Hecla Mining sues Montana after told to clean up before starting new projects

Silver producer Hecla Mining (NYSE: HL) is taking Montana environmental regulators to court for labelling the company and its top executive as "bad actors," while giving them 30 days to iron out a complaint that accuses them of violating the state’s mine clean-up laws.

The Montana Department of Environmental (DEQ) notice to the company, which could require it to pay up to $30 million, focuses on some old operations in Central Montana. However, the consequences of this impasse with the state’s authorities could affect Hecla’s plans to build two new mines.

Montana’s 'bad actor' law has only been used once before, and Hecla’s president and CEO is the first top executive at a large company to be scrutinized under it.

The Coeur d’Alene, Idaho-based firm is pursuing development of two large silver and copper mines in northwest Montana, which would employ about 300 workers each. They would be constructed beneath the Cabinet Mountains Wilderness, an area of remote, glaciated peaks and valleys that take their name from the area’s box-like rock formations.

Because of ties Hecla’s president and chief executive officer, Phillips Baker, has with the old mines in question, the company must now stop mining in Montana until it pays back the reclamation costs incurred by the now-defunct Zortman Mining Inc. and Pegasus Gold Mining Inc., Bloomberg BNA reported.

Hecla could resume mining once it proves that Baker will not be involved in mining or exploration in the state, the article says.

Hecla vice president for external affairs, Luke Russell, said the company had no direct relation with Pegasus. Two Hecla subsidiaries, not Baker, were the applicants for the Montana projects, he said.

“It is a far stretch to suggest now that Hecla, a 127-year-old company, is required to pay for reclamation of a mine conducted by another, totally unrelated company,” Russel told Bloomberg.

The bad actor law, passed in 1989, blocks individuals who don’t clean or pay for the clean-up of old mines from starting new ones.