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Montana says Hecla, CEO violated ‘bad actor’ law

UPDATED: Tue., March 20, 2018, 7:13 p.m.

The snowcapped Cabinet Mountains tower over the lush Kootenai River Valley on Feb. 17, 2010, outside of Libby, Mont. Montana regulators say an Idaho company proposing two mines beneath the Cabinet Mountains Wilderness is in violation of a state law that prohibits individuals from starting new mines if they haven't cleaned up old ones. (Rick Bowmer / AP)
The snowcapped Cabinet Mountains tower over the lush Kootenai River Valley on Feb. 17, 2010, outside of Libby, Mont. Montana regulators say an Idaho company proposing two mines beneath the Cabinet Mountains Wilderness is in violation of a state law that prohibits individuals from starting new mines if they haven't cleaned up old ones. (Rick Bowmer / AP)

BILLINGS – Hecla Mining Co. could be forced to pay the state of Montana more than $30 million in cleanup costs from pollution at several former mining sites before it can pursue two new projects beneath a wilderness area, state regulators said Tuesday.

The Coeur d’Alene-based company and its president were deemed to be in violation of the state’s “bad actor” law that targets individuals and companies that abandon polluted sites, said Montana Department of Environmental Quality Director Tom Livers.

The alleged violations were first reported by the Associated Press.

Hecla’s president and CEO, Phillips Baker Jr., is a former executive for Pegasus Gold Corp., which went bankrupt in 1998, leaving government agencies with a massive cleanup bill from three Montana sites that polluted surrounding waterways when cyanide, arsenic and other contaminants leaked out of the mines.

Baker is also current chairman of the National Mining Association, the industry’s leading trade group.

A Hecla executive denied any responsibility for Pegasus’ actions and said the company intends to challenge the alleged violations.

The company is pursuing development of two large silver and copper mines in northwest Montana that would employ about 300 workers each. They would be constructed beneath the Cabinet Mountains Wilderness, an area of remote, glaciated peaks and valleys that take their name from the area’s box-like rock formations.

At the most polluted of the Pegasus sites, the Zortman-Landusky gold mine in north-central Montana, the state has spent $32 million on cleanup work and continues to spend more than $2 million annually to treat contaminated water flowing from the site, state officials said.

The bad actor law, passed in 1989, blocks individuals who don’t clean or pay for the cleanup of old mines from starting new ones.

“We believe the Legislature was clear in its intent to hold individuals and companies accountable for their failure to reclaim mine sites,” Livers said. “We’re deeming Baker a bad actor for his Pegasus connections … By knowingly employing Baker, who violated the bad actor provision, Hecla is in violation.”

Hecla Vice President Luke Russell said the company had no direct relation with Pegasus. Two Hecla subsidiaries, not Baker, were the applicants for the Montana projects, he said.

“It’s a far stretch to say a 126-year-old company is ineligible to mine in Montana for the actions of another company that it has no relation with,” Russell said. “They got it wrong.”

A coalition of environmental groups since October has been pressing Livers’ agency to enforce the “bad actor” law against Hecla. Bonnie Gestring with Earthworks, one of the groups involved in the effort, said Tuesday’s action was a “victory” for Montana taxpayers.

“It says loud and clear that mining companies don’t get to pocket Montana’s riches while the public is left with the costs,” she said.

Hecla and Baker were given 30 days to declare their intention to resolve the matter by repaying the state’s cleanup expenses. Alternatively, the company would have to prove Baker and any entity under his direction will not conduct mining or exploration activities in the state, the letters stated.

Livers acknowledged that Hecla has a reputation as a responsible company with its cleanup work on another former mining site in northwest Montana, the Troy Mine, which closed in 2015.

The bad actor law has only been enforced once before, in 2008, and never against major projects like the ones Hecla is pursuing at the Rock Creek Mine near Noxon and the Montanore Mine near Libby.

Federal agencies have spent more than $17 million at Zortman Landusky, but there’s no requirement under Montana’s law for that money to be paid back.

To date, the total bill for the site’s cleanup is almost $76 million, Livers said, including $47 million covered by reclamation and water treatment bonds posted by Pegasus.

Details were not immediately available for cleanup costs at two other Pegasus mines – the Beal Mountain mine near Anaconda and the Basin Creek Mine north of Basin.

Hecla also owns mines in Alaska, Quebec, Mexico and the Lucky Friday Mine in Mullan, Idaho, where union workers are on strike. In a deal announced Monday, Hecla will purchase the outstanding shares of Klondex Mines Ltd., of Reno, which owns the Fire Creek, Midas and Hollister mines in Nevada, for $462 million.


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