Former, current owners of Lava Cap mine on hook for $32M in clean-up costs | TheUnion.com

Former, current owners of Lava Cap mine on hook for $32M in clean-up costs

A federal judge has handed down a $32 million judgment in a 10-year-long lawsuit over clean-up costs for the defunct Lava Cap gold mine on Banner Mountain.

The suit was filed in 2008 by the U.S. government and the California Department of Toxic Substances Control against developers Sterling CentreCorp, Inc., and against current property owner Stephen Elder.

But the issues at the Banner Mountain Superfund cleanup site, which was a functioning gold and silver mine from 1861 until 1943, had been percolating for years before that.

Tailings were collected on the site and also allowed to flow into Lost Lake, which was created for that purpose, according to the Environmental Protection Agency.

In 1979, the state Water Resources Control Board inspected the 30-foot log dam that held mill waste in a tailings pond on the property, according to state records.

The water agency warned the dam and other containment structures were badly decomposed and very unstable. The agency issued an order to fix the dam, and create diversion ditches and containment basins to capture sediment escaping from the waste pond. But for reasons state water board officials later could not explain, the order was rescinded.

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Property sold

In 1989, Elder and a partner bought 486 acres, including Lava Cap Mine, for real estate development. Elder eventually kept 100 acres including the mine for himself.

Elder knew the area had been a mine and contained tailings, but he didn't worry about them, he told The Union in 2011. And the water board's warning and order never appeared in disclosures during the purchase, he said.

On New Year's Eve of 1996, heavy rains caused the log dam to burst, sending 10,000 cubic yards of mine tailings gushing into Little Clipper Creek and Lost Lake.

The EPA started investigating the site in 1999, and officials eventually found elevated levels of arsenic in Little Clipper Creek downstream of the mine, in Lost Lake and below Lost Lake, in soil throughout the same area, in groundwater beneath mine waste and on some properties adjacent to the mine.

The federal agency provided in-home treatment systems to the owners of tainted wells, bulldozed two rental houses Elder had on the property, and removed two acres of trees and dirt to cover up the mine tailings.

Then the agency took legal action to make Elder pay.

Lawsuit filed

In 2008, the EPA and the state department of Toxic Substances Control filed a complaint against Elder, his company, Elder Development Corp., and mine companies Sterling CentreCorp and Newmont Mining.

Two Newmont entities — Newmont Capital Limited and Newmont Mining Corp. of Canada Limited — settled for $3 million in 2009.

In 2012, an initial trial concluded in a ruling in favor of the plaintiffs, who alleged that Sterling CentreCorp and Elder were responsible for the clean-up costs. Sterling CentreCorp had become the owner of the mine site in 1952, when it acquired all the assets of Lava Cap Gold Mining Corp. The assets included a subsidiary called Keystone Copper, a now-suspended company that Sterling alleges was actually the responsible party.

Elder's involvement appears to stem — at least in part — from a state law that makes a property owner liable by the fact of ownership.

The trial that just concluded put a price tag on the level of the defendants' fiscal responsibility. According to the final judgment recorded on Tuesday, the federal and state government is entitled to recover $32,050,083 in costs incurred.

"Both Sterling CentreCorp Inc. and Stephen Elder were sued at the same time and both are responsible for the money," said Russ Edmondson, the spokesman for the state Department of Toxic Substances Control. "There is no set amount that either is responsible for. (The state) will go after collecting the money however it can."

Sterling CentreCorp attorney Gary Smith said he expects to appeal the judgment.

Elder also hopes to appeal the judgment, daughter Misty Lee said Friday.

"This has destroyed his life," she said. "It's really, really sad. My dad hasn't had the money to fight this … He's 74 years old. What is he going to do? "

Contact reporter Liz Kellar at 530-477-4236 or by email at lizk@theunion.com.

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