For media and legal inquiries, contact steveelder1@gmail.com.

Saturday, September 20, 2008
 9:50:52 AM

Nevada City, CA -- A Nevada City man faces financial ruin as the U.S. Department of Justice prepares to sue him and others to recover $20 million the feds spent to cover arsenic left from an old gold and silver mine he never operated.

The action raises concerns about the future of property all over California’s Mother Lode by holding liable a modern-day landowner for pollution created by a Gold Rush-era enterprise. “It has ruined my life,” said Steve Elder, 64, who had planned to retire on the land he fell in love with two decades ago.

As current owner of the old Lava Cap Mine on Banner Mountain, Elder is being held responsible for mining activity that stopped the year before he was born. A mine tailings dam on the land burst in 1997, spilling arsenic into a creek and an old tailings pond downstream. That disaster came almost 20 years after a state report warned the dam was weak. Elder never knew about the finding until after the dam broke, he said.

He already has spent hundreds of thousands of dollars fighting the EPA’s contention that he should pay the cleanup costs. Meanwhile, state and federal agencies could be left holding the bag for billions of dollars to clean up the toxic leavings of the Gold Rush: An estimated 47,000 abandoned mines litter California, according to a 2008 report by the Sierra Fund. The companies that extracted the ore decades ago often no longer exist.

This year, several multi-million-dollar clean-up projects at former mining sites have begun in Nevada County alone. Elder’s problems started on New Year’s Eve 1996, when heavy rains filled the holding area for the old mine tailings. The log dam burst, and more than 10,000 cubic yards of arsenic-laden tailings gushed into Little Clipper Creek. The creek empties into Lost Lake, an old tailings pond. Water quality in the creek was impaired. Newts died.

Elder believes federal and state agencies are at fault: They never enforced a 1979 abatement order from the state’s Regional Water Quality Control Board that required the former land owners to fix the dam. “They knew that dam was going to go down, and they did nothing about it,” Elder said. After the collapse of the dam, the U.S. Environmental Protection Agency designated the area a Superfund site and, along with the state Department of Toxic Substance Control, began cleaning up the arsenic soils. A 2-acre hole remains on Elder’s property where crews dug up forested land to cover the tailings.

Years of negotiations between EPA and Elder, including his agreement to pay for some clean-up, failed to reach a solution. On Aug. 12 this year, Elder received a letter from the Department of Justice notifying him the agency, at the request of the EPA and state Department of Toxic Substance Control, were prepared to bring a lawsuit against him and Sterling Centrecorp Inc. “Sterling was the mother company of the ones I bought from,” Elder said.

In addition, the DTSC on Sept. 12 sent Newmont Mining Corp. of Canada Limited, which operated many mines in Nevada County, a notice of a proposed consent decree in U.S. District Court. In that action, the agency is trying to recover $3 million in costs associated with cleaning up hazardous substances from the Lava Cap Mine Superfund Site. Supervisors from DTSC and the state water board could not be reached for comment on Friday. “We can’t comment on any pending enforcement actions,” said EPA spokesperson Wendy Chavez.

Various groups operated mines in the area from 1861 until 1943, according to reports from the DTSC. In the early years, miners sought silver. The mine was inactive from 1918 to 1934, when mining resumed under the Lava Cap Gold Mining Corp. At some point, the nearby Banner Mine and Lava Cap Mine were connected by a 5,000-foot horizontal underground passageway known as a drift. The Banner Mine was one of the largest gold mines operating in California at the time. Between 1934 and 1943, it produced 270,000 ounces of gold and 2.3 million ounces of silver.

Arsenic commonly occurs in gold-bearing deposits throughout the western United States. When digging mine shafts, gold miners would bring up to the surface waste rock containing heavy metals such as arsenic and lead. They dumped the waste, called tailings, into large piles.

Elder, originally a Southern California real estate developer, and a business partner bought 486 acres for $800,000 on scenic Banner Mountain just east of Nevada City in 1988. On part of it, they developed 29 luxury residential lots called Banner Mountain Woodlands, and they went their separate ways. Elder settled on 100 of the original acres. “I fell in love with the mine,” Elder said. “I was going to die on those 100 acres. That was my master plan.”

Elder never discovered any environmental concerns during the escrow process. He thought he might use the tailings in construction projects for fill and in concrete. “Really, back then, this wasn’t an issue. Mine waste wasn’t considered toxic,” Elder said.

After the spill from the burst dam, Larry Parkinson, a warden from the state Department of Fish and Game, told Elder of the cleanup and abatement order issued to then-owner Keystone Copper Corp. “Both the log dam used to create the mill waste fill and the outlet structure for the dam are badly decomposed,” the order reads. “The entire structure appears very unstable and with approaching fall rains, the situation can only get worse or possibly disastrous if heavy rains cause mass movement of the fill downstream.” The state water board ordered Keystone to build diversion ditches and containment basins to capture toxic sediment escaping from Lava Cap Mine’s fill basin. It also ordered the company to come up with a plan to fix the dam.

For reasons that remain unclear, the dam never was repaired. Later, when Elder learned of the order and investigated, water board officials found the part of the order concerning the dam had been rescinded.

In a June 9, 1997, letter to the state DTSC, water board officials could not justify why. “There was no mention of improvements to the dam,” the letter reads. “The file contains no indication that the required technical report was ever submitted or that anything was ever done to improve the structural integrity of the dam.” A memo sent between water board department heads that same year came to similar conclusions — adding anxiety about media coverage of the case. “There was a memo that said that the (order) was rescinded but that there was no record of when or why. The file doesn’t contain anything useful,” the memo says. “Everybody knew about the third portion of the abatement order except me. I don’t know why,” Elder said.

Since his troubles with the state and federal government began, Elder has seen the government place liens on three of his property’s parcels for a total of $12 million — preventing him from selling the land. The EPA bulldozed two houses Elder built on his property that had provided rental income, saying the buildings were dangerously close to the tailings pile. The agency paid the tenants a total of about $39,000 to move on short notice, he said. Elder still owes $100,000 on those mortgages, he added.

He has spent years trying to negotiate a deal with the EPA, he said. At one point, EPA lawyers offered to let him off the hook by his paying $180,000 and restricting his use of the land. “I went through hell,” Elder said.

Five months ago, Elder lost his attorney when he could no longer afford to pay; he owed him $10,000. Elder now lives on borrowed money.

Earlier this year, the EPA turned down his other offers of compromise. He did not respond to the Department of Justice’s August letter or meet with federal lawyers this month to resolve the matter before it goes to litigation. “I’m to the point now, I just don’t care anymore,” Elder said.

To contact Staff Writer Laura Brown, e-mail lbrown@theunion.com or call 477-4231. To contact City Editor Trina Kleist, e-mail tkleist@theunion.com or call 477-4230.