Final Settlement in Gold King Mine Blowout Lawsuit Announced

Kelley Drye & Warren LLP congratulates the State of New Mexico, which announced its final settlement on December 29, 2022, of claims related to the Gold King Mine Blowout, putting to rest nearly seven years of protracted litigation. In the final settlement agreement, Environmental Restoration, LLC and Weston Solutions, Inc. agreed to pay the State of New Mexico $5 million, bringing the total monetary recoveries for the State of New Mexico to almost $50 million, on top of over $200 million that has been committed through the federal Superfund program to the remediation of the Bonita Peak Mining District (BPMD) and the improvement of regional water quality in New Mexico.

On August 5, 2015, the United States Environmental Protection Agency caused a blowout at the Gold King Mine near Silverton, Colorado. The blowout released more than three million gallons of acid mine drainage bearing over 800,000 pounds of heavy metals into the Animas River in Colorado, which flowed downstream and into the Animas and San Juan Rivers in northwest New Mexico. The indelible images of the orange-yellow river were worldwide news. The tragic event also called attention to a century of mining waste and abandoned mines in the BPMD in Colorado that were not being adequately addressed and were impacting New Mexico’s waters.

Kelley Drye attorneys Bill Jackson and John Gilmour were retained by the New Mexico Environment Department in the days following the Blowout and, together with Andrew Homer and Lana Rowenko of Kelley Drye, and co-counsel at Robles Real & Anaya, they have been representing New Mexico in its response to the environmental and economic consequences of the Blowout over the last seven years. On behalf of New Mexico, Kelley Drye brought a series of actions against the United States, its contractors, and several nearby mine owners – together with an original action against the State of Colorado in the United States Supreme Court – for causing the Gold King Blowout and for the inadequate reclamation and water treatment of the mines that set the stage for the tragedy. In addition to the recovery of New Mexico’s costs and damages, these actions were designed to require that the BPMD be listed on the federal Superfund National Priorities List (NPL).

Through seven years, Kelley Drye’s strategy and actions have achieved:

  • The listing of the BPMD as a federal Superfund Site and the commitment of over $200 million in reclamation and treatment of acid mine drainage and heavy metals emanating from the mining district, resulting in a significant improvement of water quality in the Animas and San Juan Rivers in New Mexico, the Navajo Nation and Utah;
  • The recovery of over $20 million in remediation, response and enforcement costs expended by the State of New Mexico as a consequence of the Gold King Mine Blowout;
  • The recovery of almost $20 million in economic damages and tax losses suffered by the State of New Mexico as a result of the stigma and associated impacts of the Gold King on New Mexico tourism and regional agricultural communities; and
  • The recovery of over $12 million in natural resource damages that are being applied directly to the region affected by the Gold King Mine Blowout, including for soil health, agricultural irrigation, and other projects designed to benefit farmers in New Mexico.

Through these matters, we were able to make a direct and substantial impact on the water quality, environment, lives and livelihoods of New Mexicans living in San Juan County,” said Bill Jackson. We were also fortunate to work side-by-side with an amazing group of public servants at the New Mexico Environment Department, the Office of Natural Resource Trustee, and the Attorney General’s Office, who are all striving to protect human health and the environment of New Mexico. None of this would have happened without that amazing team.”
We are very proud of the results we achieved for the people and State of New Mexico, and Kelley Drye is honored to have been selected for the role” said John Gilmour.

Kelley Drye served as lead counsel in New Mexico’s lawsuit against the United States, its contractors Environmental Restoration, LLC and Weston Solutions, Inc., and mining defendants Sunnyside Gold Corporation, Kinross Gold Corp., and Kinross Gold USA, Inc. The suit was filed in the United States District Court of New Mexico. The State filed its lawsuit in May 2016, seeking remediation, response costs, long term water quality monitoring, and economic damages arising from the stigma impacting agricultural and tourism industries in northwest New Mexico.

Kelley Drye also brought an original action in the United States Supreme Court for New Mexico against the State of Colorado related to the releases from the BPMD and in an effort to highlight the need to list the BPMD as a Superfund Site on the National Priorities List.
New Mexico’s claims against Colorado and the United States ultimately resulted in the listing of the Bonita Peak Mining District as a Superfund site on the NPL,” said Jackson. This, and the United States’ dedication of hundreds of millions of dollars of remediation and water treatment in the region, will serve to protect New Mexico’s waters and people from heavy metals and other hazardous substances resulting from historical mining activity near Bonita Peak.”

From 2015 through 2022, New Mexico and Kelley Drye attorneys vigorously pursued the case against all the defendants. The State, through Kelley Drye, defended against multiple rounds of motions to dismiss, engaged in extensive fact and expert discovery, took over 50 depositions, and successfully defended against multiple early dispositive motions related to immunity defenses—in particular, the United States’ assertion of application of the discretionary function exception to the waiver of sovereign immunity under the Federal Tort Claims Act and the Contractor Defendants’ assertion of application of the government contractor defense. After discovery, Kelley Drye attorneys briefed additional dispositive motions and Daubert motions.

Prior to this final settlement with the Contractor Defendants, Kelley Drye had successfully negotiated two additional settlements on behalf of New Mexico. In January 2021, New Mexico announced an $11 million settlement with the Mining Defendants, of which $1 million was dedicated to natural resource damages. Then, in June 2022, New Mexico announced a historic $32 million settlement with the United States, which included cash payments of $18.1 million in response and enforcement costs and $10 million for restoration of injured natural resources. This final $5 million settlement with the Contractor Defendants—of which $2 million will be dedicated to natural resource damages—concludes the State’s hard fought and important litigation.

The funds obtained through these settlements are already being put to use in northwest New Mexico, the region affected by the Gold King Mine Release. In March 2022, ONRT announced the first four projects in or around San Juan County, New Mexico to be funded from Gold King settlements. Following the settlement with the United States and the allocation of an additional $10 million in funds available for natural resource projects, the Office again solicited project proposals. The Office received over $28 million worth of project proposals as of October 2022, and are currently preparing a draft restoration plan in response. From the remaining settlement funds, the Office of the Attorney General is awarding an additional $4.3 million in grant funds to directly address harm from the Gold King Mine Release in northwest New Mexico.

For decades, the lawyers at Kelley Drye have been fortunate to represent public sector clients in historic and incredibly complex natural resource damages and environmental contamination cases of all kinds. In total, Kelley Drye’s public clients have recovered tens of billions of dollars in remediation costs, property damages, natural resource damages, and lost tax revenues in a variety of complex environmental matters, and we have created the nation’s preeminent environmental practice group for states, attorneys general, local governments, and other public entities. In doing so, we have been creative in our approach and tenacious in our efforts to obtain the best results for the public. To see more on Kelley Drye’s Public Sector representations click here.