BOISE – Idaho’s state endowment fund has been showing strong returns, so state officials had no qualms this week about designating the endowment fund’s board to also oversee a new, $50 million permanent endowment, this one to permanently cover all costs of operating a water treatment plant to help clean up mining contamination in the Silver Valley.
The $50 million comes from Hecla Mining Corp. as part of a settlement of a giant Superfund lawsuit covering multiple companies and a wide swath of the Coeur d’Alene Basin where a century of mining spread contaminants harmful to people, fish, birds and more. A 2011 consent decree covering Hecla’s portion of the settlement required the company to deposit $66 million with the federal court; an amendment to that decree is expected by the end of this month to release the funds for cleanup activities.
Under the plan, the federal Environmental Protection Agency will use $15 million of the funds to expand an existing water treatment plant in Kellogg and operate the plant for the next five to 10 years, until those funds are spent. The Idaho Department of Environmental Quality will then take over, and it’s responsible for using the investment earnings from the remaining $50 million to operate the plant in perpetuity.
Idaho’s five top state elected officials, sitting this week as the state Board of Land Commissioners, approved setting up the new endowment and having the Endowment Fund Investment Board oversee its investment. That’s the group that now oversees the investment of the state’s $1.7 billion permanent endowment, whose earnings largely benefit the state’s schools.
So far this year, Idaho’s endowment fund has gained 17.5 percent from investment earnings. “We’re looking to come in with a strong result for the fiscal year which ends June 30,” investment manager Larry Johnson told the Land Board.
The endowment’s earnings have been strong enough that it’s built up five years of reserves, so for the first time in several years, the annual distribution to Idaho’s public schools next year is expected to rise slightly, from $31.3 million to $31.5 million.
“That’s good – we’re going in the right direction,” said state Superintendent of Schools Tom Luna, who serves on the Land Board.
Attorney General Lawrence Wasden asked if the endowment investment board had any concerns about taking on the additional endowment to manage, and Johnson said no. In addition to managing the state endowment, the board also oversees investment of two smaller endowments for the state Department of Parks and Recreation, for Ritter Island and the Trail of the Coeur d’Alenes.
“We believe the $50 million should be sufficient to fund the operation of the plant into perpetuity, to continue to clean up the heavy metals from the waters,” Johnson told the Land Board. All investment costs would be covered by the endowment, and if treatment costs ballooned or investments tanked, the state would have no liability to continue operating or funding the plant.
The Central Treatment Plant in Kellogg originally was developed by the Bunker Hill Mine to treat wastewater coming out mine, which it still does, but now it’s operated by the EPA. The EPA plans to expand it, likely by 2016, to also collect mining-contaminated groundwater in the area and pump it to the plant for treatment; the idea is to improve the water quality in the South Fork of the Coeur d’Alene River. No river water will be piped to the plant; just groundwater.
The endowment plan was developed with the concurrence of the Coeur d’Alene Tribe, the EPA and the DEQ, because the endowment investment board has the ability to make more money by investing the funds, to cover inflation and future cost increases, than does the EPA. Long-term annual operating and maintenance costs are estimated at $1.5 million a year.
In the more than two years that the $66 million has been held by the court, it’s been invested in the federal courts’ Court Registry Investment System, which deposits the money in the U.S. Treasury, essentially investing it in treasury bills and charging a fee of 10 percent of interest earned to cover holding costs.