Hecla Mining sues Montana over ‘bad actor’ decision

BILLINGS – Hecla Mining Co. sued Montana environmental regulators on Friday for deeming the company and its president as “bad actors” who should pay for cleanups at several polluted sites before pursuing two new mines.

Attorneys for three Hecla subsidiaries described the state’s allegation that the company is responsible for ongoing pollution from several defunct mines as frivolous.

Coeur d’Alene-based Hecla had no direct involvement in the polluted mines at issue.

But its president, Phillips Baker Jr., who also chairs the National Mining Association, was formerly the chief financial officer for Pegasus Mining Co., of Spokane.

Pegasus’ 1998 bankruptcy left state and federal agencies on the hook for pollution cleanups at its Montana mines, including the Zortman-Landusky gold mine on the edge of the Fort Belknap Indian Reservation. Ongoing cleanup work at the shuttered sites has cost about an estimated $100 million to date, and bonds put up by Pegasus covered only a portion of the bill.

State officials first revealed to the Associated Press earlier this week that Hecla could be asked to reimburse taxpayers for more than $30 million in cleanup work. That claim is based on Montana’s so-called bad actor law that blocks individuals and companies who don’t clean or pay for the cleanup of old mines from starting new ones.

But attorneys for the Hecla subsidiaries – Montanore Minerals Corp., Troy Mine Inc. and RC Resources – asked a Lincoln County district judge to reject the alleged violations. They said the state’s reading of the law “erroneously equates” Baker and Pegasus and assumes he had control over activities at the now-defunct mines that polluted surrounding waterways with contaminants, including arsenic and cyanide.

“Mr. Baker neither directed nor controlled mining operations at any of the Pegasus entities’ mines,” wrote the subsidiaries’ attorney, William Mercer. “If Pegasus failed to perform (cleanup work) pursuant to its permit with the department, Pegasus is exclusively liable.”

Mercer served as U.S. Attorney for Montana under former President George W. Bush.

The Montana Department of Environmental Quality was reviewing Friday’s lawsuit and had no immediate further comment, spokeswoman Kristi Ponozzo said.

Hanging in the balance in the case are two copper and silver mines proposed by Hecla in northwestern 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 south of Troy.

Hecla bought Montanore in 2016 for almost $30 million. In May, a U.S. District judge ruled that federal officials violated laws meant to protect threatened species and their habitat in approving the mine’s development.