MAC/20: Mines and Communities

No gold for Goldcorp, after California judgment

Published by MAC on 2009-06-16

Canada's Goldcorp/Glamis Gold has lost its three-year old fight to mine a Californian gold deposit from a site close to territory which is sacred to the Quechan nation.

The company had argued that it would be uneconomic to return mined-out land to a "safe, usable" condition, and that this violates its "rights" under the NAFTA (North American Free Trade Agreement). For previous coverage on MAC, see: http://www.minesandcommunities.org/article.php?a=7346

United States Government prevails in Glamis Gold arbitration under NAFTA

By Luke Eric Peterson

IAReporter

9th June 2009

In an award released last evening to the parties, the United States Government has prevailed in an arbitration under Chapter 11 of the North American Free Trade Agreement (NAFTA).

The award itself remains unpublished for the time being, as the parties will need to agree on redaction of certain confidential information.

However, IAReporter can confirm that the claims by Glamis for breach of Articles 1105 (Minimum Standard) and 1110 (expropriation) of the NAFTA have been rejected.

The US has an unblemished record in NAFTA Chapter 11 proceedings, having earlier prevailed in the Mondev, ADF, Loewen and Methanex cases.

Background on Glamis claim

Glamis turned to arbitration in December of 2003, alleging that it been subjected to treatment contrary to the NAFTA's Chapter 11.

The company cited several obstacles that impeded a proposed gold mining venture located in Imperial County, in the Southern California desert, east of San Diego.

At the core of Glamis's claim were a pair of measures adopted by the State of California: a Senate Bill, and a set of regulations issued by the California State Mining and Geology Board (SMGB).

The regulations were introduced on public health and safety grounds, and provided for mined lands to be returned to a safe, usable condition - including through the complete backfilling of open-pit metallic mines.

The Senate Bill (SB 22) also provided for the backfilling of open pit metals mines that are located near Native American sacred sites.

For its part, Glamis complained that the California measures rendered its Imperial Mine project economically valueless, thus amounting to an indirect expropriation under NAFTA Chapter11.

In addition, Glamis complained that it has been subjected to an additional indirect expropriation by virtue of a US Department of the Interior refusal to process the company's Imperial Project Plan of Operation

In its defence of the NAFTA claim, the US Government has insisted that the regulations and Senate Bill were designed to promote important public interests - including public safety, as well as the protection of Native American sites.

The tribunal hearing the NAFTA arbitration consists of Prof. David C. Caron of the University of California at Berkeley (the US nominee), Kenneth D. Hubbard Glamis's nominee), and Michael K. Young (chair of the tribunal).

Glamis's original appointee to the tribunal, Donald L. Morgan, resigned from in November 2005 following a challenge lodged by the US Government in relation to his being involved in litigation against the US Government.


Goldcorp Loses Bid for $50 Million in Compensation From U.S.

By Mark Drajem

Bloomberg

9th Junee 2009 -- Goldcorp Inc., Canada's largest gold mining company *[see editorial note] lost its bid for $50 million in compensation it sought because U.S. environmental restrictions limited its operations.

Glamis Gold Ltd., which was purchased by Vancouver-based Goldcorp in 2006, filed the case under the rules of the North American Free Trade Agreement, arguing that environmental regulations made it impossible to extract gold from a mine it owns the rights to in the California desert.

The tribunal unanimously rejected Glamis' claim and ordered The company to pay two-thirds of the arbitration costs, the State Department said in a statement.

Jeff Wilhoit, a Goldcorp spokesman, said the company is "disappointed that the government has chosen to turn its back on a job-creation engine."

Margrete Strand Rangnes, director of the Sierra Club's trade program, said the case demonstrated how companies try to use Nafta to overturn regulations meant to protect health or safety.

"The fact that Glamis' claim was even possible, that a foreign company could try to undermine U.S. environmental laws in the name of higher profits, shows why our trade agreements' foreign investor rules must be altered," she said.

U.S. Representative Kevin Brady, a Texas Republican, said in a statement that the "decision is further proof that critics are wrong. These provisions preserve the ability of the United States to regulate for the environmental interest."

Glamis acquired the rights to mine on 1,650 acres of land owned by the Bureau of Land Management in 1987, and had its bid to extract the gold first turned down by the Clinton administration in 2001 on the grounds that it was in the "spiritual pathway" of the Quechan Indian lands, and then reversed and approved by the Bush administration.

Mining Board

California's mining board then adopted emergency rules in 2002 that gold mines must be backfilled after the mining was complete.

The initial federal delay and then California's actions "individually and together have resulted in the expropriation of the investor's investment," Glamis said in its initial filing in 2003.

Still, Glamis hasn't lost the right to the land, and in the intervening time gold prices have nearly tripled, according to Public Citizen,a public advocacy group.

"The tribe is never going to allow a mine to be permitted," said Courtney Coyle, an attorney for the Quechan nation.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

* MAC editorial note: In fact Barrick Gold, headquartered in Canada, is the world's largest gold mining comp;any

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