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Posts Tagged ‘Hecla Mining’

Announced Monday and likely to be approved by a federal court in the next month or two, Hecla Mining and the U.S. EPA have settled longstanding Superfund litigation. The settlement establishes Hecla’s contribution toward the costs of the Coeur d’Alene basin minewaste cleanup. According to news reports, Hecla has agreed to pay some $263 million toward the cleanup which is estimated to ultimately cost more than $2 billion.

Although the accounting and apportionment of the funds will be complex, Hecla’s settlement will essentially be added to previous settlements – particularly the ASARCO settlement for some $452 million announced last year – to fund the bulk of the outstanding cleanup effort from this point forward.

With each flood season, historic mine wastes continue to contaminate some 160 miles of shoreline and riverbank in the Coeur d’Alene basin with heavy metal pollution. As a result, the basin constitutes one of the largest and most expensive Superfund cleanups in the U.S. The metals, which are at levels above federal health-based cleanup standards, are a danger to both humans who live and play in the region, as well as fish and wildlife that live there. For example, annually, some 150 tundra swans die from lead poisoning related causes during their migration stopover.

Prior to this settlement, Hecla had been a fierce opponent to EPA’s plans for a comprehensive cleanup plan for the upper Coeur d’Alene basin. Those plans, rolled out to the public last summer, are expected to be finalized soon. Now that Hecla has settled its obligations to the cleanup, and has reportedly achieved some level of protection for its ongoing mining operations, its vocal opposition to the cleanup should quiet.

Indeed, with the litigation largely resolved, the financing largely settled, and with the cleanup plans for the upper basin to be approved soon, the Coeur d’Alene basin cleanup may be entering a new era. Collaboration and cooperation should be much more prevalent as the cleanup continues from the upper reaches of the Coeur d’Alene basin down to the Coeur d’Alene Lake.

In fact, planning for the lower basin cleanup is just now getting underway. Along those lines, a more formal collaborative effort is in the early stages of being formed to engage stakeholders in designing the lower basin cleanup work. The cleanup of the waterways and shorelines between Cataldo and Harrison will be complex and expensive. Indeed, some approaches could still be quite controversial. However, without the specter of ongoing litigation, the cleanup should proceed less acrimoniously. We certainly look forward to getting on with it.

 

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We have obtained a copy of a cleanup counter-proposal for the upper Coeur d’Alene basin from Hecla Mining, and not surprisingly, the mining company proposes a much shorter, much cheaper, much less comprehensive, cleanup. We’re still weeding through their complicated 378-page, 10-year proposal, but based on a quick skim, we’re skeptical that their plan will meet cleanup standards in our lifetime. Or anyone’s lifetime.

As much as we are loathe to acknowledge it, the cleanup in the upper basin is still a long way from completion.  We’re not exactly happy that the EPA proposal calls for 50 to 90 years of waste cleanup and water treatment for the upper basin.  Unfortunately though, it’s probably a fair assessment of what it takes at current funding levels to clean up the Silver Valley once and for all. Hecla’s proposal — which plans only for the next 10 years and puts off major water treatment efforts – almost guarantees another lengthy EPA administrative process ten years from now.

Instead, we should just agree to get on with it. We should commit to cleaning up the Coeur d’Alene basin — completely, efficiently, to scientific-based standards, and according to the law. The mining industry’s special-interest shortcuts to the cleanup will only delay the restoration of the basin.

Your comments to EPA will help counter the mining industry delay tactics. Our friends at Idaho Conservation League have set up an easy way to send an email to EPA to support the Coeur d’Alene cleanup. Take a couple of minutes to tell EPA that you prefer a comprehensive cleanup over a half-baked one, that you prefer to finish the job rather than take half-measures with no end in sight, and that restoration of the Coeur d’Alene ecosystem is important to you, your family, and to the health of the region.

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Last week, in anticipation of the formal public hearing on the EPA cleanup in the Silver Valley, we received a postcard mailing purportedly from “Citizens for a Prosperous Silver Valley” critical of the EPA proposal. The return address was a box in a Coeur d’Alene UPS Store, and we couldn’t find any further information about this alleged group of so-called citizens.

Without any explanation, the postcard’s very first claim is that the “over-reaching and expensive approach will threaten hundreds of current and future mining jobs in the Silver Valley.” The postcard also calls into question the EPA plan saying “EPA wants taxpayers to buy into and pay for a massive expansion that will cost billions of dollars and take a very long time to implement.”

Coincidentally — or not — the positions on the postcard tracked those of Hecla Mining employees who turned out at the public hearing. The large Silver Valley mining concern runs the Lucky Friday mine near Mullan.

The unspoken truth is that Hecla has already been found by a federal court judge to be liable for 31% of the cleanup costs. However, Hecla has not settled this claim with EPA. So Hecla is motivated to minimize projected cleanup costs, so as to minimize their ultimate exposure.

Moreover, Hecla has been criticized for playing fast and loose with required corporate reporting of its cleanup liabilities. (See: Robert Ropetto, Silence is Golden, Leaden, and Copper: Disclosure of Material Environmental Information in the Hard Rock Mining Industry, 36-38, (2004).)

Hecla’s recent report states:

Hecla Limited currently estimates the range of its potential liability for both past costs and remediation (but not natural resource damages as discussed above) in the Basin to be $65.6 million to $93.6 million (including the potential range of liabilities of $60 million to $80 million for Basin cleanup, and  $5.6 million to $13.6 million for the United States’ past cost claims), with no amount in the range being more likely than any other at this time. Hecla Limited has accrued the minimum liability within this range, which at June 30, 2010, was $65.6 million.

The problem for Hecla, though, is that all estimates of the upper basin cleanup are nearly $1.3 billion. The lower basin cleanup has barely begun.  Also, another mining operation, ASARCO, recently settled with EPA for some $482 million. The federal judge that held Hecla responsible for 31% of the cleanup had held ASARCO liable for only 22%.

Yet, Hecla is a company that paid their CEO nearly $3 million in total compensation last year, has $197 million in cash on its balance sheet, and just posted its second highest gross profit and cash flow from operating activities in Hecla’s 119-year history. In a recent article, Hecla President and Chief Executive Officer Phillips S. Baker, Jr. said, “Our mines, operating management and orebodies combined with current prices allowed Hecla to generate an extraordinary amount of cash flow for the amount of production.” (Meanwhile Hecla’s quarterly report notes that they do not expect to contribute to the employee pension plan this year, and just recently saved $9 million on eliminating a post-retirement medical plan.)

So while the proposed EPA cleanup is, indeed, expensive, and it will, indeed, take a long time to implement, the taxpayers aren’t necessarily going to be on the hook for all the costs.  When Hecla finally pays what it owes, the taxpayer burden will be dramatically reduced.

UPDATE 2/25/2011: Hecla announced today that it has reached a tentative agreement to pay $263 million as settlement of its cleanup claims.

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As the future of the Coeur d’Alene Basin cleanup hits center stage this week, legal interns Sean Waite and Jeff Briggs supply this tutorial:

In a recent Coeur d’Alene Press editorial, and many times throughout the long history of the Coeur d’Alene basin cleanup plan, the question has been raised; “who is really going to end up paying for all this?”  While a complete response to that question can get very complicated, the underlying law provides us with a fairly straightforward answer:  those responsible for causing or contributing to the problem, i.e the mining companies, are supposed to pay. For any amount that is not recoverable, the federal Superfund program does. 

In 1980 Congress enacted the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), commonly known as Superfund.  Under CERCLA, Congress put into practice the “Polluter Pays” principle, an environmental policy that requires that the costs of pollution be borne by those who cause it.  In other words, the companies or people responsible for the contamination are the parties liable for the cost of its clean up.  Moreover, CERCLA is a strict liability statute, so an entity becomes legally obligated to cover the cost of clean upon being found as a contributor, regardless of negligence or fault. For the Coeur d’Alene basin Superfund site, a federal court has already found several companies responsible for the environmental degradation of the area, and therefore, clean up costs.

The list of companies causing or contributing to our mess includes Hecla Mining Company, ASARCO, the Coeur d’Alene Mines Corporation, and the Sunshine Mining and Refining Company.  All but Hecla Mining Company, found by the court to be 31% liable, have reached settlement agreements with the EPA.  This includes a recent $482 million payout by ASARCO, which was apportioned with 22% of the cost.  Hecla remains the sole financially-solvent company yet to settle its liability.

For any costs of the cleanup not recoverable from a polluter, CERCLA utilizes a cost-sharing mechanism.  Generally, the federal Superfund program is responsible for paying for the initial cleanup, leaving post-cleanup operation and maintenance to the states.  The federal government is not required to do a perfect job but must ensure that human health and the environment are protected.  The post -cleanup operation and maintenance of sites is crucial to ensure that the cleanup efforts provide for meaningful long term protection of human health and the environment.  

Unfortunately maintaining the Superfund program has become an unfunded mandate for the federal government.  Until 1995, Superfund cleanups were funded through both the “polluter pays” principle discussed earlier and by taxing the chemical and petroleum industries that manufacture hazardous materials that create Superfund sites.  The idea was that the Superfund tax would ensure that the polluting industries, not the general taxpayer, would be responsible for the problems they collectively create.  (The problem with relying solely upon the “polluter pays” principle is that 30% of the companies that create Superfund sites are unable to pay for their cleanup.)  However, the tax on the chemical industry expired in 1995 and has not been renewed.   Now, our federal tax dollars are used to clean up their messes.  Due to these funding issues, the Obama administration has proposed reinstating the Superfund tax on polluting industry, but there has been a decided lack of progress on this front.

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