Swatting the Gnats
The Federal Environmental Protection Agency—EPA, for short.
In other countries, it would be the equivalent of a ministry of the environment, but the American version was in a different league altogether in both power and stature.
Created by President Nixon in 1970, the agency oversaw nearly every regulation related to air, water, and soil pollution, and it possessed the extraordinary authority to pursue criminal charges and civil suits at the same time for violations of federal law.
For anyone in mining or construction, the EPA was a creature of terror.
If you didn’t have a proper Environmental Impact Statement, even a project worth tens of millions of dollars could be frozen overnight.
An Environmental Impact Statement was a document that analyzed in advance how a large-scale development project would affect the surrounding environment and laid out countermeasures.
It had to examine every environmental factor—air pollution, water contamination, soil pollution, noise, the destruction of wildlife habitat, and more—and just preparing one could take anywhere from a year to more than five.
If you put a shovel in the ground without that paperwork, a stop-work order was only the beginning. Equipment seizure, fines, and in serious cases even criminal penalties could follow.
...I made this long detour because of these bastards.
Even if there was an oil field in my own backyard, I couldn’t develop it however I pleased with these dogs snapping at my heels.
And now, at last, they had come storming onto my site.
I gave Vito and Soren a brief glance.
Both of them, each clutching a thick stack of binders to their chests, gave me a nod.
The middle-aged man who seemed to hold the highest rank among them looked at me.
“Are you the owner, sir? Lee Energy?”
He drew a thick bundle of documents from his coat and handed them to me.
I accepted the papers without a word.
“Excuse me, but this site is adjacent to a protected environmental zone.”
“What is your affiliation and position?”
“Tom Kemper. Field Investigation Team Leader, Environmental Enforcement and Monitoring Division, EPA Region 1 Boston Field Office.”
The EPA had its headquarters in Washington, D.C., and was organized into ten regional offices across the country.
Tom Kemper slicked his oily hair back and continued.
“Have you submitted an Environmental Impact Statement? What about your water pollution prevention measures? And the fugitive dust report?”
“...”
“Ah, I see. Nothing has been prepared. This is a clear violation of federal environmental law. Stop work immediately, and if you fail to comply, we’ll begin prosecution proceedings.”
With a loose wave of his hand, he indicated the equipment behind my shoulder.
“I recommend making a wise decision before this escalates to equipment seizure.”
The other officials standing behind him folded their arms and chimed in.
“Team Leader, shall we get the paperwork ready?”
“Yes, let’s proceed by the book. Start with the seizure inventory.”
“Looks like we’re going to be busy. This is a huge operation. What were they thinking, expanding so recklessly?”
One of them pulled a wad of red stickers from his pocket, and the laborers who had stopped work watched me with anxious eyes.
But—
...Not surprising.
I simply shrugged.
The EPA showing up here was, in a sense, inevitable.
The rumor that a gold vein had been discovered had probably already spread throughout the entire Eastern mining industry, and once a site drew that kind of attention, the regulators naturally came sniffing around.
And what target was easier for them than a new company?
Big corporations fought back with legal departments and lobbyists, but a small firm just starting out usually didn’t have that kind of firepower.
There were countless cases of operators being caught because they didn’t fully understand the regulations and ran afoul of them.
For the purposes of padding their enforcement statistics—or shaking down a bribe—there was no better meal ticket.
But I’m different.
I raised a hand and signaled Vito.
“Counselor, if you would explain it to them.”
Vito stepped forward.
“Good day. I am Vito Hamilton, legal representative for Lee Energy.”
With a white cotton glove on his hand, Vito produced a yellowed document envelope.
He held it right up under the team leader’s nose and smiled politely.
“I am familiar with the environmental statutes you mentioned. You mean the Clean Air Act of 1970 and the Clean Water Act of 1972, yes?”
“What? Ah, yes, of course. Knowing that, you still proceeded this way?” Tom Kemper shot back with forced ease, but Vito paid him no mind and continued.
“Would you mind rearranging the order of procedure a little?”
“What?”
“Before you issue a stop-work order, please examine the validity of this document first. If it is valid, then Team Leader, you would currently be acting beyond your authority.”
“...And what exactly does that mean?”
Tom Kemper asked again.
Instead of answering, Vito opened the document and pointed to the date and official seal at the bottom.
“Take a look. This is an unrestricted mining and development permit approved in 1923 by the Massachusetts Mining Commission and the federal government.”
The official’s eyes followed the tip of Vito’s finger.
On the page, the numbers 1923 stood out clearly, along with the signature of the governor at the time and a crimson seal that carried the weight of decades.
“The United States Constitution and its laws expressly recognize the Grandfather Clause. Even if a new regulation is enacted, rights lawfully acquired before that point cannot be retroactively infringed.”
“...In 1923?”
“Yes. The mining rights to this site were established half a century before the regulations you’re brandishing were even born. In other words, modern environmental impact procedures and resident-consent requirements do not apply here. Only the 1923 permit conditions do.”
“That’s a matter of interpretation. It’s something a court would have to decide.”
Tom Kemper answered calmly, but the confidence in his voice had vanished.
“Of course you may take it to court.”
Vito drew a business card from his breast pocket and politely tucked it into Tom Kemper’s shirt pocket.
“But your chances of winning are 0 percent. There’s plenty of case law. The 1978 Duke Power v. Carolina Environmental Research Group decision, the 1985 New Mexico Mining Association v. EPA ruling... would you like me to continue?”
“Was a formal lawsuit actually filed? You never know until you try, do you?”
“Indeed. But by the time you find out after trying, it’s already too late.”
I followed up on Vito’s words.
“We have already filed an action in the Springfield Division of the Massachusetts Federal District Court seeking confirmation of our Grandfather Clause rights. The first ruling is due at the end of the month, and the Temporary Restraining Order has already been granted in our favor.”
Temporary Restraining Order, or TRO.
An emergency temporary order from the court, more urgent than a preliminary injunction.
A preliminary injunction required both sides to appear in court and go through a hearing before it could be issued, but a TRO could be granted without notice to the other side if the claim that “immediate and irreparable harm is imminent” was accepted.
Its duration was fourteen days.
Within those fourteen days, a hearing on the preliminary injunction would be held, and the real courtroom battle would begin.
Put simply, it was the court’s emergency brake: Stop for now, and we’ll argue about it later.
Even a federal agency was not exempt.
I showed the officials a copy of the court order.
///////
Interim Restraining Order
Case No.: 6:91-CV-03021
Plaintiff: Lee Energy, Inc.
Defendant: United States Environmental Protection Agency
.
.
Upon review of the plaintiff Lee Energy’s emergency petition, this court finds as follows:
The 1923 mining permit issued by the Massachusetts Mining Commission and submitted by the plaintiff has been confirmed as authentic, and it is highly probable that it falls within the scope of the Grandfather Clause. It is established precedent that rights acquired prior to the implementation of the National Environmental Policy Act of 1970 and the Clean Water Act of 1972 are protected from retroactive application... Should the plaintiff’s operations be forcibly suspended, the court acknowledges that irreparable financial harm is likely to occur in the form of losses from breach of contract, employee attrition, and depreciation from idle equipment... Although the defendant EPA would suffer the disadvantage of delayed regulatory enforcement as a result of this order, such harm can be adequately remedied after judgment on the merits. By contrast, the harm to the plaintiff is directly tied to the survival of the business itself, and thus the balance of equities weighs in the plaintiff’s favor... The protection of property rights lawfully acquired is a fundamental value guaranteed by the Constitution, and temporarily restraining administrative action that infringes upon those rights is consistent with the public interest... Therefore, this court orders as follows...
I read aloud the most important portion of the interim restraining order myself.
“For fourteen days from the date of this order, the defendant United States Environmental Protection Agency and its subordinate agencies are prohibited from taking any regulatory enforcement action, issuing any stop-work order, seizing any equipment, or imposing any administrative penalties against the plaintiff Lee Energy’s site. January 15, 1992, Judge Harold W. McGregor, Springfield Division, Massachusetts Federal District Court.”
“...”
Tom Kemper’s face went pale.
He smiled faintly at him.
“We will file for a preliminary injunction before the period specified in the temporary restraining order expires, and as you well know, the preliminary injunction proceedings are separate from the merits trial. If you look at the TRO, you can see our odds of winning the injunction are... quite high. And if we win the injunction, our odds of prevailing on the merits are very high as well.”
“...”
“The moment we win, today’s visit becomes evidence of abuse of authority and obstruction of business. The fact that a federal official tried to ignore a valid vested right and issue a stop-work order against a lawful business site is excellent grounds for a civil damages claim.”
“...”
“Do you understand now why I asked for your affiliation and position from the very beginning? If I’m going to sue for business interference, I need to know who I’m suing. The price for stopping this site will be heavy. I doubt it’s a burden an ordinary civil servant can bear...”
I asked Tom Kemper clearly, one word at a time.
“What do you think about that, Mr. Tom Kemper, Field Investigation Team Leader, Environmental Enforcement and Monitoring Division, EPA Region 1 Boston Field Office?”
“...”
Tom Kemper began to stammer.
Then, all at once, his attitude changed one hundred and eighty degrees.
“There seems to have been a misunderstanding, boss.”
He tucked the red sticker bundle back into his coat and clasped his hands in front of him, now far more respectful.
“You were exercising rights that are both lawful and historically protected. Had we taken the wrong step, we would have committed a serious offense against you. I imagine one of my subordinates reported this without understanding the situation. I don’t know how to apologize for this rudeness...”
Perhaps because he had realized his bluster was useless, the officials’ attitude softened dramatically.
“We sincerely hope we haven’t caused you too much displeasure, sir.”
“Not at all. It’s nothing. Humans make mistakes. The important thing is how those mistakes are resolved, wouldn’t you agree?”
I glanced behind me.
Then Armstrong stepped forward.
Having spent thirty years in the mining business, he knew exactly how to smooth things over with government people.
I handed him the corporate card.
“There seems to have been a bit of a misunderstanding, but the people from the EPA are, by and large, excellent folks. We stumbled a little at the start, but now that we’ve had the chance to greet one another, we can’t just send them off without more, can we?”
“No, sir. I’ll make sure they’re properly looked after.”
“I’m too busy to attend, but I’ll be there in spirit. Take good care of them, Team Leader.”
I winked, and Armstrong winked back.
Tom Kemper cleared his throat.
“Ahem, ahem. No need for all this. We were the ones who misunderstood the situation, and now you’re the one apologizing to us. That’s entirely improper.”
“Oh, come now—why do professionals have to make things so stiff? We all know how it is. In the field, there are days like this and days like that. Instead of making everything rigid with lawyers and judges and all that, why don’t we just go over to the bar over there and talk comfortably? Come on now—”
Armstrong led Tom Kemper and the other officials to a newly opened pub nearby.
They would probably drink a few cold beers, chatter about nothing until sunset, and then at night go off to be entertained properly—adult to adult, as it were.
I had no desire to meddle in every petty detail, so I merely handed over the corporate card and let them be.
Later, if they sic reporters on me or try to pressure us by manipulating civic groups, it’ll become annoying. Better to soothe them a little for now.
If we dragged this all the way to federal court with the TRO, the preliminary injunction, and then the merits trial, nothing would happen for at least ten years.
And in ten years, I can do anything.
I might even be able to mine out every last grain of the gold sleeping beneath Wishville.
At length, after Armstrong led the officials away, cheers erupted among the workers.
“Woooah!”
“Did you see that? Those government guys couldn’t say a damn thing!”
“That lawyer’s something else! Best show I’ve ever seen!”
“That was so satisfying! They won’t dare show their faces here again!”
The site came back to life.
Bulldozers roared as their engines warmed, and the crane lifted an H-beam into the air.
Work resumed as though nothing had happened.
***
Several more days passed like that.
Bubble, bubble, bubble, bubble, bubble, bubble, bubble, bubble, bubble, bubble...
At the center of the refinery, metals separated from the ore were boiling in liquid form inside an electric furnace.
Molten metal.
That was what you called liquid metal after it had been melted down.
The furnace was a cylindrical steel structure about waist-high, roughly a meter across.
In the middle of its body, lined with thick refractory bricks, sat a blackened graphite crucible, and inside it the metal boiled furiously like stew.
With the resistance heat from the electricity, the internal temperature climbed past 1,100 degrees Celsius.
Gold’s melting point was 1,064 degrees, so this was slightly above that.
Within three meters of the furnace, the heat was so intense it was difficult even to breathe.
Every worker wore a silver-coated thermal suit, yet sweat still streamed down them as if it were raining.
The color of the molten gold was not simply yellow.
The edges glowed orange like the sun, while the center shone with such a blinding yellow-white that it made my eyes hurt, as if a tiny sun were trapped inside the crucible, thrashing about.
Black foam floated on the surface. That was slag, a mass of impurities.
Silicates, iron oxide, copper oxide, and other unwanted materials mixed into the ore had melted under the heat and risen to the top.
One worker approached carrying a two-meter steel rod.
At the end of the rod was a flat iron plate shaped like a ladle.
The moment he dipped the rod into the surface of the molten metal—
Chiiisssh!
A terrifying hiss burst out, and white smoke billowed upward.
The worker slowly moved the rod, pushing the slag aside.
Ripples formed across the surface of the molten metal.
It wasn’t light and sloshing like water.
It moved with a heavy, sluggish viscosity, like stirring boiling syrup.
The displaced slag piled up around the rim of the crucible, and beneath it the real gold emerged.
A yellow liquid with a faint reddish glow.
The reflected lights on its surface shimmered and stabbed at my eyes.
Armstrong, wearing thick thermal gloves and safety goggles, picked up a massive pair of tongs.
“It’s coming out! Here’s the first one!”
With a blast of hot steam, the graphite mold opened its mouth, and as two workers synchronized their movements to tilt the crucible, the red-tinged golden liquid poured slowly into the rectangular form.
Chiiisssh!
The honey-thick liquid gold filled the corners of the mold without leaving a single gap.
What began as a dazzling white-gold color slowly shifted to orange, then to a clear yellow.
One worker used long tongs to lift the mold and plunge it into the cooling tank prepared at the side.
Shhhhhh—PFFFT!
The instant the hot metal met the water, white steam exploded skyward as if detonating.
The water boiled furiously.
A few seconds later, once the steam subsided, the worker used the tongs to fish out the gold bar.
In the place where the red glow had vanished entirely, a heavy gold bar emerged.
Armstrong brought a portable composition analyzer to the surface of the newly solidified bar.
Beep—
Green numbers flickered rapidly across the analyzer screen.
Armstrong shouted.
“Purity 99.99%! Four Nine! Four nines! It’s perfect bullion, Boss!”
Four Nine.
Nine repeated four times: 99.99 percent.
The standard for bullion traded in the international gold market.
Armstrong waited until the bar had cooled enough, then lifted it with the tongs and handed it to me.
“Please take it, Boss. This is Wishville’s first gold bar.”
I took the gold bar in both hands.
Thud!
Even through my thick leather gloves, its heavy weight came through clearly.
The heat still left in it warmed my palms softly.
I lifted the bar to eye level.
Glint—
Yellow with a faint red tint.
This little block alone weighed about 400 troy ounces.
At today’s gold price of $352.50 per ounce, this brick was worth roughly $140,000.
If I don’t sell it and instead put it in a bank safe-deposit box and borrow against it as collateral...
One gold bar was worth about $140,000.
As of 1992, American banks would lend up to 75 or 80 percent of market value against gold.
That meant I could pull out about $100,000 in cash against each bar.
At an interest rate in the four-percent range, lower than the prime rate.
If I sold the gold, that was the end of it. But if I pledged it as collateral, I could reclaim it whenever I wanted.
And when I did reclaim it, I would sell it later—when gold prices had climbed to the top—securing the maximum possible profit.
Perfect.
The banks would happily open their vaults for hard gold collateral like this.
I gave instructions to Armstrong and the others.
“Keep the furnace hot. We’re running at full capacity, twenty-four hours a day, from now on.”
“Yes, sir!”
Armstrong answered with a crisp salute.
The workers all sprang into motion at once.
A new crucible was placed atop the electric furnace, and crushed ore poured in by the load.
The furnace that would become Wishville’s new heart began to beat.