THE BLOG
06/13/2016 03:18 pm ET Updated Jun 14, 2017

Pebble Mine: Canadian Mining Company Threatens to Stick U.S. Taxpayers with Costs of "Potentially Catastrophic" Mining Scheme

Whatever your position on free trade - or specifically on the North American Free Trade Agreement ("NAFTA") - here's something everyone can agree on: NAFTA does not support a claim for damages against U.S. taxpayers by the last remaining partner in The Pebble Partnership based on its failure to secure (or even apply for) a permit for the Pebble Mine - the reckless gold and copper mega-mine proposed for the headwaters of the Bristol Bay wild salmon fishery in southwest Alaska.

Everyone can agree, that is, except the last remaining partner in The Pebble Partnership:

In January, in a letter to the U.S. State Department, Northern Dynasty Minerals ("Northern Dynasty") - now the sole owner of the Pebble project - threatened precisely such a claim. According to the company's lawyers, Northern Dynasty is prepared to file a claim for "arbitration" under NAFTA, seeking compensation for the failure of the Pebble Mine project to move forward to federal permitting. The basis? That the U.S. Environmental Protection Agency ("EPA") has acted in a "grossly abusive, arbitrary, and deliberately opaque manner," in breach of due process, U.S. statutes, and "Northern Dynasty's legitimate expectations . . . ."

In the ensuing 42 pages, the letter lays out the basis for Northern Dynasty's astonishing claim that NAFTA entitles it to a bail-out based on EPA's alleged efforts to prevent it from pursuing its scheme to develop a copper and gold mega-mine in the headwaters of the greatest wild salmon fishery on Earth.

Of all the specious claims flowing from the word processors of Northern Dynasty's team of DC lobbyists and lawyers - and there have been many such claims - this one may take the cake:

First, Northern Dynasty has NEVER APPLIED for a federal permit. There can be no basis in NAFTA for a foreign corporation to claim damages against a signatory country for failing to issue a permit for which an application has not even been filed. No application, no permit, no damages.

Second, although Northern Dynasty peppers its threat with references to an EPA "pre-emptive veto" of its project, EPA has done no such thing. Indeed, beyond undertaking a review of the project under the federal Clean Water Act, EPA has taken no final action whatsoever with respect to the Pebble Mine. No final action, no injury, no damages.

Third, none of its claims of "gross procedural and legal violations" holds water. It claims a deprivation of due process based on the absence of consideration of a permit application for Pebble, even though it has never filed one. It claims a violation of the National Environmental Policy Act ("NEPA"), alleging an entitlement to an environmental review process under that statute even though NEPA attaches only after a permit application has been filed. And it claims a violation of the federal Clean Water Act even though the process undertaken by EPA has been authorized by Congress and upheld by the courts, including, most recently, by the U.S. Court of Appeals for the DC Circuit.

But most fundamentally, beyond these manifest flaws in Northern Dynasty's argument, the company's threatened claim is barred by two explicit provisions of NAFTA that reserve the right of signatories to protect their environmental resources through lawful regulation. In NAFTA sections 1114 and 1106, the signatories anticipated the need for an explicit regulatory carve-out from claims for compensation and, to that end, reserved the right of the host country to protect its environment without being subject to claims for compensation on that basis by the regulated interests.

Those provisions are directly applicable in the case of the Pebble Mine. Northern Dynasty claims a "right" to seek a permit to build one of the most destructive mining projects in the world - one characterized by EPA as potentially "catastrophic" - and that its "right" has been unlawfully abridged by the agency's potential use of its regulatory authority under section 404(c) of the Clean Water Act. In other words, this is a challenge to the authority of the principal U.S. environmental regulator - authority granted to EPA by Congress over 40 years ago to protect the environment of the United States. As such, even were EPA to issue a final decision adverse to Northern Dynasty's perceived interests, the company would have no valid claim for compensation.

Recall that this is the project abandoned by all of Northern Dynasty's former mining partners, including Mitsubishi Corporation (in 2011), Anglo American (in 2013), and Rio Tinto (in 2014), three of the largest mining companies in the world. It is the project opposed by over 80 percent of the people who live in the Bristol Bay region, over 90 percent of the Bristol Bay native tribes (including the Bristol Bay Native Corporation, the region's largest developer), and over 95 percent of the commercial fishermen of Bristol Bay, an industry that generates $1.5 billion each year and tens of thousands of jobs.

In the wreckage of what once was The Pebble Partnership, Northern Dynasty is a lonely voice of desperation, searching for some miracle that will vindicate its shareholders' mindless pursuit of personal profit at the expense of everyone else - and, most particularly, at the expense of the people and communities of Bristol Bay. It was, is, and always will be a completely unacceptable project, unjustified by the science, inconsistent with the law, and at odds with common sense.

But don't look for The Pebble Partnership to walk away any time soon. Its CEO and its lawyers have been promised multi-million dollar bonuses if they can turn this around, and the threat under NAFTA delivered to the State Department in January is the latest salvo in their lucrative legal assault on EPA - an assault that may now be expanded to include a claim against the taxpayers of the United States.

The Pebble Mine should be terminated - once and for all. And when that day comes, when the only thing left of The Pebble Partnership is a mountain of legal bills, don't be surprised if the company's last gasp is an attempt to pass them on to U.S. taxpayers.

Take action now to stop the Pebble Mine.