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With help from bankruptcy, cleanup of mine at former Idaho boom town begins

Cleanup work begins this year on the old Sunset-Star Silver Mine in Nine Mile Canyon north of Wallace, Idaho. The mine, owned by the Success Mining Co., is pictured with a boarding house in this historic photograph. (Courtesy/Wallace District Mining Museum)
By Becky Kramer beckyk@spokesman.com(509) 459-5466

Sunset is one of the forgotten boom towns of Idaho’s Silver Valley. Its school, its general store and its largest employer, the Sunset-Star Silver Mine, faded into the forested landscape decades ago.

But the toxic legacy of early 20th century mining practices lingers at the old town site north of Wallace. Superfund cleanup work will begin this summer to remove tailings and waste rock from the Sunset-Star Mine, which continues to send lead and other heavy metals into a nearby creek.

Money for the cleanup comes from a trust established during Asarco Inc.’s 2009 bankruptcy settlement.

Over the next 30 to 40 years, the trust is expected to pay out more than $1 billion for Superfund work in the Coeur d’Alene basin, including the cleanup of about 200 old sites like the Sunset-Star Mine.

The environmental trust is among the largest of its kind in the nation, said Dan Silver, the trustee appointed by the bankruptcy court.

Originally funded with $436 million from Asarco, the trust has paid out $65 million for cleanup of old mine waste in the Coeur d’Alene River Basin since 2010. Because of investment gains, the trust’s current value is $497 million.

“These kinds of trusts are relatively unique. It took a lot of effort for us to get it set up,” said Bill Adams, a program manager for the U.S. Environmental Protection Agency in Seattle, which pushed for the trust.

Asarco, a multinational mining company, operated for 110 years and had substantial holdings in the Coeur d’Alene Mining District. In 2005, the company filed for bankruptcy, citing extensive environmental liabilities across multiple states.

During the bankruptcy, Asarco’s attorneys and the U.S. Department of Justice negotiated a settlement for the company’s share of the cleanup work in the Coeur d’Alene Basin.

Because of the size of the settlement and the scope of the cleanup needed, EPA officials wanted a fund that would grow over time, Adams said.

The basin is “a large area, with massive amounts of dredging and capping and remedies required that are likely to get very expensive,” he said.

Usually, Superfund settlements are paid directly to the federal government, which isn’t allowed to invest the money, Adams said. But through a third-party trust, the assets can be invested to generate a return.

The trust’s portfolio is managed by BlackRock Investments, a global institutional investment firm. EPA officials don’t have control over how the trust’s assets are invested, but they determine how much money is withdrawn each year for cleanup work, said Silver, the trustee.

In reality, the parties talk frequently, Silver and Adams said.

BlackRock and EPA’s economic consultants have determined the trust can disburse $20 million to $25 million each year for cleanup work. “That’s the sweet spot,” Adams said.

That level of spending allows EPA to get a meaningful amount of work done each year, while still preserving the trust’s ability to appreciate over the long run, he said.

Since the trust started making payments, the EPA has been able to accelerate the cleanup work in the Coeur d’Alene Basin, Adams said. Over the last several years, about $30 million annually has been spent on Superfund work, which includes payments from the trust and from a one-time $263 million environmental settlement from Hecla Mining Co., another long-time Silver Valley operator. Past annual cleanup spending was in the $15 million range, funded with taxpayer dollars.

Silver said the long-range goal for the trust is to generate enough money to pay for more than $500 million worth of environmental remediation in the upper basin, plus the cleanup of the lower basin, where the estimated cost of the work needed along the Coeur d’Alene River and the chain lakes still is being tallied.

“We’ll need to earn as much as we can to give the EPA some flexibility,” Silver said. “That way the citizens of the United States will never have to pay for the cleanup; it will be done by a private party.”

The trust will finance about $21 million in Superfund projects this year. The spending includes the first phase of a three- to four-year project to remove 440,000 cubic yards of material from the Sunset-Star Mine, along with other work, Adams said.

The old mine site is the second of three targeted for cleanup in Nine Mile Canyon, a formerly prolific mining area. The creek running through the canyon is one of the most polluted tributaries of the South Fork of the Coeur d’Alene River.

Water flowing through the old mine tailings picks up lead, zinc and cadmium, which it carries into the creek. The metal concentrations far exceed water quality standards that were written to acknowledge the area’s natural mineralization, Adams said.

The work will help reduce the amount of heavy metals flowing into the Coeur d’Alene River, and ultimately into Lake Coeur d’Alene.