Prominent Miner Vows to Fight Montana’s ‘Bad Actor’ Allegations

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By Stephen Lee and Tripp Baltz

Montana’s decision to crack down on the president of one of the world’s biggest silver miners comes as part of a more careful look at individual officers’ work histories, a state spokeswoman tells Bloomberg Environment.

But Phillips S. Baker Jr., the president and chief executive officer of Hecla Mining Co. and the man identified by the Montana Department of Environmental Quality as a “bad actor,” says the state improperly slapped sanctions on him, and that he’s going to “pursue every avenue to restore my reputation and good name.”

The state DEQ recently started more formally “tracking” mining companies’ corporate officers, said Kristi Ponozzo, the agency’s public policy director.

On March 20, the department told Hecla that it had confirmed that Baker once held top jobs at bankrupt companies that haven’t paid their land cleanup tab.

Guilty by Association?

Because of its ties to Baker, Hecla must now stop mining in Montana until it either pays back the reclamation costs incurred by the now-defunct Zortman Mining Inc. and Pegasus Gold Mining Inc., Baker’s old companies. The company could also resume mining once it proves that Baker isn’t involved in mining or exploration in the state, according to letters from the DEQ to Hecla that the agency provided to Bloomberg Environment.

Hecla doesn’t plan to take either option that Montana offered. It’s going to file a legal challenge against the ruling, Luke Russell, the company’s vice president for external affairs, told Bloomberg Environment.

“Hecla had no association with Pegasus,” Russell said. “It is a far stretch to suggest now that Hecla, a 127-year-old company, is required to pay for reclamation of a mine conducted by another, totally unrelated company.”

The state’s bad actor law has only been used once before, and Baker is the first officer at a large company to be scrutinized under it, Ponozzo said.

Montana is “implementing changes to the permit application process for hardrock mines that more formally track and identify officers,” Ponozzo said. DEQ already has ways of identifying what it calls bad actors in the coal mining industry, because it’s connected to a national database, but is still “trying to figure out how we can do that” on the hardrock side, she said.

The Zortman and Pegasus reclamation costs haven’t been calculated yet. But one of Zortman’s old mines alone will cost at least $30 million plus $2 million a year in perpetuity for water treatment, plus interest, said Bonnie Gestring, Northwest program director for Earthworks.

Baker Says Montana Agency Wrong

Baker pushed back vigorously against the DEQ decision.

“I am not restricted from mining and exploration in Montana because I was not the person that Montana has ever issued a permit for mining or exploration,” Baker told Bloomberg Environment. “I never did the mining or was responsible for the reclamation. I was not a principal, nor did I control the companies who did the mining and had the reclamation responsibility. And I was not an employee of the companies when the sureties made payment to the state of Montana.”

Baker also said Hecla shouldn’t be blocked from mining because “the law clearly does not apply to Hecla. If I was a person that could be restricted by the statute and had been a controlling person of Pegasus, it would still not apply to Hecla, but only to Pegasus.”

Moreover, Baker said, Montana DEQ “never asked me to provide any information, so I do not understand how they can make a determination about me.”

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

Other Miners Anxious

Montana’s decision to pause Hecla’s mining activities has the state’s mining industry feeling jittery, Tammy Johnson, executive director of the Montana Mining Association, told Bloomberg Environment.

“Anything like this makes investors nervous,” Johnson said. “It sure makes it a tough environment, where everybody just wonders whether the state is hospitable to mining and worthy of investment.”

Johnson also questioned the logic behind the state agency’s decision.

“The notion that one individual that worked for one company, and now has all the liability for a company he once worked for, is disconcerting,” she said. “And Hecla is not the entity that holds the permits on any of their proposed projects.”

Ashley Burke, senior vice president for communications at the National Mining Association, agreed.

“Requiring one company to pay for the reclamation responsibilities of another, unrelated company, is a clear misapplication of the law,” Burke said.

An Independent Streak

Gestring of Earthworks called the decision “a victory for Montanans and taxpayers who unfairly shoulder the financial burden of mine cleanup.”

“It demonstrates a fierce independence that a lot of Montanans have,” Aaron Mintzes, senior policy counsel at Earthworks, told Bloomberg Environment.

“There may be some places where the mining industry and regulator are very, very closely tied, or inseparable,” he said. But Montana has an independent streak, and they’re not going to be ruled by the mining industry or anybody else—particularly a bad actor like Mr. Baker.”

Earthworks has been filing legal challenges against two big Hecla projects, known as the Rock Creek and Montanore mines, which they say would endanger grizzly bears and bull trout habitats in the Cabinet Mountains. Those mines are now on hold.

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