on record (five recorded
weekly violations multiplied by seven days in a week) in which the arsenic level
measured at or in excess of 150 µ/L. This results in a total penalty of $35,000 for those
The Court will impose a penalty of $500 per day for the remaining violations on
the record, for those involving concentrations of arsenic of less than 150 µ/L. Even
though an occasional permit violation involving arsenic concentrations of 11 or 12
micrograms per liter might not be cause for extreme concern, the lower level violations
have occurred frequently and often involved arsenic concentrations of many times what
MEMORANDUM DECISION AND ORDER- 26
the Permit allows. Arsenic is a deadly poison. Because it is an element, it does not
degrade over time but instead settles into the stream bed or dissolves into the water and
eventually finds its way into the food chain. Further, as Mr. Hayes pointed out, the 10 µ/L
arsenic limit is intended to protect human health in addition to the health of aquatic life.
Thus, the numerous smaller permit violations are collectively more significant and are not
inconsequential simply because they individually do not rise to the level of the dramatic
violations that occurred at other times.
Accordingly, the Court rules that Clean Water Act penalties are imposed in the
amount of $500 for 432 violations for the period from May of 2013 to February of 2017,
in the total amount of $216,000.11 Added to the $35,000 total penalty for the violations in
excess of 150 µ/L, the total amount of Clean Water Act penalties is $251,000.
The Court imposes the same amount, that is $251,000, as a civil contempt penalty
for the actions and inactions of Atlanta Gold that constitute failure to comply with the
Court’s prior orders, for the reasons described previously in this decision. Payment of the
sanction amount will be held in abeyance in order to allow Atlanta Gold the opportunity
to remedy such contempt.
Future Penalties or Contempt
This number does not count the violations that occurred between December of 2012
and May of 2013, because Judge Williams already declined to impose any additional penalties
for violations occurring during this time frame. (Dkt. 122).
MEMORANDUM DECISION AND ORDER- 27
Finally, the Court leaves open the possibility of additional Clean Water Act
penalties along the same parameters as described above, (1) for violations that have
occurred, if any, after February of 2017 and up to the date of this decision; and, (2) as to
any violations that might occur after the date of this decision. Leaving open the
possibility of additional penalties is necessary because, as explained below, the Court will
impose a somewhat distant compliance deadline, and the fact of an additional period for
compliance should not become a financial benefit to Atlanta Gold other than as an
opportunity to avoid the requirement that it pay the contempt sanctions set out in this
decision.12 Similarly, the time needed for the Court to consider and then decide the
pending Motion should not create a financial benefit for Atlanta Gold, particularly when
the Court’s docket is bursting at the seams.
The Court now addresses the request for “enforcement remedies.” A new injunction
setting a new compliance deadline is necessary, which will be issued in a separate document.
As to the specific parameters of that injunction, ICL has requested that Atlanta Gold be
required to submit a “Plan for Compliance” to the Court, which plan would include “a
Treatment Facilities Plan,” explaining how the existing facilities are to be upgraded so as to
On September 14, 2017, the ICL filed a “Notice of Continuing Violations” (Dkt. 157)
indicating that further violations of allowable arsenic levels had occurred during the months of of
March through July, 2017. At the time of that filing, this decision was nearly complete. To
avoid delay in issuing this decision, the Court will not address these alleged additional violations
at this time but instead, will take them up in the context of a future status conference, consistent
with the schedule announced in this decision.
MEMORANDUM DECISION AND ORDER- 28
achieve compliance and an “Operations and Maintenance Plan,” which would demonstrate
how Atlanta Gold intends to utilize its resources to maintain the treatment facilities.
(Plaintiffs’ Motion, Dkt. 128, p. 3). At the evidentiary hearing, counsel for ICL also clarified
that ICL seeks to have the Court require Atlanta Gold to hire an independent engineering
expert to conduct a site evaluation and submit a plan for bringing the Adit waters into
compliance, rather than allowing Atlanta Gold to create its own plan.
At this stage, notwithstanding the obvious skepticism of ICL, the Court will assume
that Atlanta Gold is capable of identifying solutions on its own without the requirement of
specific directions from the Court. Nor is it necessary at this time to require the company to
submit to the Court detailed plans for improving the water treatment facilities and detailed
explanations as to how it will utilize its financial resources to achieve that goal. The history
of this litigation, dating back to the first lawsuit in 2005, shows a pattern of the company
making improvements toward effective water treatment while it is under active Court
supervision, but then taking a considerably more lax approach when no one is watching. This
pattern suggests that continued supervision of the Court is plainly necessary, but specific
directives from independent experts as to how to treat the water may not be. But the Court
makes specific admonishment here to Atlanta Gold that part of the Court’s thinking on this
issue stems from the belief that it may be less expensive for the company, and likely also less
adversarial, if Atlanta Gold is allowed to take this specific responsibility on its own. In other
words, the Court believes that the likelihood of successful water treatment that will meet
Permit standards is actually increased by requiring Atlanta Gold to take on that responsibility
MEMORANDUM DECISION AND ORDER- 29
directly. However, if what transpires going forward suggests that these assumptions are not
true, and that more direct court involvement as to the means of achieving compliance is
necessary, then the Court will impose more specific requirements and enlarge the scope of
injunctive relief to include the same.
For these reasons, the Court concludes that an injunction requiring compliance by a
date certain consistent with the rulings in this decision, is sufficient. In addition to this
general injunction, the Court will require that Atlanta Gold provide periodic reports detailing
its progress to both the ICL and the Court. Made a part of that will be regular status
conferences with the Court and the Plaintiffs, in which Atlanta Gold will be required to detail
under oath the planning, progress, and implementation of the necessary improvements.
Accordingly, the Court sets a new compliance deadline of August 30, 2018, by which
time Atlanta Gold must achieve substantial compliance with the terms of the Permit.
“Substantial compliance” in this setting means improving control of the volume of water to
be treated so that the system is not overwhelmed, and improving the effectiveness of such
treatment in general.
If substantial compliance is not achieved, the Court will remove the stay on
implementation of the additional $251,000 contempt amount, and require that immediate
payment of that amount be made. Further, if Atlanta Gold does not achieve substantial
compliance by the expiration of this deadline, the Court will 1) obtain independent
recommendations as to the actions necessary to bring the treatment of the effluent from the
Adit under control and within Permit limits, 2) require that Atlanta Gold pay the expenses
MEMORANDUM DECISION AND ORDER- 30
of such independent experts, and 3) will then require that Atlanta Gold undertake, complete,
and pay the expense of the actions recommended by such independent experts.
Plaintiffs’ Motion to Hold Defendant in Civil Contempt (Dkt. 128) is hereby
GRANTED. A new injunction imposing the new compliance deadline of August
30, 2018 will be issued as a separate order. Counsel for each party are instructed
to lodge a proposed draft of such injunction and any related orders, with a copy to
be served upon opposing counsel on the business day after such lodging, by
Friday, September 22, 2017. Alternatively, counsel can submit a stipulated
form of proposed injunction, and any related orders, by the same date.
The Court orders Defendant to pay additional Clean Water Act penalties, in the
amount of $251,000, plus interest, to the United States Treasury no later than
DECEMBER 31, 2017. Interest shall accrue at the rate specified in 28 U.S.C.
§ 1961(a) and (b). Such interest shall begin to accrue as of the date of this Order.
Defendant is ordered to pay an additional amount of $251,000 for civil contempt,
to be paid to the United States District Court for the District of Idaho; provided,
however, that this portion of the Order is held in abeyance until September 30,
2018, to allow Defendant an opportunity to comply with the terms of this decision
and its related injuction and other orders, to include substantial compliance with
the Permit. Should substantial compliance be achieved, this portion of the Order
will be rescinded nunc pro tunc.
MEMORANDUM DECISION AND ORDER- 31
Atlanta Gold shall file periodic status reports detailing the steps it has taken to
reach compliance with the terms of the Permit and the results achieved (including
all relevant DMRs). The first such status report shall be due no later than October
31, 2017. The second shall be due February 1, 2018. The third shall be due by
June 1, 2018. The fourth shall be due August 1, 2018. The information in the
report shall be verified by declaration or affidavit of an officer of the corporation
with knowledge of the matters contained in the declaration or affidavit. The
Court will review these filings and hold a status conference if the Court deems
appropriate, and particularly it appears that significant progress toward substantial
compliance is not occurring.
This case shall be administratively terminated after entry of the injunction and
any related orders, but the Court will retain continuing jurisdiction over this
matter and it may be reopened at any time upon the Court’s own action, or upon
motion of a party for good cause, for purposes of ensuring compliance with the
injunction and other requirements.
DATED: September 15, 2017
Honorable Ronald E. Bush
Chief U. S. Magistrate Judge
MEMORANDUM DECISION AND ORDER- 32
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