(CN) — After capitalizing on a two-day lapse in a federal mining ban at Montana’s beleaguered Zortman-Landusky mines in 2020, a small mining company appears to have been developing its claims without the authorization of the state environmental agency.

In early July, the Montana Department of Environmental Quality drafted an administrative order that would require two individuals and their mining companies to reverse the damage they’ve caused to the site of the former Zortman gold mines. They’d also be required to pay more than a half-million dollars in penalties for violating the Montana Metal Mine Reclamation Act by operating without permits and for refusing to post bond money for reclamation.

However, at this point, the administrative order is only a draft document, said Montana DEQ spokeswoman Moira Davin. But Davin said it’s being used as a stick to encourage Luke Ployhar of Bozeman and Owen Voigt of Helena to stop their digging, which is destroying some of the reclamation work that’s been completed since the mine was listed as a federal Superfund site in 2004.

“The negotiations are ongoing. DEQ reserves the right to issue the order if discussions aren’t successful,” Davins said.

The Assiniboine and Gros Ventres tribes of the Fort Belknap Reservation are following the proceedings closely, as are three environmental groups: Earthworks, the Montana Environmental Information Center and Montana Trout Unlimited. They reacted Wednesday upon learning of the draft administrative order.

“The devastation at Zortman-Landusky from previous mining activity is unforgivable. The Little Rockies and the Zortman-Landusky area should be off limits to any more mining,” said Derf Johnson, Montana Environmental Information Center attorney. “It’s jaw dropping that someone would risk even further environmental devastation, and so we’re heartened to see DEQ crack down on risky mining activity.”

When it comes to examples of mining’s devastating environmental damage in Montana, the Zortman-Landusky gold and silver mines, located in the Little Rocky Mountains just south of the Fort Belknap Reservation, are probably second only to the extensive copper mines of Butte. Pegasus Gold Corporation used the caustic process of cyanide heap leach mining to extract gold from the Zortman Mine from 1979 until it declared bankruptcy in 1998. After that, the cost of cleanup and reclamation fell to the taxpayers as the state of Montana and the U.S. Bureau of Land Management assumed responsibility.

As Pegasus Gold pulled out, Ployhar bought some land on the Zortman mine site in 2001, which later became part of the Superfund site. According to the draft administrative order, Ployhar’s purchase agreement required Ployhar to allow DEQ access to the property for reclamation activities and that the water on the property be treated forever.

The Zortman mine was one of the first large cyanide heap leach operations in the nation to open, and it experienced many problems, including cyanide spills and surface and groundwater contamination. The mine contains high amounts of sulfide rock, which produces sulfuric acid when exposed to water, either in the form of groundwater or precipitation.

After suffering years of contamination, locals finally sued Pegasus Gold under the Clean Water Act and came away with a $36 million settlement in 1996. However, that doesn’t go far when water has to be treated in perpetuity. The water sources for Fort Belknap are still threatened by acid mine drainage, but currently the tribes’ funding for water treatment lasts only until 2028.

“The Aaniiih and Nakoda Tribes thank the DEQ for upholding the law and issuing a penalty that is commensurate with the egregious violation committed. We will continue to protect our precious water and sacred sites in this area of the reservation,” said Jeffrey Stiffarm, Fort Belknap Indian Community president on Wednesday.

Montanans voted in 1998 to ban cyanide heap leach mining.

After the Zortman Mine was designated a Superfund site in 2004, the BLM built five water treatment plants and started mine reclamation activities, which to date have cost $80-$85 million, according to the administrative order.

After all that investment, Montana DEQ employees weren’t happy this March to see that unscheduled excavation had disturbed some of the reclamation work.

They had been looking through World Imagery aerial photos from Sept. 20 for evidence after Voigt informed them he’d been digging for samples in the treatment plant sludge at the Landusky silver mine, two miles away from the Zortman mine. Voigt’s company, Legacy Mining, had gathered the samples to validate his proposal to process the sludge for metals, but he hadn’t gotten permission to dig.

DEQ sent Ployhar and Voigt a letter saying any disruption of completed or ongoing reclamation work could risk liability under Superfund law. DEQ requested Ployhar send a written response acknowledging that he understood, but Ployhar never responded.

In addition to Voigt’s sludge excavation, DEQ discovered seven other illegal dig sites in the photos, all of which were located in three regions of Ployhar’s property where Ployhar and Voigt have been applying for exploration licenses since 2020. That’s when Ployhar and his company Blue Arc filed a mining claim with the BLM in a two-day window immediately after a 20-year mining moratorium at Zortman-Landusky expired but before the BLM could get another moratorium in place, according to the Daily Montanan.

Even though Ployhar owns the property, the BLM is involved because it oversees mineral rights and BLM land surrounds the two mine sites. So the agency banned mining within the mine sites starting in 2000 while it was cleaning up public land. The BLM has also placed mineral right moratoriums on 3,600 acres of public land surrounding the mine sites.

DEQ denied three successive exploration applications from Ployhar for various reasons. For the first proposal, Ployhar never posted the required reclamation bond. The second application proposed to reopen two underground tunnels, but Ployhar withdrew that eight months later. For the third application to dig a long deep trench, DEQ went through with an environmental assessment but several public comments said the proposal should be rejected because the area had cultural importance for the Fort Belknap tribes. A decision hadn’t been reached before DEQ discovered the illegal digging.

DEQ personnel visited the eight sites at the end of March to verify what they’d seen in the aerial images. They confirmed that the digging had damaged reclamation work, including areas where vegetation, soil and capping material had been removed, causing more of an acid threat to groundwater. They also discovered that the capped entrances to the two underground tunnels Ployhar had applied to develop had been altered.

“The operator’s disturbance of the adit, without review/approval from DEQ, was ill-advised as it potentially damaged the groundwater monitoring well, increased water leaving the adit and infiltrating into the groundwater and created significant safety concerns,” the draft administrative order said.

Ployhar said he was just “cleaning up the entry to add doors to secure for safety and access,” according to the administrative order.

Bonnie Gestring, Earthworks Northwest Program director, praised DEQ for being prepared to take enforcement action.

“It’s infuriating to see such blatant disregard for the decades of reclamation work to control acid drainage and improve water quality in the Little Rockies,” Gestring said.

Based on all the evidence it had found, DEQ sent letter to Ployhar and Voigt, accusing them of mining without a permit or bond. In the letter, DEQ offered the men an out by either reclaiming the disturbed areas or obtaining the necessary permits with the required bonds. The current negotiations likely include similar offers and requirements.

Two weeks later, Ployhar emailed DEQ, protesting that what DEQ thought was mining was really just preparations for campgrounds and cabins.

Ployhar most recently tried to appeal to Montana Gov. Greg Gianforte. Ployhar’s June 1 email said he’d moved to Montana in 2016 to develop the mineral and recreational reserves of his property. He went on to say DEQ’s requirements were unreasonable and that his mine could provide jobs. He inaccurately claimed that DEQ wouldn’t need to treat the water anymore if he could mine the ore because more of the sulfide rock would be removed.

In other situations, Gianforte has expressed unqualified support for mining companies. In July 2021, his administration dropped a DEQ lawsuit begun by the previous administration that would have labeled Hecla Mining Company CEO Phillips Baker Jr. as a “bad actor” for his role in the Pegasus Gold abandonment of the Zortman-Landusky mines. Baker was the top financial officer for Pegasus Gold during the bankruptcy. If Baker were found to be a bad actor under Montana law, his current company, Helca, wouldn’t be allowed to develop two mines proposed in western Montana.

Gianforte has criticized state and federal officials for how long it has taken to get the two mines permitted, according to the Montana Free Press.

However, the state of Montana isn’t the only one to make the call. The BLM also has to approve Ployhar’s claim.

“Filing a claim doesn’t mean developing a claim. There’d be an extraordinarily high bar here to meet — including bonding and environmental considerations,” said BLM spokesman Al Nash in December. “It would be an extraordinary financial hurdle to get us to a place where we might give serious consideration for exploration there.”