Hearing Airs Nitty-Gritty On Dispute

Dawn wants to pay for treating contaminated ground water and sealing old waste pits by charging to dispose of radioactive uranium mill tailings from other states. The waste - uranium ore with most of the uranium removed - would be placed in a 28-acre plastic-lined pit that was built to hold the same kind of waste from Dawn’s mill.

Uranium mill tailings are far less radioactive than the low-level nuclear waste that goes to the Hanford Nuclear Reservation. State Health Department officials say the Dawn proposal would expose Ford residents, over five years, to just 40 percent of the radiation in one chest X-ray.

But to environmental purists, it makes no sense to clean up a contaminated site by bringing in more contamination. To others, it makes no sense to delay a needed cleanup for years and take the risk that taxpayers will have to pay the multimillion-dollar bill.< The dilemma is caused by inadequate environmental laws in the mid1950s when the mill opened. Dawn was required to post only a $1 million bond, which is just a fraction of the estimated $15 million to $40 million cleanup cost if clean fill is used.

The mill closed in 1982 and Dawn now would be bankrupt except for a line of credit guaranteed by the wellheeled Newmont. Newmont owns 51 percent of Dawn, and a defunct Spokane penny-stock company, Midnite Mines, owns the rest.

Although Newmont has set aside cleanup money for accounting purposes, the company contends it is not responsible for Dawn’s debts. Newmont officials say they would vigorously resist any legal effort to pierce the “corporate veil” between the companies.

State officials are confident they could win a legal judgment against Dawn, but they probably would need a judgment against Newmont to get any cash. That could be much more difficult.

The corporate-veil doctrine is a holy of holies in legal and business circles. It protects stockholders from liability for corporate debts even if the stockholder is not an individual but another corporation.

Washington courts haven’t been entirely consistent, but the Washington Law Review says the state Supreme Court has ruled that the corporate veil should not be lifted unless two conditions are met:

It is apparent the corporation and its stockholders function as one entity.

Regarding the corporation and its stockholders as separate would victimize others with fraud or other wrongdoing.

Assistant Attorney General Bill Williams declined to reveal details of his advice to the Health Department, but said his analysis was not optimistic. He estimated a lawsuit against Newmont would cost $1 million and take five years with appeals.

“There is a chance that we would win, but there is maybe at least an equal chance that we would not be successful,” Williams said.

There is a danger, he said, that the company-bankrolled ground-water cleanup now in progress would be suspended during a lawsuit. But Williams said the biggest danger is that Newmont and Dawn might withdraw the current proposal and walk away if the state sued and lost.