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Gianforte administration pulls out of Hecla mining oversight

Outside Libby, Hecla Mining’s Rock Creek Mine has been in the permitting process for decades. (Missoula Current file photo)

Environmental groups are condemning the Gianforte administration for green-lighting two proposed mines beneath the Cabinet Mountains, even though the CEO has failed with other Montana mines to comply with environmental safeguards.

On Wednesday, the Montana Department of Environmental Quality issued a statement saying it would not enforce the state’s “bad actor” provision against Hecla Mining Company and its president, Phillips Baker Jr.

“At this time, it seems highly unlikely the case would result in reimbursement,” said DEQ Director Chris Dorrington in the statement. “In choosing to dismiss this case, I want Montanans to know that DEQ is not stepping away from continuing to seek reimbursement of these costs, and we are not backing down from our commitment to holding bad actors accountable for their actions.”

However, on Thursday, environmental groups and tribes that backed DEQ when it sued Baker in 2018 fired back that DEQ is backing down. The decision is in keeping with Gianforte’s industry-friendly policies and statements, the groups say.

Gianforte has spoken favorably of the Hecla mines in the past, and held a campaign event at Hecla’s offices in Libby last year. During that event, he criticized state and federal officials for how long it has taken to get the two mines permitted, according to the Montana Free Press.

“In dropping this case, DEQ is walking away from its only real shot at defending Montanans from being bilked out of millions of dollars of taxpayer money by Baker and Pegasus,” said David Brooks, executive director of Missoula-based Montana Trout Unlimited. “Of equal concern to failing to recuperate costs from Pegasus’s past actions, this decision also sends the message to mining executives that it is fine to leave Montana and its citizens with massive cleanup costs in the future.  The Bad Actor law is meant to be a deterrent, not just a punishment.” 

Before he became the CEO of Hecla, Baker was the top financial official for Pegasus Gold, Inc., and was a principal officer for several of its subsidiaries when it declared bankruptcy in 1998.

After declaring bankruptcy, Pegasus Gold defaulted on its reclamation obligations at the Zortman-Landusky, Beal Mountain, and Basin Creek mines, forcing Montana taxpayers to shoulder the companies’ cleanup responsibilities.

Public agencies have spent more than $50 million trying to clean up the Zortman-Landusky mines, which have permanently contaminated the water of the Fort Belknap Reservation in northeastern Montana. The DEQ predicted that water treatment, which must continue indefinitely, will cost Montanans more than $2 million annually.

Partly as a result of the Pegasus default on reclamation, the 2001 Legislature passed the “bad-actor” clause of Montana’s Metal Mine Reclamation Act, which prohibits companies with uncompleted reclamation efforts or their managers from starting new mining projects. Former Republican Gov. Judy Martz signed the bill, which had bipartisan support.

The effort to tunnel under the Cabinet Mountains Wilderness in northwest Montana began more than 30 years ago but encountered several delays. An initial 2001 U.S. Forest Service environmental impact statement was not favorable and the previous mining company successfully challenged it in court.

Baker made the jump in 2001 to be a director at Hecla, and two years later, he took over as CEO. After Hecla bought the mines for $30 million in 2016, he revived Hecla’s efforts to develop the Rock Creek Mine near Noxon and the Montanore Mine near Libby, which would extract copper and silver from beneath the wilderness, which is the traditional land of the Ktunaxa people.

In early 2016, the Forest Service issued a more favorable draft supplemental study, even though the mines could deplete groundwater beneath the Cabinet Mountains, which could reduce flows in regional streams that are prime bull trout habitat. But that got the ball rolling again for the mining company.

In October 2017, six conservation groups, backed by the Fort Belknap Indian Community, alerted DEQ to Baker’s past and the fact he is subject to the bad-actor clause. The conservation groups included Earthworks, the Montana Environmental Information Center, the Clark Fork Coalition, Rock Creek Alliance, Save Our Cabinets and Montana Conservation Voters.

Baker has said that as a financial officer, he had no say in Pegasus mining operations.

In March 2018, DEQ sued Baker – in addition to Montanore Minerals Corp. and RC Resources Inc. – following an investigation that found he qualified as a bad actor. The Fort Belknap Indian Community, the Ksanka Kupaqa Xaʾⱡȼin tribal society of the Ktunaxa Nation and the conservation groups intervened on the side of DEQ in July 2018.

In May, District Court Judge Mike Menahan ruled that DEQ has the authority to enforce the bad actor law against Baker and his Idaho-based company, clearing the way for the DEQ to weigh the case and reach a decision.

But yesterday’s decision indicates DEQ is letting it drop without further investigation, the groups said.

“Montana’s mining laws only serve as an effective deterrent if they are enforced,” said Andrew Gorder, Clark Fork Coalition legal director. “The ‘bad actor’ law was passed in the wake of Pegasus’ bankruptcy and was clearly intended to hold mining executives accountable for their previous messes. If DEQ won’t enforce the law against Pegasus’ former Vice President and CFO, then the law isn’t worth the paper it’s printed on.”

Bonnie Gestring, Northwest Program Director at Earthworks, said the groups didn’t know what the next step might be after learning of DEQ’s decision yesterday. They don’t know if they have any leverage to require DEQ to enforce state law.

So, at this point, the only thing holding Hecla back is a failure to get special-use permits for the mines from the U.S. Forest Service. The Forest Service issued the permits based on U.S. Fish and Wildlife opinions during the time that Ryan Zinke served as Interior Secretary. The Washington Post described an October 2017 meeting where Zinke apologized to Baker for the difficulty Hecla was having getting permits.

In 2017, U.S. District Judge Donald Molloy found the agencies violated the Endangered Species Act by granting a permit that relied on a flawed biological opinion that bull trout and grizzly bears wouldn’t be affected.

This past April, Molloy vacated decisions by the U.S. Forest Service and U.S. Fish and Wildlife Service that allowed Hecla to move ahead with exploration work on the Rock Creek Mine between Noxon and Libby. Molloy said that, in looking at only the exploratory project, the agencies had failed to consider the effects of a full-blown mine on the water and wildlife of the region.

 “Hecla has said that they will continue to move forward. So the next step for them is to submit new proposals with mitigation measures that are in compliance with those laws,” Gestring said.

Hecla has the resources to invest in proposals. In the first quarter of 2021, it reported a gross profit of $64.8 million.

Contact reporter Laura Lundquist at lundquist@missoulacurrent.com.