DEQ calculates half-million dollar fine for alleged activities at Zortman mine

Montana Department of Environmental Quality has calculated a potential fine, more than $500,000, for a group requesting permission to do mining exploration at a site that already has cost millions in restoration.

The fine has been proposed for alleged mining exploration without a permit.

A consent order drafted by Montana Department of Environmental Quality states that Blue Arc LLC, Luke Ployhar, Legacy Mining LLC and Owen Voigt will pay the fine, $516,567, for conducting exploration without a permit in the Little Rocky Mountains at the Zortman Mine just south of Fort Belknap Indian Reservation, as part of the consent order.

DEQ spokesperson Moira Davis said no fine has been officially imposed on any of the entities who have been notified of violations of the Metal Mines Reclamation Act.

Davis said, using its legal discretion, DEQ calculated a penalty that was commensurate with observed violations.

DEQ has the discretion to issue an administrative order or to offer the parties involved the opportunity to negotiate an administrative order on consent, Davis said, and the department has elected to offer the latter and sent the initial draft of the administrative order on consent and the penalty calculation to the parties July 1 to initiate those discussions. The discussions are ongoing.

The draft of the consent order also requires Ployhar and Voigt to cease any exploration and mining activities at the properties until fines have been paid, proper licenses and permits have been issued and a performance bond has been filed and requires them to submit a plan for reclamation at the eight sites DEQ identifies as where exploration has occurred.

In the discussions leading up to the fine calculation and consent order being drafted, Blue Arc sent a letter to DEQ April 15, 2022, in response to its violation letter sent to the company, the consent document said. The letter said Blue Arc was not exploring the properties for mining or extracting material for mining, but rather was developing several campground sites that will contain cabin, recreation vehicle and tent sites.

The consent document says Ployhar sent a letter to Gov. Greg Gianforte June 2 where he also said he is trying to develop his property as a potential recreation site.

The consent document states that DEQ has determined that mining exploration has occurred on eight sites owned by Ployhar and details the sites and what activity DEQ found.

Fort Belknap Indian Reservation and several groups have actively opposed Ployhar's proposed mining exploration.

Fort Belknap calling for a public meeting about a Ployhar mining exploration permit request led DEQ to upgrading its requirements from an environmental assessment to a more complete environmental impact statement for the permit request.

The head of Fort Belknap Indian Community's tribal council praised DEQ's proposed consent agreement.

"The Aaniiih and Nakoda Tribes thank the DEQ for upholding the law and issuing a penalty that is commensurate with the egregious violation committed," Fort Belknap Indian Community President Jeffrey Stiffarm said in a press release. "We will continue to protect our precious water and sacred sites in this area of the reservation. This is exactly why we have been fighting over the years for the return of the Grinnell Notch to us."

More than a century of mining in the area

In its proposed consent order and fine calculation, DEQ described the activity as a violation of major gravity that has compromised reclamation work at the site and represents a risk of acid rock drainage, the press release said.

The work is going on in an area with more than 100 years of mining and mine exploration, including recent mining that caused environmental damage that has, so far, cost the state and federal government an estimated $80 million to $85 million in reclamation and remediation and seriously damaged the environment on and near Fort Belknap Indian Reservation.

The federal land in the area that led to the pollution and the reclamation and remediation cost had been withdrawn from mining for 20 years, until a lapse of a few days allowed Ployhar to file mining claims on the federal land - the land in question in the consent agreement is private land - but that land again has been withdrawn by the federal government.

U.S. Bureau of Land Management announced in June it was publishing a notice of intent to withdraw more than 900 acres of land from mining in addition to the land listed in a notice in 2020.

The area has more than 100 years of history of mining for gold. The land in question originally sat within the boundaries of the Fort Belknap Indian Reservation when it was established in 1888. Then gold was discovered.

The federal government in the 1890s pressured the tribes on the reservation in 1896 to sell back land on the southern part of the reservation after gold was discovered there, and then mining began.

In 1979, Zortman Mining Inc., a wholly owned subsidiary of Pegasus Gold Corp., started mining in the area, using heap leach mining. This process used chemicals, including cyanide, to leach minerals like gold from ore from two open-pit mines totaling about 1,200 acres of land, half public and half private.

The Red Thunder Oral History site says that a grassroots group organization based near Lodge Pole began a legal campaign against the mining after people noticed wildlife dying and rumors began spreading about babies being born with birth defects.

Red Thunder began taking legal action against Pegasus, the site said.

Montana regulatory agencies in 1992 detected acid rock drainage from the exposed bedrock, a common problem in mining which typically occurs when water mixes with sulfides in exposed rock and forms acid. Montana, and later the federal Environmental Protection Agency, filed lawsuits against Pegasus claiming violations of Montana Water Quality Act and the U.S. Clean Water Act.

Pegasus settled out of court in 1996 and was required to pay $37 million in civil penalties and provide other relief, but was to be able to continue mining.

But when gold prices reached record lows in 1997, the site says, Pegasus declared bankruptcy, reorganized under the name Apollo Gold and closed the Zortman-Landusky mines.

The bond posted by Pegasus and its settlement did not cover the costs of cleanup, and the state and federal government have spent millions on the cleanup so far with millions more to come in annual water treatment along with reclamation.

Acid mine drainage from abandoned sites can continue for generations or even, under certain conditions, thousands of years.

A two-day window to mining

Following the closure of the Pegasus mines, the federal government had withdrawn in 2000 the region from mining claims, with five-year withdrawals extended for five more years three times.

The consent document says Ployhar purchased in August 2001 the private lands associated with the Pegasus bankruptcy. The land was in the region the U.S. of Bureau of Land Management listed as under the authority of the Federal Comprehensive Environmental Response, Compensation, and Liability Act for regulation.

In 2020, under the Trump administration's interior secretary at that time, David Bernhardt, the Interior Department announced a 20-year withdrawal of most of that land - less about 900 acres - but did not post notice of the withdrawal for two days.

In that two-day window, Ployhar's Bozeman-based Blue Arc, which owns the private land patchworked in the federal land where the Pegasus mine operated, filed multiple mining claims on the federal land.

Ployhar has said he was watching the area for an opportunity to explore mining in the area, saying he intends to use traditional underground mining if the exploration finds minerals, and when the withdrawal lapsed he filed the claims.

Fort Belknap Indian Community has raised doubts on that.

"In October of 2020 while BLM napped for 48 hours, the withdrawal did not occur timely as it had the three prior times," Stiffarm said in June. "During this very short window of time, Mr. Ployar filed his mining claims. The council has demanded answers with the secretary of interior and has demanded an Office of Inspector General audit. The council wants answers."

Stiffarm added that the additional withdrawal simply goes back to protections that were in place from 2000 to 2020.

Mine exploration permits and testimony

Blue Arc, and Legacy Mining, had applied for permits to do mining exploration on Ployhar's land in the Little Rockies, which go through the state Department of Environmental Quality because they are requests for exploration on private, not federal land.

Ployhar told Havre Daily News earlier this year that he has no intention to use heap leach mining if the exploration finds minerals to mine, but will instead use conventional underground mining.

DEQ had approved one of those permits, pending sufficient bonding, and was considering another, when Fort Belknap called for a hearing to collect public input on the idea.

Fort Belknap, Montana Environmental Information Center and Earthworks sued DEQ and Blue Arc over the first permit which was approved, saying the tribes had been left out of the process and the agency failed to adequately consider the impacts of new mining. That lawsuit still is pending, with Judge Yvonne Laird granting an unopposed motion from DEQ to stay the case.

When DEQ was considering the second permit request, at Fort Belknap Indian Community's request it held a public hearing to gather comments, which were universally opposed to new mining in the area.

Following that hearing, DEQ said more study was needed and said a full environmental impact statement study - it originally used a less-extensive environmental assessment process - would be conducted.

Stiffarm also testified May 12 before the U.S. House Committee on Natural Resources' Subcommittee on Energy and Mineral Resources in support of the Clean Energy Mineral Reform Act of 2022, which would revise the U.S. mining laws that have been in place since 1872.

Stiffarm testified on the history of mining in The Little Rockies and its impact on Fort Belknap Indian Community, including the Pegasus heap leach mining and the proposed new mining exploration.

"Future mining at the site not only threatens the health and welfare of tribal members, it threatens to further desecrate sacred tribal land, including the potential to disturb the graves of relatives and ancestors of tribal members," he told the committee.

A new chapter in the dispute

But in its documents, DEQ says mining exploration was going on before any licenses or permits were issued - even before the companies applied for them.

Ployhar and Voigt have applied three times for an exploration license in the area since 2020.

The first application was approved by DEQ in February 2021, but they failed to post the reclamation bond required for the exploration license that authorizes surface disturbance. The applicants submitted a second application in March 2021, but asked that it be withdrawn in November 2021. The third application was filed in July 2021 and is still pending.

After DEQ determined in February 2022 that an environmental impact statement was necessary to analyze the potential impacts to areas of tribal cultural significance. Ployhar and Voigt appealed the decision to the Board of Environmental Review.

The proposed consent order is the latest action on the issue of the proposed mining exploration.

The other groups supporting Fort Belknap in its lawsuit and opposition to the proposed mining exploration applauded the proposal.

"It's infuriating to see such blatant disregard for the decades of reclamation work to control acid drainage and improve water quality in the Little Rockies," said Bonnie Gestring, northwest program director at Earthworks. "We're heartened to see DEQ take enforcement action to protect water resources and public health."

"The devastation at Zortman-Landusky from previous mining activity is unforgivable. The Little Rockies and the Zortman-Landusky area should be off limits to any more mining," staff attorney with the Montana Environmental Information Center Derf Johnson said. "It's jaw dropping that someone would risk even further environmental devastation, and so we're heartened to see DEQ crack down on risky mining activity."

"Our mining laws must be enforced to protect Montana's greatest attribute: clean water," said David Brooks, executive director at Montana Trout Unlimited. "We're pleased to see DEQ move forward with this enforcement action."