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U.S. Counter-Memorial IN THE ARBITRATION UNDER CHAPTER ELEVEN OF THE NORTH AMERICAN FREE TRADE AGREEMENT AND THE UNCITRAL ARBITRATION RULES BETWEEN GLAMIS GOLD, LTD., Claimant/Investor, -and- UNITED STATES OF AMERICA, Respondent/Party. COUNTER-MEMORIAL OF RESPONDENT UNITED STATES OF AMERICA CONFIDENTIAL INFORMATION REDACTED Mark A. Clodfelter Assistant Legal Adviser Andrea J. Menaker Chief NAFTA Arbitration Division Keith J. Benes Mark E. Feldman Mark S. McNeill Jennifer Thornton Heather Van Slooten Attorney-Advisers Office of International Claims and Investment Disputes UNITED STATES DEPARTMENT OF STATE Washington, D.C. 20520 September 19, 2006 TABLE OF CONTENTS PRELIMINARY STATEMENT .........................................................................................................1 FACTS .........................................................................................................................................7 I. Mining On Federal Lands Is Heavily Regulated By Both Federal And State Law.......7 A. Congress Amended The Mining Law In 1976 To Strengthen Protections Of Environmental, Cultural And Archaeological Values ................................................8 B. The California Desert Conservation Area Was Created In Part To Protect Sensitive Cultural Resources In the California Desert .............................................11 1. The CDCA Plan Was Based On The Principle Of “Multiple Use” Of Public Lands...................................................................................................................12 2. The Full Extent Of The Cultural Resources Within The CDCA Is Not Known.................................................................................................................14 C. BLM’s 3809 Regulations Implemented FLPMA’s Unnecessary Or Undue Degradation Standard................................................................................................17 D. Glamis Must Comply With State Reclamation Laws Applicable To Mining On Federal Lands Within California ..............................................................................19 1. The California Environmental Quality Act Imposes Stringent Requirements On Mining Operators ..........................................................................................20 2. The California Surface Mining and Reclamation Act Mandated That Mined Lands Be Restored To A Usable Condition........................................................22 II. An Extensive Array of Domestic Legislation And International Instruments Protect Native American Cultural Resources ..............................................................24 A. Congress Has Increasingly Legislated In The Interest Of Historic And Cultural Preservation...............................................................................................................24 B. Both Congress And The California Legislature Have Enacted Legislation Specifically Designed To Ensure The Preservation Of Native American Culture...30 C. Various International Instruments Recognize The Importance Of Adequately Preserving Historic And Cultural Properties ............................................................33 III. Glamis’s Proposed Open-Pit Cyanide Heap leach Gold Mine: The Imperial Project ..........................................................................................................................35 A. Unbackfilled Open-Pit Metallic Mines, Such As Glamis’s Proposed Imperial Project, Leave Enormous Open Pits And Mounds Of Waste Materials On Mined Lands That Threaten The Environment And Public Health And Safety ..................37 B. Glamis Proposed To Locate The Imperial Project On A Major Prehistoric Travel Corridor That Is Central To The Spirituality And Cultural Continuity Of The Quechan .............................................................................................................41 IV. Federal Processing Of Glamis’s Plan Of Operations...................................................48 2 A. Several Archaeological Surveys Of The Proposed Imperial Project Site Identified Numerous, Significant Native American Cultural Resources..................50 1. The Cultural And Archaeological Significance Of The Proposed Mine Site Was Documented Before Glamis Acquired Its Interest In The Imperial Project Mining Claims ........................................................................................51 2. The First Block Survey Of The Proposed Imperial Project Revealed That The Area Was Associated With Quechan Religious and Cultural Traditions....58 3. The Archaeological Surveys Conducted In Association With The 1996 EIS/EIR Confirmed That A Major Prehistoric Trail Network Intersected The Proposed Imperial Project Mine And Process Area ...........................................59 4. Concerns About The Adequacy Of The 1996 Archaeological Survey And Cultural Resource Inventory Led BLM To Require A Resurvey Of The Proposed Project Mine And Process Area..........................................................62 5. The Archaeological Surveys Conducted In Association With The 1997 DEIS/EIR Confirmed That The Proposed Imperial Mine Would Adversely Impact An Area That Was Spiritually And Culturally Significant To The Quechan ..............................................................................................................63 6. No Other CDCA Mine Had As Significant An Impact On Native American Cultural And Spiritual Resources As Did The Proposed Imperial Project.........71 B. EIS Process...............................................................................................................74 C. ACHP Comments......................................................................................................78 D. The DOI Solicitor’s 1999 M-Opinion.......................................................................81 E. Final Environmental Impact Statement ....................................................................84 F. The Issuance And Rescission Of The Record Of Decision For The Imperial Project .......................................................................................................................85 G. Validity Examination................................................................................................87 H. Glamis’s Request To Cease Processing Its Plan Operations And Submission Of Its Claim To Arbitration............................................................................................90 V. The California Measures..............................................................................................92 A. Senate Bill 22............................................................................................................92 B. State Mining & Geology Board Regulations............................................................96 ARGUMENT .............................................................................................................................104 I. Glamis’s Claims With Respect To Many Of The Federal Measures Are Time- Barred Under NAFTA Article 1117(2)......................................................................104 II. Glamis’s Expropriation Claim Is Without Merit .......................................................107 A. Glamis’s Expropriation Claim Challenging The California Measures Is Not Ripe.........................................................................................................................108 3 B. The California Measures Did Not Interfere With Any Property Right Held By Glamis And, Thus, Are Not Expropriatory 119 1. The Property Interest At Issue: Glamis's Unpatented Mining Claims 120 2. Laws And Regulations That Merely Specify Pre-Existing Limitations On Property Rights Are Not Expropriatory 127 a. SB 22 Is A Generally-Applicable Legislative Measure To Implement Pre- Existing Principles of Religious Accommodation Enshrined In The United States And California Constitutions, And Is Therefore Not Expropriatory 137 b. Senate Bill 22 Specifies Pre-Existing Statutory Obligations to Protect Native American Sacred Sites and Thus Is Not Expropriatory 144 c. The Amendments To The SMGB Regulations Specify Pre-Existing Environmental And Health and Safety Requirements Under California Law And Thus Are Not Expropriatory 148 III. Even If Glamis Did Have A Property Interest In A Particular Reclamation Plan, Glamis's Investment Was Not Indirectly Expropriated By SB 22 Or The SMGB's Amended Regulations 159 A. The Reclamation Requirements Do Not Deprive Glamis Of All Economic Use Of Its Investment 160 1. Glamis's Internal Valuations Demonstrate That The Imperial Project 165 2. Behre Dolbear's Valuation Of The Imperial Project Mining Claims Before The Reclamation Requirements. Is Seriously Flawed 167 3. Behre Dolbear's Valuation Of The Mining Claims Taking Into Account The Reclamation Requirements Is Also Seriously Flawed 171 B. Glamis Could Have Had No Reasonable Expectation That It Could Conduct Mining Operations Free From California's Reclamation Requirements 180 1. Glamis Received No Specific Assurances That The Legislative And Regulatory Environments In California Would Not Change 181 2. A Reasonable Investor Should Have Known That The Imperial Project Area Contained Significant Prehistoric Resources Protected By Long-Existing Laws 189 3. Because Mining Is A Highly Regulated Industry, A Reasonable Investor Would Have Anticipated The Possibility Of Regulatory Changes 190 C. The Regulatory Nature of the Challenged California Measures Supports
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