State drops 'bad actor' case against Hecla CEO

Montana's Department of Environmental Quality is dropping its lawsuit against a North Idaho-based company seeking to develop two large silver and copper mines in Northwest Montana.

The decision prompted conservation groups involved in the case to allege political interference by Republican Gov. Greg Gianforte, who promoted the projects on the campaign trail. Administration officials rejected the assertion.

Coeur d'Alene-based Hecla Mining Co. sued in March 2018 after the DEQ attempted to label the company's chief executive, Phillips Baker Jr., a "bad actor" under Montana's Metal Mine Reclamation Act. The law was designed to block individuals and companies who don't clean up their old mines from starting new ones.

The department — under then-Gov. Steve Bullock, a Democrat — sued back, saying Baker and Hecla should not be granted permits for the proposed mines in Lincoln and Sanders counties because of Baker's past involvement with the Pegasus Gold Corp.

Pegasus went bankrupt in 1998, abandoning three mines in the Little Rocky Mountains south of the Fort Belknap Indian Reservation and leaving taxpayers on the hook for tens of millions of dollars in reclamation and water-treatment efforts that continue to this day.

Lewis and Clark County District Court Judge Mike Menahan handed the state a victory in May, ruling the DEQ has the authority to apply the "bad actor" label to Baker and other out-of-state actors, though the ruling did not address the merits of the case.

ON WEDNESDAY, the department filed a motion to dismiss the case, citing what it called "a number of factors including complex procedural hurdles that complicate the case and potentially risk DEQ's ultimate goal of preventing bad actors from operating in Montana."

DEQ Director Chris Dorrington, a Gianforte appointee, added the case seems "highly unlikely" to result in reimbursement for the cleanup of the former Pegasus mines from either Hecla or Baker, who was a vice president at Pegasus before it went bankrupt.

"When deciding to further pursue this case, DEQ has to consider all demands on our time and all of the demands on our resources, as well as the potential environmental benefits or consequences," Dorrington told the Daily Inter Lake in an interview Thursday.

A coalition of tribal and conservation groups lambasted the agency's decision, saying the state has thrown away a chance to hold mining executives accountable and prevent further pollution.

"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," David Brooks, executive director of Montana Trout Unlimited, said in a statement. "The bad actor law is meant to be a deterrent, not just a punishment."

Andy Werk, president of the Fort Belknap Indian Community, said the DEQ's decision would perpetuate "the devastating burden of environmental injustice."

"The state of Montana must prioritize protecting the health of Montana communities, including the Aaniiih and Nakoda tribes of the Fort Belknap Indian Community, and protecting the natural resources that sustain all life," Werk said in a statement. "DEQ's dismissal of the enforcement action flies in the face of this responsibility and prioritizes mining executives over Montanans."

The groups said the state has spent more than $50 million cleaning up acid mine waste in soil and water from the Zortman-Landusky Mine alone. Pegasus also ran the defunct Beal Mountain and Basin Creek gold mines in the Little Rocky Mountains.

Luke Russell, a Hecla spokesman and vice president, said the state's case was "unwinnable" as the company had no involvement with the former Pegasus mines. Hecla previously has said Baker left Pegasus before it went bankrupt.

"Mr. Baker is not a bad actor under Montana law," Russell said. "His employ at Pegasus more than 20 years ago was the only basis for bringing this case."

The DEQ noted the three mines at issue in the case — the Rock Creek, Montanore and Troy mines — are all in compliance with the Metal Mine Reclamation Act. The Troy Mine is undergoing final reclamation and the two proposed mines face environmental review, technical evaluation and public comment before they would be issued permits, the agency said.

"These projects should, therefore, individually succeed or fail on their own merit through the permitting processes, where DEQ can thoroughly consider all relevant scientific and technical details and public input before deciding whether each should proceed," the department said in its motion to dismiss.

Derf Johnson, who directs the nonprofit Montana Environmental Information Center's clean water program, said the permitting process is beside the point and the DEQ should have continued pursuing its claim under the bad actor law.

"What good are the laws if they're not actually enforced? And what message does that send to the currently operating mines if, through political persuasion, they can ignore and get around Montana's bad actor law?" Johnson said.

MONTANA IS one of many states with bad actor statutes that let state environmental agencies consider a company or individual's environmental record in deciding whether to grant permits.

The Montana Legislature passed the law in 1989 and expanded it in 2001 to apply to company executives. It's been enforced once before, in 2008, in a case that did not involve a major project like the ones Hecla is pursuing at the Rock Creek Mine near Noxon and the Montanore Mine near Libby, according to state officials. Both projects have been in the works for decades.

The two copper and silver mines would tunnel beneath the Cabinet Mountains Wilderness. They've been stalled for years as environmentalists have repeatedly sued over concerns the mines would harm area rivers and wildlife, including bull trout and grizzly bears.

During a July 2020 campaign event at Hecla's offices in Libby, Gianforte panned the DEQ and the state Department of Natural Resources and Conservation as "project-prevention departments," criticizing how long it's taken to secure permits for the Rock Creek and Montanore mines, the Montana Free Press reported. (State and federal agencies have issued permits for the mines, but they have been successfully challenged in court multiple times.)

"I don't think we should approve every permit, but we ought to be able to get a 'yes' or 'no' in less than 35 years," Gianforte said at the time.

Regarding the DEQ's decision to drop the case, Johnson, with the Montana Environmental Information Center, alleged: "It's clear that this is a very political decision. It's clear that this is a policy change from the governor's office."

Dorrington, the DEQ director, and Gianforte spokeswoman Brooke Stroyke said the governor did not advocate for the lawsuit to be withdrawn.

"As with matters relating to protecting Montana's environment and Montana taxpayers, the governor entrusted and empowered DEQ to take the action the agency thought most appropriate," Stroyke said in an email.

Dorrington reiterated that point, almost verbatim, in Thursday's phone call.

"The governor relied upon us to make those decisions," he added.

While environmentalists worry the proposed mines could do permanent damage to the federally protected Cabinet Mountains Wilderness, mining executives note copper and silver are needed to produce electric vehicles, wind turbines and other components of an eco-friendly economy.

"We are looking forward to moving these projects forward," said Russell, the Hecla spokesman. "They are important for clean energy, they can be done responsibly and they will have a huge economic impact for Northwest Montana."