The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

(Bloomberg Businessweek) -- For a century, the mines of the Coeur d’Alene Mountains in North Idaho produced much of the heavy metals that made the U.S. a global superpower. Starting in the 1880s, through the rise of industrialization, the introduction of the automobile, and two world wars, a few narrow canyons in the Coeur d’Alenes yielded more than 11 million tons of zinc, lead, and silver, as much as a fifth of U.S. production.

Mining has left a mark on the culture of the Silver Valley and an indelible stain on the landscape, which remains heavily contaminated. To extract a pound of metal, mining companies had to process nearly 14 pounds of ore, and they dumped the crushed waste rock into mountain streams and along river banks. Over the course of a century, the tailings and mine drainage flowed down the 40-mile-long watershed, depositing some 75 million tons of highly toxic sludge into Lake Coeur d’Alene. House cats convulsed from drinking the water. Migratory tundra swans suffered slow deaths as their digestive tracts seized up from lead poisoning, causing both suffocation and starvation as undigested food backed up into their long necks. Children in the Silver Valley in the 1970s registered some of the highest levels of lead in their bloodstreams recorded anywhere.

By the time the area’s biggest mine, run by the Bunker Hill Mining Co., in Kellogg, closed in the early 1980s, the mines had spread a ribbon of poison from the Idaho-Montana border to Lake Coeur d’Alene and down the Spokane River all the way into Eastern Washington. In 1983, the U.S. Environmental Protection Agency declared the Bunker Hill Mine and smelter complex the nation’s second-largest Superfund site. The agency has been a presence in the valley ever since.

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

Today, after 35 years and almost $900 million in cleanup costs, Bunker Hill’s tailings heap still oozes 400 pounds of toxic metals a day into the South Fork of the Coeur d’Alene River. Tundra swans still flap and stagger in the marshes. After picking up more mine waste downstream, the river dumps almost 400 tons of lead and 700 tons of zinc into Lake Coeur d’Alene every year.

You’d never know it on the shores of the azure lake, a vacation jewel of the inland Northwest. The region has moved on. Timber and minerals have given way to tourism, outdoor recreation, and second homes. The new economic base is additive, not extractive. It relies on healthy forests, fish, wildlife, and an abundance of clean rivers and lakes—clean, at least, to the naked eye.

People come from all over the West to be on or near the spider-shaped lake, which extends its arms across 50 square miles. They fish for native cutthroat trout and invasive northern pike; swim, kayak, and jet-ski in tranquil bays; and tee off over the lake onto the famous floating 14th green of the Coeur d’Alene Resort golf course.

Many never leave. Last year the population of Kootenai County, where Coeur d’Alene is located, increased 2.9 percent, to 157,637, making it the fifth-fastest-growing metropolitan area in the U.S., according to the Census Bureau. The median home price in the area rose 12 percent, to $249,000—still more than affordable for the thousands of people, many of them retirees, who’ve moved there after selling homes in such places as Los Angeles and Seattle. The county is 94.5 percent white, 1.4 percent American Indian, and 4.6 percent Hispanic, and, in the 2016 presidential election, 67 percent Trump voters. The politics here are deeply conservative; as recently as 2004, the white-supremacist group Aryan Nations marched through downtown Coeur d’Alene.

So far, much of the metals pouring down from Silver Valley has settled innocuously on the bottom of the lake, undiffused in the overlying water. But the pollution is a ticking time bomb. Coeur d’Alene’s rapid development is loading the lake with nutrients from septic systems, lawn runoff, and logging activity, among other sources. Nutrients promote plant growth, which depletes the water’s oxygen supply. When the water becomes sufficiently anoxic—depleted of saturated oxygen—the metals will dissolve and flux upward into the water column, turning the lake into a toxic sink of liquefied arsenic, cadmium, lead, and zinc.

“This watershed needs time to heal, and billions of dollars of remedial cleanup, to become a functioning ecosystem again,” says Phil Cernera, an environmental scientist for the Coeur d’Alene Tribe, whose lands include most of the southern half of the lake.

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

The Trump EPA doesn’t do healing. In March, the agency disclosed a shocker: After months of secret talks, it had signed an agreement with a Canadian company to reopen the Bunker Hill Mine. Scott Pruitt, the agency’s administrator until his ouster in July, said in a statement that the pact would restore mining jobs, contribute $20 million toward cleanup costs for the Bunker Hill Mine, and provide almost $1 million a year for water treatment. In exchange, the new Bunker Hill Mining Corp. and the property’s previous operator were absolved of any responsibility for past toxic releases. The slate, if not the Coeur d’Alene watershed, would be wiped clean.

The deal foundered in September, after metals prices dropped and investors balked at pouring more money into a mining project led by a majority shareholder who is facing, of all things, Securities and Exchange Commission charges for mining fraud. But the consent decree to let bygones be bygones still stands, available for use by Bunker Hill Mining or whatever operator succeeds it. One way or another, the Bunker Hill Mine, one of the most prodigious polluters in American history, appears destined for a “fresh start,” as the EPA put it in its March announcement celebrating the deal.

Bunker Hill closed in 1981 because it couldn’t comply with U.S. clean air and water laws. Its owner at the time, Gulf Resources & Chemical Corp., declared bankruptcy, walking away from its pension obligations to its workers and stiffing the EPA for the cleanup bill. Gulf’s chief executive officer, David John Rowland, moved home to Britain, where he is a lavish contributor to the U.K.’s Conservative Party.

Other mining companies came and went; none could figure out how to make money while saddled with Bunker Hill’s pollution liabilities. That changed under a U.S. president who has promised to revive traditional industries in rural and blue-collar America, come what may. Bunker Hill makes a juicy target. In 1991, geologists estimated it still had 9.1 million tons of minable ore. Under the new operators’ plan to mine 1,500 tons a day, that’s 16 years’ worth.

Those estimates date back 27 years and cover only reserves compliant with SEC disclosure standards for “proven and probable” mineral bodies. In September, Bunker Hill Mining filed a technical report with Canadian securities regulators upgrading its “exploration target” for two zones within the mine to 10 million to 12 million ore-tons, with metals concentrations four to seven times higher than in the 1991 estimates. Laced with fat veins of zinc and lead and to a lesser extent silver, Uncle Bunker, as locals once called the mine, boasts a labyrinth of tunnels almost the length of New York City’s subway system, on 31 levels spanning 6,000 vertical feet. Some of the passages have shifted and crumbled and need shoring up, but most are ready to roll rock.

“This thing’s got 200 miles of tunnels already built and an ore body that’s only one-third mined,” says Robert “Bobby” Genovese, the Canadian investor who put together the original deal. “It’s like buying the New York Yankees!”

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

Genovese was a peculiar choice on the part of the EPA, even considering the rogues and swashbucklers who helped build the American West. He’s a penny-stock pitchman whose companies operate polo clubs, boutique hotels, cowboy-themed restaurants, and a fleet of Florida yachts—one of which, a 75-footer, was seized by U.S. marshals in February for $1.6 million in unpaid debt. He’s also fighting SEC charges of fraud and securities violations stemming from a dubious mining investment in Nevada. Genovese is as brash and checkered as a mega-Superfund mining promoter could be.

The reprieve for Bunker Hill was vintage Scott Pruitt. During his tumultuous 16 months in office, he pushed cleanup and reuse of Superfund sites with the same ardor he brought to gutting regulations protecting the nation’s air and water. The rehabilitation of toxic facilities was part of “refocusing” the EPA on its “core mission,” Pruitt said—ignoring that President Richard Nixon created the EPA a decade before the Superfund law explicitly to prevent pollution from harming the environment.

Mining has never entirely stopped in the Silver Valley, but output fell sharply when Bunker Hill closed and laid off 2,200 workers. The EPA and its hundreds of contractors were greeted like an occupying army. Families who’d lived on mining incomes for decades rejected the whole idea that pollution was a serious problem. From their point of view, the worst contaminant in North Idaho was the federal government, in thrall to effete environmentalists on the coasts.

“Somebody somewhere else is always sticking his nose into your town, like everybody in Hollywood complaining about hunting grizzlies,” says Gary Sheppard, a fourth-generation Silver Valley miner who now drives 11 hours, four times a month, to a mining job in Nevada. “You don’t see grizzly bears being reintroduced to California.”

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

Main Street in Kellogg, population 2,100, droops with the look of faded mischief and grandeur seen in old mining towns across the West. This was the business hub of the Silver Valley, built and controlled by Bunker Hill Mining. Today the stately brick buildings are mostly empty. Century-old structures that were once dry-goods stores, banks, and saloons house a chiropractor’s office, a Chinese restaurant, a gymnastics studio, and, in the only conspicuously remodeled storefront, a brew pub.

At the firehouse around the corner, Fire Chief Mark Aamodt lauds efforts to reopen the mine. Kellogg without Bunker Hill is a company town without the company, he says, squeezing his way between fire engines to the back of his station. He pats the gleaming chrome bumper of a 1964 Crown Coach firetruck still used by the city, a gift from the mining company back in the day. “Everybody assumed the mine would be here forever,” he says.

Now young people have to leave town to find a job, or work like Aamodt’s daughter does at the nearby ski area, Silver Mountain Resort, for little more than minimum wage. (In contrast, miners in the Silver Valley can earn more than $80,000 a year in wages and production bonuses.) Kellogg’s other new-economy employer is Dave Smith Motors, the self-proclaimed “World’s Largest Dodge, Chrysler, Jeep, Ram Dealer,” which keeps an inventory of more than 2,000 vehicles, sold mostly online. Dave Smith cars and pickups seem to line every stretch of pavement on the valley floor, as if Kellogg were built on the dealership’s lot, not the other way around. Some homes have signs in front warning, “Not a Dave Smith Parking Space.”

At the west end of town, near the bottom of the Silver Mountain Resort gondola, a row of shiny new cars defines the base of a 70-foot-high heap of old mine tailings. The EPA capped the 256-acre dump with a plastic liner and fresh turf in 2000, only to later find that an underground stream was still flushing 73 tons of metals a year from the repository into the nearby river.

Even Chief Aamodt admits the EPA has done some good, particularly its replanting of trees on the hillsides surrounding Kellogg, which were denuded by smelter emissions. But he doesn’t understand why the agency dug up 7,000 properties in the area and hauled away thousands of tons of sediments from streambeds. “Metals occur naturally around here. How can you possibly clean it all up?” he says.

The chief subscribes to a theory that’s popular here, one that several people attributed to nurses and doctors who worked for the old mining company: Lead poisoning is self-inflicted; exposure is a problem only in those families who don’t wash regularly. “If you’re out playing in the dirt, don’t put your hands in your mouth, and come in and clean up!” the chief says.

A former executive with the new Bunker Hill Mining says a nurse once told him that the kids with the most lead in their blood were the dirty ones, those who didn’t bathe. After the EPA arrived, local blood lead levels spiked, this executive claims, because unkempt “welfare families” moved into the Superfund area seeking handouts and social services. Such canards have contributed to a Stockholm-like syndrome that activists say is common in toxified communities: Victims of contamination blame themselves for their misfortune.

Over the years, researchers have found that many Silver Valley parents won’t take their kids in for blood tests—despite the $20 enticement offered by local health agencies—because they’re afraid of the shame it could bring if their children are found to be “leaded.” Today, “a very small subset” of Silver Valley kids are tested for lead, making it impossible to know what the community’s actual exposure level is, according to Omair Shamim, a physician and lead researcher with Idaho Head Start in Boise. “I wouldn’t reopen that mine until I had more data,” he says.

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

In the city of Coeur d’Alene, denial is a business strategy. The lake is the essential element of the region’s real estate boom and its $700 million tourism industry. If its waters run foul, the area’s economy will collapse. But that’s a distant threat compared with the specter of being named a federal Superfund site, which confronted Coeur d’Alene for the first time 20 years ago. Convinced the moniker was worse than the pollution itself, local leaders and Idaho politicians mobilized intense opposition and prevailed on the EPA to carve out Lake Coeur d’Alene from the federal cleanup area.

“You can walk out into the lake and swim in the lake and drink the water, and yet EPA is suggesting, and the Coeur d’Alene Indians are suggesting, that this should be a Superfund site?” said former Idaho Senator Larry Craig on the Senate floor in 1998. “I would hope not.”

The Coeur d’Alene Tribe takes the long view, planning out seven generations, as dictated by its traditions. The tribe has representation on a lake management committee set up by the EPA but has had little impact on actual policy; it’s watched in growing horror as the lake’s nutrient load has blown past several previously agreed trigger points for EPA intervention. “This has to stop,” says Caj Matheson, a tribal leader. “We’re not against mining. But we are against mining that destroys our environment and puts 80 million tons of metals at the bottom of our lake.”

The geochemistry is complex and merciless. The depletion of oxygen doesn’t just accelerate the release of heavy metals into the water from the bottom of the lake, it also activates stored nutrients that stimulate yet more plant growth, a process called eutrophication. The cycle can become self-perpetuating and impossible to break.

A process much like this has already devastated Lake Tai, China’s third-largest freshwater body, where heavy metals from decades of industrial runoff in the Yangtze River Delta reside in the lake sediments. During periods of heavy eutrophication, fish suffocate by the millions, metals in their flesh spike, and the water becomes undrinkable. Lake Coeur d’Alene, which is deeper than Lake Tai but has a much higher metals load, could reach the tipping point without warning. “No one knows when the lake will tip,” says Mark Solomon, who runs the Idaho Water Resources Research Institute at the University of Idaho. “But oxygen levels are falling and dissolved metals are rising, and the trends are all going in the wrong direction.”

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

Mining companies always knew their waste was lethal. In the early 1900s, they tried building dams to hold it back and paid off farmers whose crops and livestock died. But the huge volume of waste inundated the watershed. Meanwhile, the companies jealously guarded their water rights in court, arguing that the economic importance of mining justified the pollution.

In the late 1920s, smoke from Bunker Hill’s smelter stacks grew so thick in the valley that the mine built a solarium so workers and their families could get some substitute sunshine under ultraviolet lights. The toxic plumes turned Kellogg into a dustbowl. As early as 1921, Bunker Hill experimented with a chelation therapy for its workers that entailed running electric current through a saltwater bath as workers soaked their hands and feet. Electrodes in the tubs were supposed to draw the metals out of their bodies. Down the mountain, in Coeur d’Alene, people from the mining towns became known as “lead heads,” and their growth was so stunted they were said to have “the Silver Valley inseam.”

Little changed until 1973, when disaster struck. A fire partially destroyed the smelter baghouse, where sacks of special fabric were used to filter out some particulates before they went up the smokestack. For the next year, the filterless smelter saturated the immediate area with 30 tons of lead dust per square mile, 10 times the emission levels before the fire. Local kids’ blood set a record for lead: Almost half the children tested had more than eight times what current standards allow.

The mine’s owner never shut down the smelter for repairs, and years later, court documents suggested why. Executives’ handwritten notes contained their calculations that the likely cost of compensating any children for lead poisoning would come to about $7 million, a fraction of what the mine was earning from high metals prices in 1973.

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

Over the next two decades, operators of Bunker Hill declared bankruptcy twice, unable to pay the soaring costs for pollution control systems amid flagging demand for metals. In 1992 a picaresque entrepreneur named Bob Hopper purchased Bunker Hill out of bankruptcy protection. A former logger, miner, and long-haul trucker, Hopper spent the next two decades warring with the EPA over cleaning up contaminants that he insisted leached naturally from the rocks. He plastered “Just Say No to EPA” stickers all over Kellogg and countersued the agency, arguing that by keeping him from mining, the government was unlawfully confiscating his property under the guise of Superfund. Hopper did little actual mining before his death in 2011, beyond producing some colloidal silver for dietary supplements.

Meanwhile, Genovese was having his own mining meltdown. A pink-sheet company he controlled, Liberty Silver Corp., owned the rights to develop a silver mine in Nevada. In 2012 its stock more than doubled in just five weeks, to $1.58 a share, after Genovese’s own investment company and two ostensibly independent metals analysts issued glowing comments on the mine’s prospects. Then the SEC halted trading, citing “questions concerning publicly available information about Liberty Silver, the control of its stock, its market price, and trading,” and the shares became all but worthless. Shareholders sued Genovese for stock manipulation in federal court. The case was settled, and Genovese regrouped. He asked Bruce Reid, a veteran mining executive in Toronto, to take over Liberty Silver and vindicate its worth.

“Bobby kept coming to me with this crappy Liberty Silver asset in Nevada, and I kept saying I have no interest,” Reid says. “Finally he asked me, what will it take? I just wanted him off my back, so I said, Bobby, go get the Bunker! Son of a bitch, he got the Bunker!”

Liberty Silver agreed to pay Hopper’s heir, Bob Jr., $3.4 million to lease the Bunker Hill Mine for two years, with an option to buy it if a settlement could be reached with the EPA. Reid was named CEO. Liberty Silver changed its name to Bunker Hill Mining Corp., and Genovese stepped into the background, at least on paper. He agreed to cede voting control of his shares to Reid and not to sell any stock until ownership of the company changed hands, effectively making him a silent partner in the investment.

It wasn’t over between Genovese and the SEC. In August 2017, the agency filed charges in U.S. District Court in New York accusing him of perpetrating an “elaborate scheme to profit from pumping and dumping” Liberty Silver’s shares in 2012. Genovese denies the charges and says Liberty Silver was about to land a private placement to develop the Nevada mine when securities regulators tanked the project. “There’s a bunch of allegations; nothing’s ever been proven,” he says.

The EPA Can’t Wait to Reopen the Mine That Poisoned North Idaho

Open questions about Genovese notwithstanding, Pruitt’s supercharged Superfund program was eager to deal. The EPA dropped its settlement demand for past Bunker Hill cleanup costs from $40 million to $28 million, Reid says, and ultimately to $20 million, plus $960,000 a year to treat the mine’s wastewater.

This September, Reid resigned as Bunker Hill’s CEO, after failing to persuade investors to finance test drilling at the mine. “To be honest with you, this is a story that comes with a lot of hair on it,” he says. “I’ve had lots of people who walked away because of Bobby’s involvement.” In October, Bunker Hill Mining defaulted on its payments to Hopper and its lease was terminated. John Ryan, one of Genovese’s original partners in Bunker Hill Mining and now the company’s interim CEO, says he has investors ready to fund new drilling if Hopper and the EPA will accept less money upfront. He believes reopening the mine is inevitable at this point, based on their findings from a year of research and maintenance at Bunker Hill, and the EPA’s strong support for making it work. “Just the fact we got an agreement boiled down to hard numbers ought to make it a lot clearer for someone to come in and get something done,” Ryan says.

In Coeur d’Alene and Kellogg, few people know what’s coming. The mine’s potential reopening hasn’t been big news.

That may all be for the best. Mining has changed. It still entails sending workers deep into dank and dangerous underground caverns and the disposal of massive streams of toxic waste. But whoever operates the new Bunker Hill will use new techniques to extract more metal from 1,500 tons of ore each day than the mine’s old operator got from twice that much. And so, instead of employing 2,200 workers and powering the economy of North Idaho, the new Bunker Hill, at full production, will probably employ about 200 people, less than a third as many as Dave Smith Motors.

To contact the editor responsible for this story: Daniel Ferrara at dferrara5@bloomberg.net

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