The U.S. Environmental Protection Agency (EPA) announced that it would not pay $1.2 million in claims for economic losses stemming from the wastewater spill at the Gold King Mine in Colorado in 2015.
The agency cited laws that grant federal agencies immunity agencies if something goes awry from "discretionary" action taken by its employees.
"Therefore, the circumstances surrounding the Gold King Mine incident unfortunately do not meet the conditions necessary to pay claims," the statement said.
Reuters reported that the EPA said in a statement that it was "not legally able to pay" damage claims over the discharge from the century-old Gold King Mine, located near the town of Silverton in southwestern Colorado.
Farmers, ranchers and river-running raft companies, among others, filed the claims seeking compensation for lost business or wages from the spill.
In August 2015, an EPA contractor hired to slow seepage of pollutants from the mine breached a tunnel wall, unleashing a torrent of wastewater that had built up behind the mountainside.
The discharge sent some 3 million gallons of waste water containing 900,000 lbs of heavy metals, including arsenic, cadmium, lead and mercury, cascading into a creek that feeds the Animas River.
The plume of contamination then poured downstream into the San Juan River in New Mexico and across Native American lands before reaching Lake Powell in Utah days later.
The EPA decision, which the agency said can be appealed to the federal court system within six months, drew angry responses from elected officials in the affected states.
"We are outraged at this last-ditch move by the federal government's lawyers to go back on the EPA's promise to the people of the state of New Mexico - and especially the Navajo Nation - that it would fully address this environmental disaster," three Democrats from New Mexico's congressional delegation - Senators Tom Udall and Martin Heinrich and Representative Ben Ray Luján - said in a joint statement.
Colorado's two U.S. senators, Democrat Michael Bennet and Republican Cory Gardner, vowed to introduce legislation to ensure EPA will pay any legitimate claims.
"It is extremely disappointing that the EPA has categorically rejected every single claim filed under the Federal Tort Claims Act," Bennet said.
In October 2016, the EPA's Office of Inspector General and federal prosecutors in Denver said there would not be any criminal charges filed against an agency employee over the spill.