Thompson Sells Out Wisconsin's Resources to Mining Interests, cont.

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Wisconsin state law requires all corporations doing business in the state to register their corporate status. Previous to 1995, this registry was handled and enforced by the office of the Secretary of State, an office held in recent years by Doug LaFollette, a long-time environmental advocate and critic of foreign mining corporate activity.  As part of the same party-line tax bill when the Governor assumed power over the DNR Secretary and eliminated the Public Intervenors Office, this corporate registry authority was transferred to the Department of Commerce, again placing power under the Governor's direct control.

Since January of 1998, Rio Algom Ltd., registered in Toronto, Canada has been operating in this state as Nicolet Minerals Company.  As of September of this year, Nicolet Minerals has yet to register with the Department of Commerce.(10)

Hazardous Waste Rules

The DNR regularly defends the adequacy of Wisconsin's mining laws by saying they meet or exceed federal standards. This claim becomes suspect when one considers that federal mining regulations havenÕt been significantly revised since 1872 and generally don't address environmental issues.

This defense by the DNR is particularly hurtful with regard to federal hazardous wastes regulations and the recent attempt to update Wisconsin's rules governing groundwater monitoring surrounding mine tailings storage facilities.(11)  Back in 1980, due to both political pressures and technical limitations at the time, Congress excluded mining wastes from their RCRA Subtitle C regulations (they weren't to be considered as "toxic wastes" even though they technically meet that criteria).  Since that time, the EPA has studied present mining practices and found it even more imperative than in the past to treat such storage facilities as toxic waste dumps.(12)   Federal rules are presently under review for updating and revision.

By ignoring the science of the materials being permanently stockpiled, the DNR has refused to establish groundwater monitoring requirements for mining tailings facilities that would assure the systems hadn't failed until pollution had already seeped into the groundwater and begun its migration to surrounding aquifers. It also fails to mandate remediation once pollution occurs, allowing modification of the mining company's groundwater computer model as a substitution for stopping the pollution at its source.

In a recent Capitol Times story, Kevin Kessler, former DNR ground water section chief, admitted that the state's ground water la, passed in 1984 had an exemption from state groundwater rules as a concession for Exxon and uses that tradition as a defense of the compliance boundary where groundwater rules apply.   "1,200 feet has been a feature of mining administrative rules. We did not think it appropriate to change," Kessler said.(13)

Mining Moratorium Bill Passage

The philosophical basis for the Mining Moratorium Law is clear: engineering projections are not the same as real science that demands proven results from past experience.  Since no sulfide metallic mine has ever been shown which has been successfully operated and reclaimed without environmental degradation, the State should demand such an example from the mining companies before they propose to experiment on our most valued ecosystems.

Throughout the political process of passage of the Mining Moratorium Bill, the Thompson Administration, most Republican legislators, and the DNR insisted that the law was unnecessary and unenforceable.(14,15)

As late as January 1998, in an early version of the publication "Misconceptions About Mining In Wisconsin," the DNR proclaimed, "...whether a project succeeds or fails outside of Wisconsin has little bearing on whether a mine would or would not pollute at a particular site in Wisconsin."

Just one month later, after Assembly Republicans were forced to pass the final bill, a revised edition of Misconceptions was published which deleted this passage.

The various votes on the Moratorium bill and the associated amendments were almost purely partisan.  Even newspapers which had been ambivalent about the moratorium bill itself saw through the Republican Assembly vote that limited the definition of pollution to include only conviction and penalty for an environmental crime as an attempt to make the law toothless. (16,17)

Since passage of the bill, the Governor, DNR officials and legislators who actively spoke out against the passage of any moratorium bill are now taking credit for the law as an example of strong bipartisan support for tough mining regulations.

Democratic Connection

In recent years the mining issue has become ever more partisan. It should be noted, however, that at least some of the legislation giving the mining industry special privileges had some bipartisan support.  Party labels and affiliation may not mean  much when big money is at stake.  For example, former Democratic Governor Tony Earl has become a paid lobbyist for the mining industry in Wisconsin.

It should also be noted that not all Republican legislators have fallen in step behind Governor Thompson's pro-mining agenda. Several legislators such as Representative William Lorge, Senator Robert Cowles, and Senator Tim Weeden have actively supported tightened mining regulations. But in the case of Lorge, it cost him his party's support, leading to his defeat in the most recent primary election. This will likely stifle other Republican legislators who might otherwise choose to vote their conscience rather than support the party line.
 
It should also be noted that although this report may be seen by some as a partisan document, many of the members of our supporting organizations are long-time Republican Party contributors. We hope that in the upcoming legislative session, many Republican legislators will break rank with the party bosses, vote with their consciences, and return to the strong bipartisan support for our natural resources on which Wisconsin's national reputation is founded.

Moratorium Enforcement

For many environmental and conservation enthusiasts, the passage of the Mining Moratorium Bill was a bittersweet victory.  Although the intent of the bill was quite clear, it is recognized that Thompson's politicized DNR would be in charge of interpreting and enforcing its provisions. Their fears were clearly justified.

While most people either assumed the permitting process was on hold or waited expectantly to see what kind of response the mining companies would come up with, nothing has changed. The companies are moving full speed ahead with their project preparations and the DNR is continuing to direct resources towards analyzing options even before such plans have been made public. (See "Delay in Releasing Draft E.I.S." below.)

When pressed for action on the Moratorium Law, both Secretary Meyer and Executive Assistant Stan Druckenmiller have responded with the same self-contradictory position: (18)

a) The law is clear and precise so no implementation rules are required.
b) The DNR's interpretation of the laws implementation is in direct contradiction to the intent and understanding of the primary authors of the bill.

Rather than going though an open-hearing rule-making process whereby the DNR's interpretation of the law could be brought into line with that of the legislators who authored the bill, Thompson's DNR has unilaterally decided that they and the mining companies will simply continue with the permitting process, totally ignoring the overwhelming will of the people of Wisconsin who endorsed the Moratorium Law.

Delay in Releasing Draft E.I.S.

When Thompson met with the DNR staff, he was informed that a draft Environmental Impact Statement (EIS) would be ready for release by September or October of this year.  A staff member present reports that Thompson declared "You can't do that - that's just before the election!"(20)   Soon thereafter discussion within the DNR indicated that additional material required of the mining company would delay the release of the EIS.

DNR officials have denied this event ever took place,(21) but subsequent activity seems to show just such a pattern.

Rio Algom Chairman Gordon Gray told its shareholders that "...permits for Crandon could be in place as early as next year."(22) Meanwhile, after environmental groups began pressuring the DNR for lack of action on the Mining Moratorium Law, DNR Project Manager William Tans sent off a letter to Nicolet informing them that their submitted proposal needed "...complete revisions or updates to [eight] document/reports" including the most basic descriptions of their proposed operations and environmental safeguards.(23)

To date few, if any, of these updates or revisions have been formally submitted (and hence are not available for public scrutiny). Nonetheless, the DNR is going ahead with their evaluation of the permit application and technology analysis based on private communications between Nicolet and the DNR including the (unofficially) proposed scheme for the removal of pyrites from the mine tailings.

Thus Thompson's DNR is prepared for a fast-track approval of a draft environmental impact statement (DEIS) in less than four months time once the completed application is finally submitted.  All of this, of course, will occur after the fall election, relieving the political pressure on the Governor and his supporters.

Science Advisory Council (SAC)

In order to overcome concerns and criticisms of citizens about the Thompson DNR and their ability to permit the Crandon Mine, Thompson formed the Wisconsin Science Advisory Council on Metallic Mining (SAC) by Executive Order, implying that his DNR is not up to the task in spite of claims to the contrary.  Is this simply another attempt to place Thompson-appointed individuals in a position to oversee DNR regulators?

As recently as October 16, 1998, the Governor claimed his SAC will have the final say as to whether this mine will be built or not.(24)

The DNR and the EPA have both formally stated that the Council has no authority in the permit process other than advisory; they could not stop this mine even if they found good reason.

A recent comment by Anders Andren, chair of the governor's Science Advisory Council, says a lot about how seriously Thompson's DNR takes their mandate to evaluate the adequacy of the sample mines to be presented by Nicolet to meet the non-pollution criteria of the Mining moratorium Law. Andren said his group will not be advising on the moratorium. "We have been asked to evaluate the scientific and technical aspects. We are advisory to him (the Governor) as to whether the mine is using the best techniques to excavate a sulfide mine - not social Policy issues,"(25)

The message is clear: the moratorium enforcement will be a political decision not a technical one.

Members of the Science Advisory Council were also recently taken on a tour of supposedly successfully reclaimed mine-sites hand-picked by Nicolet Minerals to "educate" the experts. No attempt has been made to have the Council Members tour any of the thousands of historic failed mining sites so they could see the potential impact of, say, a catastrophic tailings pond retaining dam failure as occurred recently in Spain.

State Emergency Disaster Fund

History has shown that virtually all sulfide metallic mines cause environmental damage and often such damage is catastrophic and may not occur until many years after the mine has closed.

Wisconsin has no mechanism for funding such future clean-ups. Present mine bonding funds are returned to the company after demonstrating reclamation to the DNR's satisfaction. And the "perpetual responsibility" for future clean ups claimed so often by both Thompson's DNR and the mining companies is dependent solely on the "good reputation of the mining companies,"(26)  and the assumption that they will still be around and solvent many generations hence.

To remedy this situation, Republican legislators Seratti and Ourada petitioned the DNR in July 1996 for rules to establish a mine emergency fund which would be irrevocable.  The DNR drafted a rule which was then modified by the Senate Agriculture and Environment Committee in Dec. 1997 to require a minimum $2 per ton fee on hazardous metallic mining waste.  DNR staff countered with $0.25 per ton for waste disposed above ground and $0.05 per ton for backfilled waste.  In January 1998, implementation of the rule was delayed by the Thompson DNR when objections were raised by the mining companies.  The DNR has refused to schedule action before the Natural Resources Board to give final approval of the Fund.

This is despite historical evidence that the DNR has spent between $5.00 and $20.00 per ton for cleaning up mine waste pollution from turn-of-the century lead mines.

Despite the fact that much background research has been done on this problem (at no cost to the state) by environmental groups,(27) the Natural Resources Board has had nine monthly meetings since this request was made by the legislature without taking any action at all on the matter.  For many, it seems obvious that their intention is to wait until after the Gubernatorial elections before addressing this volatile issue.

The Harry Connection

In our previous report in this series, the Natural Resources Accountability Project reported on the sudden reversal in a shoreland zoning enforcement case resulting directly from the personal involvement of DNR Secretary George Meyer. Since the publication of that report, we have discovered that the homeowner, John Harry, had recently sold his privately owned business for a sum in excess of $35 million --- part of which he has used to build his 10,000 square foot home, violating the setback limits from the shores of Green Bay.  It turns out his firm, Corrosion Technology, was a major  service company to the metallic mining industry.

Flambeau Reclamation

Both the Thompson DNR and the mining companies like to stress that the permitting process for both the operation and reclamation of a metallic mine is a long extended process with thorough scientific overview and ample opportunity for public input.

After years of mass public involvement in such a permitting process, the Flambeau Mine in Ladysmith completed its active mining operations and began closure according to the approved mine plan.  In January of 1998, the company wrote a letter to the DNR announcing significant changes in their reclamation plan including severe compromises in the prairie restoration program, the preservation of mining-specific water treatment equipment, and clear technical inconsistencies resulting from the plan change.

Despite numerous informal communications around this period between the DNR officials involved and environmentalists who had obvious concerns about mining reclamation issues, the officials failed to mention any of these changes. The DNR intended to approve all but one of the changes proposed by Flambeau without any public input whatsoever.

Formal notification consisted of very small and incomplete classified ads placed in local papers near Ladysmith.  Fortunately one concerned individual happened to notice one of these notices and word got out.

After a dozen individuals wrote DNR requesting an informational hearing on the issue, DNR staff insisted the only option would be a long, expensive contested hearing which would delay the mine reclamation schedule.(28)

Meanwhile, Robert Wilson, CEO and Chairman of the Board of Flambeau Mining's parent company, Rio Tinto, threatened if such a contested hearing were necessary, he would order the demolition of the industrial buildings they had promised to lease to the local community for an economic development project.

Only when the challenging citizens stood their ground, demanding answers about several items in the plan change, did the DNR back down and schedule an informational meeting.

That meeting proved to be very productive as several important improvements were made in the reclamation plan including correction of several obviously improper items that the DNR had overlooked in their closed-door review process.

Special Tax Status

Back around 1975, a special tax advisory committee met to review the tax code for the proposed Flambeau Mine and subsequent metallic mines.(29)  A review of the minutes of this committee's discussion clearly shows that Flambeau's Head Geologist, Ed May, defined the direction of the discussion.

Initially it was decided that valuation for property taxes for the mine site would not include the value of the minerals under the earth.  Land slated for mining with billions of dollars worth of gold or copper would be assessed at the same rate as farmland.

Secondly, it was determined that the value of the minerals extracted in the mining operation would not be taxed either.

Thirdly, they decided that mining companies would have the exclusive status of being exempt from corporate income taxes which now amount to about 7.9 percent.

And finally, they wrote a complex formula for a "net proceeds tax" where the company would pay a small percentage tax on the net profits they report for that portion of the mining operation that occurs within the borders of Wisconsin. The company can easily apply the greatest value-added profit to the beneficiation, smelting or sales of the minerals once they are shipped out of the country. The net effect for the Ladysmith mine was a paltry $20 million tax collected on a half-a-billion dollars net profit for the parent company in London --- about 4 percent.  Only a small percentage of that money went back to the local community and there is ample evidence that rather than providing much-needed economic assistance to this depressed economy, the Flambeau mine left Rusk County far worse off economically than it was before the mine opened. (30)

To date, it seems that no one in the Thompson administration or the Wisconsin Manufacturers and Commerce (whose members otherwise make up the difference in corporate taxes) have gone back and evaluated this formula.  Should they do so, they would realize that Wisconsin is giving away its mineral resources at a rate that would shame the most corrupt and exploited third world nation.

"Mining Misconceptions"

In January of 1998, the DNR published a four-page document "Misconceptions About Mining In Wisconsin."(31)  Originally intended to be a comprehensive discussion of issues raised by both sides at public hearings,(32) the final document was a wholesale defense of the Mining Industry and a dismissal of 25 legitimate concerns regarding mining and its regulation in Wisconsin.

When challenged on this imbalance on Wisconsin Public Radio, Secretary Meyer replied that they didn't know of any such misinformation being promoted by the mining companies, but if such material were provided, they would consider updating their flyer.

Such information has been provided to the Secretary both before and since the publication of the DNR's broadsheet.(33)  In a letter sent on April 20, 1998, Secretary Meyer replied, "[I] agree with your comment that our recent publication, "Misconceptions About Mining In Wisconsin" does not cover many of the issues you included ... I will ask staff to consider some of the specific concerns you listed." (34)   To date, the DNR has failed to publish a more balanced version of their document.

Selective Knowledge

In August of this year, an Associated Press story reported on the Poirier mine in Quebec operated by Rio Algom and closed in 1975.(35)  Besides being one of the worst toxic waste dumps in the Province, it was also the background for a major investigation of corruption of local environmental officials.  This was not a new story; environmentalists and international news sources were well aware of this history.

When Bill Tans, the Wisconsin DNR official responsible for coordinating the review of Rio Algom's proposed Crandon Mine, was asked about this issue, he replied he knew nothing about it.  He defended his ignorance of history on the grounds that Wisconsin law only instructs him to investigate very specific legal transgressions by mining companies in the US.  Although the law clearly does not prohibit the DNR from becoming informed of other relevant information about mining applicants, the DNR has chosen to interpret their mandate narrowly in favor of the mining companies rather than fulfill their comprehensive mandate to protect Wisconsin's environment.

"The Toughest Mining Laws"

As recently as the last televised gubernatorial debates, Thompson declared "Wisconsin has the toughest mining laws in North America."(36)  This mantra, which has been repeated by almost every mining company executive and DNR official in the state, is simply not true.  In 1990, the Western Governors' Association Mine Waste Task Force determined that 11 out of 17 states had mine waste groundwater protection standards stronger than Wisconsin's. Our  laws regarding air quality and impoundment embankment stability were judged to be about average.(37)

It is obvious from the timeline and the evidence presented in the previous discussions that, Wisconsin's mining laws have been weakened, not strengthened, since 1990 (with the possible exception of the Mining Moratorium Law passed over the objections of the Governor and DNR officials.)

Even the laws and administrative rules that do exist are regularly interpreted and enforced to the benefit of corporate interests.

Intervenors Eliminated

The Wisconsin Public Intervenor Office, which for 27 years served as the people's environmental watchdog, was deleted from the budget by Thompson and the Republican-controlled Senate in 1995.

At the time, the Public Intervenor was in the midst of a review of EXXON's Crandon Mine project, preparing for formal intervention in the Master Hearing, and had hired three world-class experts to review different technical aspects of the mine permit application.

Thompson denied that the office was cut because of its review of the Crandon Mine project, or any other particular issue.  He argued the office should be cut to "streamline" the budget.

The annual taxpayer cost of the Public Intervenors was only $232,000 --- only .00001166% of the $15 billion 1995 state budget, or about a nickel per person in Wisconsin.

Throughout this budget process, Thompson's chief aide and Secretary of the Dept. of Administration was James Klauser, a former EXXON lobbyist.
 

The following sections of this report discuss key details:

  Report Overview and Introduction
  The Timeline and Issues
  The Mining Money Trail
  Conclusion and Recommendations
  Methodology and References