Missoulan Miners Offer Regulators Some Hard Lessons
That may be the least of troubles in store at a mine once touted as a model of MontanaÕs new mining industry. State officials say it may take as much as $38 million to reclaim Zortman-Landusky as required by law. But the mine operator, Pegasus Gold, went bankrupt. While in operation, Pegasus posted bonds to ensure reclamation, but those bonds total $29.6 million. Lawyers for the state got another $1 million for reclamation from the bankruptcy court overseeing reorganization of Pegasus. Optimists at the Department of Environmental Quality hope the money will stretch far enough. All in all, the state is counting on nearly $80 million worth of bonds to ensure cleanup at five Pegasus mines.
PegasusÕ bankruptcy has been an eye-opening experience for state regulators. Among the lessons learned:
ItÕs a mistake to assume the companies that develop mines will stay around - or even exist - when it comes time to clean the mines up.
Reclamation plans that presume miners will reclaim their own mines understate the actual cost when miners go out of business or skip out. Everything becomes more expensive when the state has to hire contractors for the work.
Reclamation bonds required to ensure cleanup may not be worth as much as expected. At least some of the insurance companies that issue reclamation bonds would rather fight than pay, forcing the state to rack up legal expenses or accept lesser settlements.
Case in point: Safeco Insurance went to federal court in June to cancel a $500,000 bond for reclamation at the Diamond Hill mine near Townsend. The state went to court to prevent the company from canceling the bond; the company wound up paying the $500,000 - but has since sued the state to get the money back.
Bonds are supposed to guarantee money for reclamation if a mining company fails to honor its commitments. But regulators say theyÕre learning that, with large sums of money at stake, some companies that issue bonds will exploit any possible opportunity to avoid paying. As a result, DEQ has adopted a no-nonsense, see-you-in-court approach in dealing with bond companies.
State laws enacted more than 20 years ago to better regulate the mining industry were supposed to usher hard-rock mining into a new, more responsible era. But as the first mines developed under the new laws start to play out, reclamation is turning out to be anything but assured. Look hard around the state, and you wonÕt find a single example of a large-scale hard-rock mine successfully reclaimed.
ÒUnfortunately, weÕre not at the point where you can show the citizens of Montana that everything works the way it's supposed to,Ó says DEQ Director Mark Simonich.
Earlier this year, DEQ battled the mining industry and persuaded the Legislature to make a key change in administration of reclamation bonds. Regulators now will review the adequacy of bonds at least annually; previously, bonds were subject to review once every five years. Simonich says various state agencies also are trying to do a better job of coordinating different aspects of mine regulation.
ÒWe have learned a great deal,Ó he says. Unfortunately, those lessons have been learned the hard way.
Taxpayers and the environment arenÕt the only losers when reclamation plans go awry. Miners havenÕt done their industry any favors, either. Mining is controversial enough, even when people focus on jobs and profits. Leaving citizens of the state with big messes and big bills to pay after the mines play out is a good way to wear out your welcome. In this regard, hard-rock miners would do well to emulate their coal-mining brethren.
Thirty years ago, coal mining was hugely controversial in Montana. Ranchers, environmentalists and others feared strip mining on a massive scale would leave areas of eastern Mon-tana looking like West Virginia. You donÕt hear a lot of discouraging words about coal mining today, though. ThatÕs largely because coal miners have done a splendid job of reclaiming strip mines. Coal miners have established a track record of which they are proud, and the public is satisfied.
The story is completely different when it comes to hard-rock mining. The record of hard-rock mine reclamation in Montana is one of broken commitments and public disappointments. Until this changes, hard-rock miners will find themselves embroiled in constant controversy.