Tag Archives: Lundin Mining

Mozambique, Michigan, and the SEC Complaint Against Rio Tinto

Chinde_Rusting_boats

Rusting boats at the port of Chinde, where Rio Tinto proposed to barge Riversdale coal via the Zambezi River.

Yesterday, the Securities and Exchange Commission brought a complaint in New York City against Rio Tinto, charging Tom Albanese, the former CEO of Rio Tinto, and Guy Elliott, his Chief Financial Officer, with fraud. According to the complaint, Albanese and Elliott actively misled the Rio Tinto board, audit committee, auditors, and the investing public about their acquisition of the Riversdale coal business in Mozambique in 2011.

The fraud that Albanese and Elliott are accused of perpetrating looks awfully familiar to those who have followed the development of Eagle Mine and the controversy over County Road 595. Having noticed the parallel between Mozambique and Michigan back in 2013, when Tom Albanese was forced to step down, I now have to wonder whether prosecutors will take the company’s representations around the Eagle Mine into account when building their case.

In Mozambique, they told investors, coal would be transported by barge to the Indian Ocean port of Chinde. Although their technical advisors “highlighted the ‘showstopping’ risks” associated with the barging proposals before the acquisition, Albanese and Elliott blundered recklessly ahead. Then eight months later, the Mozambique government denied Rio Tinto a permit to transport the coal by barge down the Zambezi River. Suddenly, the coal business they had acquired for $3.7 billion appeared to be worth a negative $680 million. According to the SEC’s complaint, Albanese and Elliott “concealed and glossed over” the fact that they had no viable haul route for the 30 million tons per year they projected in their business plans, and misled investors as they raised $5.5 billion in US debt offerings.

In that very same period, Rio Tinto was also promoting Eagle Mine to investors and promising economic renewal in the Upper Peninsula, though they had not yet secured a transportation route — a haul route — for Eagle’s sulfide ore. In Michigan, it appears, the company took the same cavalier attitude toward planning and risk that the SEC complaint says got them into trouble in Mozambique.

Way back in 2005, John Cherry, who was then a Kennecott Minerals project manager and is now President and CEO of the Polymet project in Minnesota, characterized Eagle as a “direct ship” operation, “meaning that the rock would not be processed on site, thereby avoiding the storage of highly toxic debris left over, called tailings.” Presumably this is what Michigan DEQ’s Robert McCann had in mind in 2007, when he told The Blade that Kennecott’s permit “would require them to keep the ores underground, put them in covered rail cars, and ship them to Ontario for processing”; the Marquette Monthly told roughly the same story that year, only now there were trucks in the picture: “ore would be transported by truck and rail to a processing site in Ontario.” This seems to have been nothing more than a cover story.

Everything changed in 2008, when Rio Tinto bought the Humboldt Mill. Those permit requirements the DEQ’s McCann touted back in 2005? They were quickly abandoned. Covered rail cars come into the picture only after the ore is crushed, ground into a slurry, floated and rendered into concentrate at Humboldt Mill. A glossy 2010 company publication promoting Eagle Mine includes not a single word about how Rio Tinto and Kennecott plan to travel the 30 kilometers from mine to mill: “Happily, processing of the nickel and copper can take place in Humboldt, around 30 kilometres [sic] away, at a previously abandoned iron ore plant.” By 2011, the company had “considered more than a half dozen transportation routes” from mine to mill, according to a Marquette Mining Journal article by John Pepin published in February of that year, but they still had no viable haul route.

A good prosecutor with a rigorous and thorough discovery process would probably be able to determine whether the evasions and misrepresentations perpetuated on the public over the Eagle Mine haul route also amounted to fraud, or were part of a larger pattern of deliberately misleading statements. It’s clear Rio Tinto never came clean — and perhaps never really had a firm plan — on mine to mill transport at Eagle before it sold the works to Lundin Mining in June of 2013 and decamped. As long as regulators in Michigan continued to be more accommodating than those in Mozambique, the company seems to have been content to let the people of Marquette County fight out the haul route issue among themselves.

The Political Project of MCRC v. EPA, Revisited

Judge Robert Holmes Bell dismissed the Marquette County Road Commission’s case against the EPA back in May, and last week the Road Commission’s attorneys at Clark Hill PLC filed a motion to alter and amend that judgment. They complain that the Court’s dismissal for failure to state a claim is not only mistaken on points of law but, more dramatically, it allows the “EPA and the Corps to wage a war of attrition on local governments seeking to protect the health and welfare of their people.”

I was struck by this inflammatory piece of political rhetoric about federal overreach for a couple of reasons. First, because it’s just the sort of hyperbolical language Michigan State Senator Tom Casperson and StandUP, the 501c4 dark-money organization funding the Road Commission lawsuit, have used to frame the case for County Road 595 and advance what, in a series of posts (1, 2, 3, 4) last summer, I called the political project of MCRC v. EPA. Second, because the motion here tacitly admits that mining activity on the Yellow Dog Plains has put “the health and welfare” of people in Marquette County at risk. Rio Tinto and then Lundin Mining proceeded with their plans to mine copper and nickel at Eagle Mine and truck it to Humboldt Mill without a clear haul route. They not only went ahead; they were permitted by the state to do so. The risk was transferred to the public.

This is a familiar pattern, but the story it tells is not about federal overreach or intrusive oversight. Quite the opposite: it’s a story about mining companies rushing projects into production without due consideration for the communities in which they are operating, regulatory capture or lax oversight and enforcement, and elected officials who all-too-easily and all-too-conveniently forget where their real duties lie.

The June 13th motion doesn’t often have recourse to this kind of language. For the most part, the motion deals with fine points of administrative law, citing a few cases that it claims the court misread or misapplied. Probably the most important of these is the Supreme Court’s discussion of the Administrative Procedure Act in a May 2016 opinion, United States Army Corps of Engineers v. Hawkes Co.. (Miriam Seifter explains Hawkes over at ScotusBlog. Even with her very clear analysis in hand I can only hope to make a layman’s hash of things.)

In Hawkes, a company that mines peat for golf-putting greens — a process that pollutes and destroys wetlands — sought an appeal of “jurisdictional determinations” by the Army Corps of Engineers that wetlands on their property were subject to the Clean Water Act.

The “‘troubling questions’ the Clean Water Act raises about the government’s authority to limit private property rights” came up for some brief discussion in Hawkes, notes Seifter, but that was not the main focus of the Supreme Court opinion. The case instead revolved around the question whether jurisdictional determinations are “final,” which in this context means they constitute an action “by which rights or obligations have been determined, or from which legal consequences will flow.”

The Army Corps in Hawkes maintained that appeals of the Corps’ jurisdictional determinations should not be allowed, because the determinations of the Corps are still subject to review and are not “final” or binding. The court found unanimously in favor of the peat-miners, saying that determinations by the Corps were final — they would put legal constraints on the peat-miners, who would have to stop polluting or face penalties — and therefore could be reviewed in court.

In MCRC v. EPA, the Road Commission now seeks a decision along similar lines. “The Court erred,” the motion complains, “by holding that EPA’s veto was not ‘final’ because Plaintiff could submit a new application to the Corps.”

In other words, the court held that the EPA’s objections to County Road 595 weren’t the last word: they didn’t constitute “final agency action” and did not entail legal consequences or impose obligations the Road Commission didn’t already have. The Road Commission can even now take EPA’s opposition to the road under advisement, go back to the Corps and seek a new permit. They can continue to work with the EPA, whose objections to the road are “tentative and interlocutory”: there is still room for conversation.

The attorneys for the Road Commission don’t deny that the Road Commission could have gone back to the Army Corps of Engineers; but they say that it would have been time consuming, burdensome and ultimately futile, as the Corps had joined the EPA in its objections to the road, and the EPA’s objections had the effect of a veto.

This brings us back to the arguments advanced in the original complaint. The EPA didn’t just object to the Road Commission’s proposal; they unfairly vetoed the new road, in a “biased and predetermined ‘Final Decision’.” The Final Decision, according to the motion, took the form of a December 4, 2012 objection letter from the EPA to the Marquette County Road Commission, to which the Road Commission replied on December 27th. They did not receive a reply, and the EPA’s failure to reply was tantamount to a “refusal.”

The EPA’s refusal (or failure) to reply to the Road Commission’s December 27th letter indicated that their objections had “crystalize[d] into a veto,” according to the motion. “Unequivocal and definitive,” a veto is a final agency action, “akin” to jurisdictional determinations made by the Corps. What legal consequences flowed from the veto? For starters, the EPA’s Final Decision divested the state, specifically the Michigan Department of Environmental Quality, of any further authority in the matter.

While this is not a new position for the Road Commission, the way the motion lays it out is nonetheless clarifying. The discussion of Hawkes, especially, brings into focus the question before the court — a question of administrative law concerning the “finality” of the EPA’s objections to CR 595. Of course that question entails others: whether the EPA’s failure to reply to the Road Commission’s letter of December 27th amounts to a refusal of the Road Commission, whether that refusal, in turn, crystalized their objections into a veto, and whether EPA vetoes are really “akin” to jurisdictional determinations by the Corps.

Stronger accusations are only being held at bay here. For example, it would be difficult to read the EPA’s failure to reply to the Road Commission’s December 27th letter as a deliberate refusal to reply without accepting the original complaint’s charges of bias and allegations of conspiracy at the EPA, or indulging its witch hunt for “anti-mining” attitudes and its demonizing of “activists.” But even if we are not willing to follow the plaintiff down that dark road, it would also be difficult, now, to overlook the serious dysfunction and administrative incompetence exposed by the Flint Water Crisis, which cost the head of EPA Region 5 her job, and which showed the world just how broken the system of environmental governance is in Michigan.

The Political Project of MCRC v. EPA, 4

Fourth In A Series

A still from a Tom Casperson campaign spot, in which Casperson (left) says the UP is “truly someplace special…now facing truly special challenges,” among them, “standing against the EPA and the unreasonable overreach of other agencies.”

Demagoguery

Michigan State Senator Tom Casperson is the most visible political figure associated with the MCRC v. EPA lawsuit, the agent if not the author of its political project. We don’t know exactly what or how much he did to encourage members of the Marquette County Road Commission to take the EPA to court, what assurances were given and what expectations were put in place, as at least some of those meetings appear to have been conducted on the down low (and in violation of the Open Meetings Act). But the Escanaba Republican has never been shy about his support for CR 595 or his hostility toward the EPA.

Brian Cabell is stating what seems obvious when he links Casperson’s support for CR 595 to his business associations with timber and trucking in the Upper Peninsula, and it’s reasonable to believe that timber interests are among the donors to Stand U.P., the 501c4 dark money association funding the Road Commission’s lawsuit against the EPA. Before entering public life, Casperson succeeded his father as owner and operator of Casperson & Son Trucking, a log-trucking business started by his grandfather and based in Escanaba, Michigan. Associations like the Michigan Forest Products Council, the Great Lakes Timber Professionals and the Michigan Association of Timbermen support and celebrate the Senator’s achievements.

But those relatively direct and straightforward business associations are probably not the only ones in play here, and in supporting CR 595 and encouraging the CR 595 lawsuit, Casperson appears to be doing more than a little favor for himself and his friends back home in the timber and trucking industries. While a 2013 tally of Casperson’s supporters shows — not surprisingly for a Republican politician in the UP — that Michigan mining, timber and fossil-fuel PACs have been among his biggest backers, I suspect the MCRC lawsuit will serve an even deeper and more shadowy entanglement of alliances and alignments.

In parts 1, 2, and 3 of this series, I’ve described the formation of a political authority, or power bloc, that now pretends to direct economic development in the UP and decide what’s in the region’s best interests. That project is closely bound up with Casperson’s own political ambitions, and those ambitions are hardly limited to advocating for this haul road. Tom Casperson covets a seat above his current station, a role on the national stage; or at least he once coveted that bigger role, and politicians don’t often reconcile themselves to less power than they think they deserve. In 2008, Casperson ran against Bart Stupak to represent Michigan’s first district in the U.S. Congress. He made a pretty good showing, with nearly 33% of the vote against the incumbent’s 65%. With Stupak’s successor Dan Benishek announcing in March that in 2016 he’s running for a fourth term (after pledging to serve only three terms), Casperson will have to cool his heels until 2018. In the meantime, however Senator Casperson has a constructive role to play.

Casperson gained a certain notoriety in 2013 when he expressed doubts during a radio interview about whether President Obama was born in the United States, but he never found his footing as a birther, at least not in public. He’s spent most of his political career fighting the EPA and the regulation of industry in Michigan. That’s apparently where his heart is. Back in 2008, when he ran against Stupak, Casperson represented oil drilling as “lining up with my core beliefs.” At the time, he also claimed that the National Environmental Protection Act (passed in 1970) has regulators “walking around looking for amoebae on the ground so that they can find something to block timber sales,” and whined that environmentalism was “bringing the country to its knees.”

In 2011, Senator Casperson introduced a resolution (SR-10) “to impose a moratorium on greenhouse gas, air quality, and other regulatory actions by the Environmental Protection Agency” and require the EPA to account for the cumulative economic effect of “all regulatory activity” on climate change, air quality, water use, and coal ash. He recently joined Dan Benishek in opposing the Obama administration’s modifications of the Clean Water Act as “regulatory overreach” — echoing the point urged by other conservative opponents of the rule, who lined up obediently behind mining, fossil-fuel and energy producers, big agriculture and fertilizer companies like Koch.

Blaming the “war on coal” — the phrase itself is borrowed from the lexicon of climate change denial — for the closing of Marquette’s Presque Isle coal plant, Casperson warns that “there is no bigger threat to affordable, reliable electrical service to our districts than the EPA.” He grandstands about the EPA at every opportunity: “At some point,” he said back in March, “somebody’s got to take a stand here or they will take our way of life away from us. Clearly, they don’t like mining, clearly they don’t like timbering and quite frankly it appears they don’t really care much for us using the great outdoors unless they give us their permission and I think that’s unacceptable.”  

For Tom Casperson, any and every environmental regulation poses an existential threat. Against this ever present danger, he is out to protect what he frequently calls the UP “way of life” and force a David and Goliath standoff with the federal government. “The burdensome regulations proposed by the EPA,” he said when introducing a bill calling for a halt to the regulation of wood-burning stoves, “are an overreach of government and need to be stopped to protect our way of life.” “If we don’t pay attention,” he warned in a recent interview, “we’re going to get run over here.” On that occasion, he wasn’t talking about the danger of ore trucks barreling through downtown Marquette; he was rising to the defense of barbecue grills.

The barbecue resolution Casperson introduced this year with State Senator Phil Pavlov (and which passed the Michigan legislature unanimously) is an unabashed exercise in demagoguery. “Barbecues are an American tradition enjoyed by families from all walks of life across the country,” it begins, “whether tailgating for a football game, hosting a backyard get-together, or just grilling a summer meal, barbecues are a quintessentially American experience and an opportunity to eat and socialize with family and friends.” What prompted this noble defense of American tradition and the quintessentially American experience of barbecue? Of football, get togethers, and families from all walks of life across the country? Nothing much.  

In an EPA-sponsored competition, students at the University of California, Riverside were awarded a grant of $15,000 for proposing “to perform research and develop preventative technology that will reduce fine particulate emissions from residential barbecues.” That’s all there was to it. But those prize-winning students and their particulate emission preventing technology posed enough danger for Casperson — along with Missouri State Senator Eric Schmitt, Richard Hudson of North Carolina, Allen West and others of their ilk — to start hyperventilating about Obama and the EPA “coming after” our backyard barbecues. It looks like a loosely coordinated effort, with all the shills singing from the same sheet.

It’s a common tactic used to stir up popular sentiment against the regulation of polluters: when big pesticide users don’t like a new rule clarifying which waters are protected by the Clean Water Act, the demagogues tell small farmers that even a little ditch on their property will be counted among the “Waters of the US”; when regulators take aim at the fossil-fuel industry, the demagogues make dark predictions about the end of s’mores and campfires.

This is, by the way, the second time the Michigan legislature has fallen for this particular barbecue canard; the last time was back in 1997, when the Michigan House unanimously approved a resolution protecting barbecue grills against over-reaching federal bureaucrats. Casperson’s resolution was a reboot. Back in the 90s, and again in 2014 when Texas Senator Pete Olson demanded the Clean Air Act had to be amended if Texas-style barbecue were to be saved, the phony patriotism around Americans and their barbecue grills was a flag-waving effort to thwart the EPA’s proposal of stricter ozone limits. This time? Maybe rallying the troops around their barbecues helped to galvanize anti-EPA sentiment in the fight against the new Clean Water Act rule, or capitalize on the Pyrrhic victory the Supreme Court handed to industry in Michigan v. EPA.

A watchdog blog notes that Casperson’s “legislative record directly reflects the money trail,” but the equally important point — the one that I want to emphasize here — is that Tom Casperson’s efforts in the Michigan legislature appear to be connected and aligned with other legislative and extra-legislative efforts to ease environmental regulation and advance extractive projects and industrial development. The MCRC complaint presents a sterling opportunity for Casperson to strengthen these connections and forge new alliances. He would be a fool to pass it up.

Clark Hill, the attorneys who prepared and filed the complaint, already support Dan Benishek through their federal PAC; so Casperson may be able to jockey for a position in line behind him. But the law firm also gave more to Michigan Democrats than Republicans, and their real power and political influence does not depend on the nominal contributions they make to various political campaigns. Those are just goodwill gestures. Their political law practice, on the other hand, is a true nexus of political power, and at the head of it sits none other than Charles R. Spies. In 2012, Spies was Chief Financial Officer and Counsel for Restore our Future, the largest super PAC in history, formed to elect the unelectable Mitt Romney. Nowadays, Spies is supporting Jeb Bush, with a new Super PAC called Right to Rise.

These are the big leagues — much bigger than Casperson could ever dream of playing in. But the national success of Right to Rise will depend on thousands of coordinated local and regional efforts. If the MCRC lawsuit continues to go forward, it could easily have a place in that scheme, while raising Casperson’s profile and burnishing his conservative credentials. For its part, Stand U.P. can continue to raise all the money the MCRC needs for its lawsuit and whatever other political projects Tom Casperson and his cronies may be planning, and never have to disclose the sources of those funds. Its 501c4 “public welfare” status affords that protection.

The Political Project of MCRC v. EPA, 2

Second In A Series
Activists Afoot!

In this Greg Peterson photo from the Cedar Tree Institute site, Northern Great Lakes Synod Lutheran Bishop Thomas A. Skrenes blesses one of the trees faith congregations planted on Earth Day, 2009.

In this Greg Peterson photo from the Cedar Tree Institute site, Northern Great Lakes Synod Lutheran Bishop Thomas A. Skrenes blesses one of the trees faith congregations planted on Earth Day, 2009.

As I suggested in my first post in this series on MCRC v. EPA, the complaint filed by the Marquette County Road Commission would have us believe that “anti-mining” forces worked secretly with and even infiltrated the EPA, and the agency’s objections to CR 595 followed a “predetermined plan.” The EPA, it claims, had decided to oppose the haul road even before the MCRC application was reviewed.

This sounds like legitimate cause for concern: permit applications should be reviewed on their merits, not pre-judged and not according to some other anti- or pro- agenda. We certainly wouldn’t want someone in the Environmental Protection Agency to be “pro-mining”; there are enough well-paid mining lobbyists already haunting the hallways in Lansing and Washington, DC. But in this case, the anti-mining label is being used as a term of opprobrium, and to distort and deliberately misrepresent what the Environmental Protection Agency is chartered and required by law to do: in short, to enforce the Clean Water Act and protect the environment.

When it comes to proving the insinuations it makes, the MCRC complaint offers slim evidence.

For example, the complaint makes a big fuss over a November 28, 2012 letter from Laura Farwell, who lives in the Marquette area and is described here as “a prominent environmental activist.”  The letter is addressed to Lynn Abramson, then a Senior Legislative Assistant for Senator Barbara Boxer, and Thomas Fox, Senior Counsel of the Senate Environmental and Public Works Committee, asking them to “weigh-in” with the EPA on CR 595. (Exhibit 1).

EPA must determine whether to uphold its original objections to proposed County Road 595 under Section 404 of the Clean Water Act (“CWA”), pursuant to its supervisory authority over Michigan’s delegated wetlands permitting program. Tom may remember that during the August 30, 2011 meeting at EPA Denise Keehner of EPA’s office of Wetlands, Oceans and Watersheds definitively reiterated EPA’s position and stated that the haul road would not happen.
Thus, this letter is to request, respectfully, that you weigh-in as soon as possible with the EPA on its decision.

The MCRC complains about Farwell’s use of the word “definitively” here and casts the 2011 meeting in a sinister light:

on August 30, 2011, a very different type of meeting regarding CR 595 took place at USEPA Headquarters in Washington, DC. MCRC was neither invited to nor informed of the meeting. In attendance (as far as is known at the present time) were top USEPA officials, Congressional staff, KBIC representatives, and a prominent environmental activist opposed to the construction of CR 595. It further appears that USEPA made no formal record of the meeting.

Without a formal record, it’s impossible to know what transpired at this meeting, and if the complaint is going to rely on Farwell’s memory of the conversation, then it should also take into account her intentions in paraphrasing and recounting it, one year after it took place. The language here — “a very different type of meeting,” “neither invited nor informed,” “as far as is known at the present time,” “no formal record” — doesn’t help in that regard, and it’s meant to suggest that conjurations were already afoot.

It’s clear the MCRC was not included in some discussions at EPA. There’s nothing extraordinary or illicit about that. All concerned parties had been meeting with and petitioning the EPA for several years at this point. The complaint is still a long way from proving that the EPA “surreptitiously met with a number of environmental activists vocally opposed to the road,” and an even longer way from proving that there was anything like an anti-mining coalition assembled in secret at the offices of the EPA.

In an ironic twist, these allegations of secrecy and whispering behind closed doors may come back to haunt the MCRC: at a Marquette County Board of Commissioners meeting this month, the Marquette County Road Commission itself faced accusations that it had violated the Open Meetings Act in planning to bring its suit against the EPA. Public officials who intentionally violate that act are ordinarily fined and incur other liabilities; in this case, there would be some eating of words as well.

By November 28, 2012, the EPA had, in fact, “decided against the proposed haul road,” as Farwell puts it in the email she sent along with the letter to Abramson and Fox. The EPA had entered objections to the Woodland Road Application (in March, 2010) and announced their objections to CR 595 (in March, 2012).  Even so, a Fall 2012 public meeting held by the EPA “in Marquette…for more input” had Farwell worried. She was not at all confident the EPA would uphold its original objections to the haul road.  The matter was still far from being “definitively” settled.

Whatever reassurances Farwell was given at that 2011 meeting — or thought she had been given, or recalled having been given, one year later — were clearly at risk of getting lost in the bureaucratic shuffle. The purpose of her letter is to prevent that.

There is nothing surprising in all this. Those watching new mining developments in the Upper Peninsula are constantly having to chase after the EPA and demand that the regulator step in and do its job.

Jeffery Loman, a member of the Keweenaw Bay Indian Community and a former federal regulator, has repeatedly put the EPA on notice and complained of the agency’s failure to enforce the Clean Water Act.

In May of this year, the grassroots environmental group Save the Wild UP filed a petition with the EPA’s Environmental Appeals Board, arguing that Eagle Mine was issued the wrong regulatory permit. The appeal requested that the EPA require Eagle Mine to obtain a Clean Water Act permit in order to protect the Salmon Trout River and other surface waters from the discharge of mining effluent. The Appeals Board did not contest the facts put forward in the petition, but dismissed it for lack of jurisdiction. They hardly proved themselves to be staunch allies.

So watchdogs and environmental groups, too, have reason to gripe about the EPA and often feel powerless in the face of bureaucratic inertia and ineptitude. Laura Farwell herself seems to have felt that way, and that’s why we find her asking Abramson and Fox for help. The MCRC complaint exaggerates her influence at the EPA when it describes her as “a prominent environmental activist.” The epithet is used here to create the misleading impression that within the offices of EPA Region 5 and the confines of Marquette County there are political opponents with resources to match the power of multi-billion dollar, multinational mining companies.

Laura Farwell and her husband Frank moved to the area in 2006 from Madison, Wisconsin. They are members of the St. Paul Episcopal Church and participate, along with their son Cody, in the church’s Earth Day tree plantings. The couple donated some money to the UP Land Conservancy. Farwell has also organized events for the Cedar Tree Institute, which works to bridge “faith communities and environmental groups.” (She is described on the Institute’s site  as “a concerned mother and local citizen.”) She is thanked for “working quietly behind the scenes” in a 2011 Earth Keeper TV video on the environmental risks posed by the Eagle Mine; and she’s copied along with many other local citizens in a Google Group post dated April 9, 2012, urging people to comment on CR 595 before the public comment period is closed.

Farwell’s commitments to land conservation are pretty clear, and while the complaint asks us to recoil in horror at the phrase “prominent environmental activist,” cooler heads are just as likely to be impressed by Farwell’s dedication to the people around her and the place where she lives. Maybe that dedication is all it takes to be a prominent environmental activist in the view of the Marquette County Road Commission.

Some locals, on the other hand, are legitimately concerned that nationally and internationally prominent environmentalists — like Bill McKibben, George Monbiot, Naomi Klein and their ilk — ignore the current situation around Lake Superior, or fail to give it the serious attention it deserves. National media have barely taken notice. Farwell herself admits that to the great and powerful in Washington DC “the proposed haul road may seem like some little back trail in the middle of nowhere,” but she urges that it will cut through “critical wetlands resources” and “enable the industrializing of this rural Great Lakes watershed by international mining interests.”

Farwell’s letter tries to create some urgency around the CR 595 issue by putting the road in context and specifying whose interests would be served by the industrializing of the region. A serious assessment of CR 595 would significantly widen the lens, taking into account the cumulative effects of all the new mining activities around Lake Superior: all leasing, exploration, development and active mining throughout northern Michigan, Wisconsin, Minnesota and Ontario. Otherwise, we miss the big picture, and without that perspective, it’s just too easy to parcel out the land, the water, and the future of the region to the highest bidders.

The MCRC complaint, too, places CR 595 in the context of “mining and economic development in the Great Lakes region” in a few places, but only to make the specious argument that those who oppose or question the road are opposed to mining and therefore opposed to the region’s prosperity. These are the ideological leaps the complaint makes. Those who don’t make these leaps are called activists or anti-mining obstructionists. That is a political, not a legal argument.

It’s never too late to have a serious discussion of what sustainable economic development and true prosperity for the Great Lakes region might look like. How might we best organize our lives together in this place? is a fundamental political question. But at this juncture, it appears, the MCRC can’t afford to let that conversation happen. This lawsuit is an attempt to shut it down and stifle dissent. Where business leads, society must obediently follow. To question this order of things, as Laura Farwell seems to have repeatedly done, quietly, behind the scenes, is to commit some kind of nefarious act.

This is where the attitude on display in this complaint gets worrisome. With this lawsuit, the MCRC pretends to have the political authority to direct economic development in the region (not just to build and repair roads). But that is only pretense, and things in Marquette County are not as they appear. The public still does not know who is funding the Road Commission lawsuit, what they stand for and what they expect in return for their support. The real powers lurk behind the scenes.

The Political Project of MCRC v. EPA, 1

First in a Series

oretrucksAAA

Ore trucks from Lundin Mining’s Eagle Mine make their way down the Triple A road.

No Labels

I’ve just gotten around to reading the complaint filed on July 8th in the U.S. District Court for the Western District of Michigan, Northern Division, by the Marquette County Road Commission against the EPA. The complaint alleges that the EPA’s repeated objections to County Road 595 — that the road will threaten and destroy wetlands, streams and protected wildlife in its way — are “arbitrary and capricious” and in violation of Section 404(J) of the Clean Water Act. The Road Commission asks the court to set aside the EPA’s Final Decision against the building of County Road 595, restore Michigan Department of Environmental Quality’s authority to permit the road, and bar the EPA from further interference in the matter.

While it may take the court some time to decide whether MCRC v. EPA has any legal merit, the complaint is written to serve other ends as well: political objectives. The complaint is aligned with efforts in Michigan, Wisconsin and elsewhere, to ease regulations, subvert the legal authority of the EPA and whip up anger against the federal government; and the plaintiffs appear to be connected, through their attorneys, to one of the most powerful Republican party fundraisers and a network of ultra-wealthy political donors.

The MCRC complaint directs ire against a familiar cadre of enemies — environmental “activists,” overreaching federal bureaucrats and the area’s indigenous community; and it pretends to discover a dark conspiracy, in which these groups meet “surreptitiously,” write “sarcastically” about mining interests, and collude to block economic development. In fact, it’s often hard to decide whether the arguments and evidence assembled in this complaint are meant to serve as legal fodder or support political posturing. So I thought I would try to sort through them in a short series of posts on the CR 595 lawsuit.

There is the tiresome pretense throughout the complaint that CR 595 would serve as something other than a haul route from the Eagle Mine to the Humboldt Mill, and that the road will benefit the public as much as the mining company. While the mining company says it is committed to making do with current infrastructure, the public clearly deserves some relief: trucks hauling ore on a makeshift route from Eagle have already been involved in a few scary accidents, and it remains a question whether cars can safely share the same road, especially an icy winter road, with ore trucks trying to beat the clock. People are understandably concerned, too, about big trucks loaded with sulfide ore barreling through the city of Marquette.

The public has another cause for grievance, and it makes for some angry foot stomping in the complaint: the MCRC spent millions to prepare for EPA reviews of the CR 595 application and failed repeatedly to win approval. Both time and money were wasted, the complaint says, not due to incompetence, stubbornness or denial, but because the EPA was never going to give the Road Commission a fair hearing. It’s in this connection that the complaint tries to lay out an “anti-mining” conspiracy between the EPA and environmental activists and the indigenous community in the Great Lakes Basin, and where the arguments become specious and contorted.

In subsequent posts I’ll address some of the ways MCRC v. EPA constructs this anti-mining strawman in order to mount a political offensive; and throughout this series, I’m going to be asking whether the “anti-mining” label correctly characterizes the evidence brought by the MCRC. I think it’s fair to say from the outset that it does not accurately represent the priorities and commitments of people and groups concerned about the construction of CR 595. It’s reductive, and turns road skeptics into industry opponents. To be against this particular haul road — or hold its planners to the letter of the law — is not necessarily to pit yourself against the entire mining industry.

The anti-mining label deliberately confuses haul-road opposition with opposition to the mining industry in order to coerce people into going along with the haul road or risk losing their livelihood, or at least the jobs and economic prosperity promised when mining projects are pitched. The MCRC complaint goes even further: it conflates mining with economic development — or reduces all economic development in the region to mining — and so runs roughshod over the thoughtful arguments of people like Thomas M. Power, who has studied the ways mining can restrict and quash sustainable economic development.

The anti-mining label fences ordinary people in, distorts and exaggerates their legitimate concerns, and does not recognize that people might come to the CR 595 discussion from all different places. Most don’t arrive as members of some anti-industry coalition; they are fishermen, residents, property owners, teachers, hunters, parents, hikers, snowmobilers, birdwatchers, loggers, parishioners, kayakers, merchants, and so on. Some are many of these things all at once.

The label is fundamentally disrespectful: it refuses to meet people on their own terms and fails to ask what any of the people who oppose CR 595 actually stand for. What do they want for the area? What do they value and love? What do they envision for the future? Where do they have shared interests? Where do they have real differences? How can we work together? The anti-mining label forecloses all those questions. Instead, people are divided. The label demands that everybody take one side or the other (and, as I learned in the course of my work on 1913 Massacre, in the Upper Peninsula that demand has deep historical roots in the labor conflicts of the early twentieth century; but, no worries, in this series of posts I’ll try to stay focused on the present).

I have always had trouble with the idea that “anti-” and “pro-” mining positions should govern the way we talk about the environmental regulation of mining. I myself can easily slip into this way of talking. But as I tried to explain in an exchange on this blog with Dan Blondeau of Eagle Mine, that way of thinking impedes and short-circuits important conversations about the ethics of mining. Playing the anti-mining card reduces the questions of whether and how mining can be done responsibly — in this place, by that company, at this time — to mere pro and contra. It’s a dangerous ruse: instead of identifying risks and addressing responsibilities, it generates social conflict.

Can Mining Be Saved?

TeslaGigafactory

The Tesla Gigafactory, currently under construction in Storey County, Nevada.

Andrew Critchlow, Commodities Editor at The Telegraph, speculates in a recent article that Elon Musk and Tesla might “save the mining industry” by ushering in a new age of renewable energy. Domestic battery power production at the Tesla Gigafactory (now scheduled to go into production in 2016) is bound to create such demand for lithium, nickel and copper, Critchlow thinks, that the mining industry will find a way out of its current (price) slump and into new growth, or possibly a new supercycle.

“Major mining companies are already ‘future proofing’ their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry,” writes Critchlow; and the “smart commodity investor” will follow suit, with investments in “leading producers” such as — this is Critchlow’s list — Freeport-McMoRan, Lundin Mining and Fortune Minerals.

It’s a credible scenario, but it’s also terribly short-sighted. The big switch over to domestic solar power and battery storage Musk is hyping in the run up to the opening of the Gigafactory would no doubt give miners a short-term boost, but it will also take a lasting toll on the places where copper and nickel are mined, raise serious human rights concerns, and put even more pressure on the world’s freshwater resources.

After all, the copper and nickel used to make Tesla’s batteries are going to come from places like the Democratic Republic of Congo, where Lundin and Freeport-McMoRan operate a joint venture at Tenke Fungurume, and which has been at the center of the recent debate in the EU parliament over conflict minerals; Peru, where protests against Southern Copper Corporation’s Tia Maria project led the government to declare a state of emergency in the province of Islay just last Friday; or the nickel and copper mining operations around Lake Superior that I’ve been following here, where there are ongoing conflicts over free, prior and informed consent, serious concerns that sulfide mining will damage freshwater ecosystems and compromise one of the largest freshwater lakes in the world, fights over haul routes, and repeated complaints of lax regulatory oversight and political corruption.

Rice farmers clash with riot police in Cocachacra, Peru. The fight is over water. (AP Photo/Martin Mejia)

These are just a few examples that come readily to mind. It wouldn’t take much effort to name others (Oyu Tolgoi, Oak Flat, Bougainville) and to see that the same problems arise, to a greater or lesser degree, no matter where copper and nickel mining — sulfide mining — is done.

The mining industry and commodities investors have historically tended to minimize and marginalize the environmental and social costs of sulfide mining; so it’s really no surprise that Critchlow should argue that increased demand by battery producers is all it will take to “save” mining. Leave it to others, I guess, to save the world.

But the supply and demand model is reductive and misleading, even for those looking to make a fast buck. A recent Harvard study of company-community conflict in the extractive sector summarized by John Ruggie in Just Business suggests just how costly conflict can be. A mining operation with start-up capital expenditures in the $3-5 billion range will suffer losses of roughly $2 million for every day of delayed production; the original study goes even further, and fixes the number at roughly $20 million per week. Miners without authentic social license to operate lose money, full stop. So Critchlow’s is at best a flawed and myopic investment strategy that ignores significant risks. It also appears to shrug off legitimate human rights claims, and turn a blind eye to environmental degradation, and deadly violence of the kind we’re seeing in Peru right now. That’s irresponsible, if not downright reprehensible.

A Macquarie Research report cited by Critchlow claims that the switch away from fossil fuels to battery power in the home is all but inevitable. But if we make the switch to renewables and fail — once again — to address the ethics of mining, what exactly will we have saved?

Mark Your Calendars

This week, the Michigan Senate unanimously passed a resolution brought to the floor by Senator Tom Casperson, who represents the 38th district. Senate Resolution 27 declares an official day to commemorate mining in Michigan. Mining Day will fall on September 6th.

It’s clever to create a holiday for mining on 9/06 — the area code of the Upper Peninsula. But it’s also a little strange that the holiday will fall on a Sunday in its inaugural year (so much for sabbath and the respite it promises from the workaday world). Labor Day falls on the 7th of this year, and on the 5th in 2016; so maybe Mining Day will help put the focus on the Upper Peninsula’s archetypal laborer, the miner. But as the text of the resolution never even uses the word “miner,” “worker,” “labor” or “laborer,” and notes only in passing that mining in the UP “attracted immigrants from around the world,” it might be a little hasty or naive to conclude this measure is being taken to honor the working men and women of the region.

Casperson himself promotes Mining Day as a day to recognize the role of mining “in the settling of Michigan’s Upper Peninsula” and as a “way of life” characteristic of the region, and in a press release, he added that the day would also be an opportunity to “celebrate and support responsible mining operations” in the state. So SR 27 doesn’t just look back to a bygone era of mining, but forward, positioning mining as a “growing industry” in Michigan. The adopted resolution even includes language about the “Limestone mines” in the news lately.

In this way, SR 27 tees up a second resolution that Casperson introduced: SR 28, another pro-mining measure that met with unanimous approval. In this resolution, the Senate expresses its unqualified “support for the renewed growth of mining in Michigan.”

This is not just boosterism or servile flattery. SR 28 actually serves a couple of important political functions.

First, it burnishes Casperson’s legislative track record at no political cost. Down the road, he can and probably will claim some responsibility for the jobs that mining companies create in the UP.

Second, SR 28 establishes legislative precedent. Casperson and others can point to this resolution and the unanimous support it received when introducing other pro-mining legislation or when confronted with challenges to mining projects already underway. Interviewed about the bill, Casperson made this explicit: “we will work to remove any remaining barriers that could inhibit the continued growth of responsible mining interests in Michigan.” No barriers to continued growth: but still, somehow, “responsible,” as if responsibility can be had without limits.

The barriers to growth Casperson has in mind are, first and foremost, the flimsy ones upheld, but barely, by the EPA in the face of the new mining boom. The federal agency has not prevented any mining projects in Michigan; but it has so far been the primary obstacle to the building of CR 595, which was originally planned as a haul route for Lundin’s Eagle Mine. The EPA entered and then upheld its objections to construction of the road, and denied the Michigan Department of Environmental Quality authority to permit the road. (The US Army Corps of Engineers along with the US Fish and Wildlife Service had also entered objections.)

Casperson elsewhere has tried to cast this as a standoff between state sovereignty and federal government intrusion. Now, with SR 28, Senator Casperson has enlisted the full body of the Michigan Senate in his crusade to cut that haul road through the Michigan wilderness, and show big government what’s what in Michigan. (He’s been on similar state-sovereignty kicks to reinstate wolf-hunts — which caused him some embarrassment when he was caught fabricating stories of children being stalked by wolves — and to prevent the limiting of emissions from wood-burning stoves by the EPA.)

Casperson is now colluding with the Marquette County Road Commission to sue the EPA over CR 595. So far, the Road Commission and affiliated CR 595 die-hards have created a 501c4 non-profit organization called Stand U.P., which says it will raise $500,000 to cover the lawsuit. But there’s no reason to stop there. As a 501c4, Stand U.P. can fund the EPA lawsuit as well as a broad range of activities in the name of improving the “social welfare” — a concept even the IRS calls “abstruse” and lacking any clear definition. 501c4 organizations are not required to disclose the names of donors, but Brian Cabell figures “it’s safe to say” that the money for Stand U.P. won’t come in “$5 contributions or bake sales or lemonade stands. It’s mostly corporate money.”

Even if the EPA lawsuit fails, then, there is little to prevent Stand U.P. from becoming (unless it already is) a trough of dark money. No wonder the Senator is eager to celebrate mining’s return to the Upper Peninsula.

The Boom Starts With A Rush

Overturned Eagle Mine TruckThe news that an ore truck overturned last week on its way from Eagle Mine to Humboldt Mill brought me back to a conversation some friends and I had in the lobby of the Landmark Inn this past October. Earlier that day we’d been touring the Yellow Dog Plains on the smooth wide roads that the Marquette County Road Commission cut through the wilderness for the mining company, keeping count of the big trucks we saw. All the trucks were outfitted with double loads — two side-dump trailers worth of ore — and the ore was covered with black tarps, neatly tied down.

The ties caught my attention. I wondered how long it would be before human nature set in, and workers started getting lackadaisical about how they tied down the tarps, or stopped bothering to secure and check each tie.

I was not even thinking of anything so scientific as studies by Ludovic Moulin, which find that over sixty percent of industrial accidents can be attributed to “organizational and human factors.” I had in mind something closer to the line about the field of the slothful in Proverbs: “yet a little sleep, a little slumber, a little folding of the hands to sleep,” and disaster can ensue. Eventually, someone in the course of the day was going to shrug and say to himself, “good enough,” slacken his attention, or hurry off to a break, I thought, and things could go downhill from there. A loosely tied load might spill on the highway or on the roadside, even if the driver was taking every precaution on his route. Repeat that small human error enough times, and you have a trail of sulfide ore from the mine to the mill, running through the Yellow Dog Plains and right through the center of Marquette.

Turns out I’d failed to fully grasp the reality of the situation. I didn’t imagine at the time that the tarps used to tie down the ore on the Eagle Mine trucks would rip in the case of an accident. In this case, the tarp of the second trailer was “torn open,” according to Save the Wild UP; Yellow Dog Watershed Preserve has a photograph of the torn cover here. I was also unaware that the Michigan Department of Environmental Quality allowed these soft-cover tarps only after Eagle Mine had requested a special amendment to its permit. Hard covers would take longer to remove; with soft covers, the trucks could be more easily unloaded. Time is money.

Special amendments and exceptions seem to be the rule when it comes to Eagle. For instance, though Lundin Mining CEO Paul Conibear has repeatedly boasted to investors about the great transportation infrastructure already in place at Eagle when Lundin bought the property from Rio Tinto, the truth is that the current haul route for Eagle Mine was never part of the plan. It was a last minute concoction — an “upgrade” of roads hastily authorized by the Marquette County Road Commission. No surprise, then, that a full environmental assessment of the haul route — as required by Part 632 of the Michigan Nonferrous Metallic Mining Law — has never been made.

Last week’s accident might be yet another sign that Eagle Mine was not actually ready for prime time when Lundin announced, at the end of November, that Eagle had entered commercial production ahead of schedule. But consider things from the company’s point of view. Lundin had acquired the Candelaria copper mine from Freeport only a month earlier for $1.8 billion — taking on huge debt — and by the end of November copper prices were declining precipitously. That made it all the more urgent to start delivering nickel at Eagle. After all, analysts expect “Lundin to introduce a dividend in 2015 once its Eagle mine is ramped up.”  Pressure is mounting. The Lake Superior mining boom appears to have gotten underway in a slightly panicked rush.

A Response from Maidlow’s Office

Karen Maidlow’s office responded this morning with what appears to be a form letter regarding the proposed lease of a parcel next to the Yellow Dog River for mineral exploration by Lundin Mining.

The letter I sent last week urged Maidlow to look into Fisheries’ sudden — and perplexing — reversal of Kelley Smith’s 2003 “non-development” classification of the parcel.

In 2003, Smith deliberately reversed a 2002 “development” recommendation by Fisheries field staff. Why? Madison of Fisheries said he must have done it “for some reason” and Stampfly of Forestry was “at a loss” to account for it. Maidlow realizes she can’t ignore Smith, so she puts him in his place: “Mr. Smith was not part of the review process, only the approval process”; the former Fisheries Chief was reversed “on the basis of the most recent field review.” The field wins out over the office. The bureaucracy repudiates the bureaucrat. Fisheries’ recent reversal of Smith will likely be upheld.

Here is the salient paragraph:

On November 21, 2002, field staff reviewed the parcel under consideration here for a direct metallic mineral lease request from Prime Meridian Resources, Inc. (Prime). Field staff’s recommended parcel classification was development. Although the parcel did not contain water or aquatic resources, its classification was changed to nondevelopment on August 21, 2003 at the request of Mr. Kelly Smith, former DNR Fisheries Division Chief, as a condition of lease approval. Please note that Mr. Smith was not part of the review process, only the approval process. On the basis of the most recent field review, the proposed classification for this parcel is Leasable Development with Restriction. This means that the sub-surface minerals can be mined, subject to other regulatory review, and any proposed development on the surface would face further review by DNR staff before being permitted.

I’m afraid this already sounds like a done deal, even though nobody at DNR seems to know — or is willing to discuss — why Smith wanted to protect Parcel NE1/4 SE1/4, Section 13, T50N, R29W on the Yellow Dog Plains from industrial development.

A Letter to Karen Maidlow, Michigan DNR

Karen Maidlow, Property Analyst, Minerals Management
Michigan Department of Natural Resources (DNR)
P.O. Box 30452
Lansing, MI 48909

Dear Karen Maidlow,

This letter is with regard to land owned by the State of Michigan on the Yellow Dog Plains and next to the Yellow Dog River in Michigamme Township, Marquette County (40 acres, NE1/4 SE1/4, Sec.13, T50N, R29W).

As you know, in a 2003 review, this 40-acre parcel was designated “non-development” by former Fisheries Chief Kelley Smith. Fisheries biologist George Madison, who works out of the Baraga office of the DNR, reversed Smith only this year. It is unclear why, and I urge you to look thoroughly into the matter as part of your review and clarify for the public whether and on what grounds the DNR thinks Fisheries’ reversal of its position on this parcel should stand.

Madison himself says that he was unable to tell why Smith had placed the non-development restriction on the parcel in the first place.

For some reason Kelley Smith (former Fisheries Chief) had placed a non-development restriction recommendation on this parcel during an 8-21-2003 review. Indeed while there is no water or aquatic resources on this parcel, with care and respect for the 2003 review I carried Mr.Smith’s recommendations forward in case there was an element of uniqueness to this parcel that we are not aware of.

For this 8-12-2014 review, I have changed Fisheries Division’s recommendation to “development” with no restrictions.

What reason did Kelley Smith have for restricting development on the parcel? Madison cannot say, and in May of this year Forestry Supervisor Jeff Stampfly admitted he, too, was “at a loss” when it came to accounting for Smith’s review. But then they both recommend its reversal.  Both Stampfly and Madison seem to suggest that Smith was simply mistaken, or at least they see his 2003 review as problematic. What exactly did Smith say? Isn’t it possible that Smith discerned some “element of uniqueness” here that Madison and Stampfly are unable to appreciate? The prudent thing would be to find out.

To that end, the DNR should publish Smith’s August 2003 review — undertaken before the mining boom had really gotten underway — and take what Smith says there under advisement. To help clarify things, Smith himself (now in retirement) should be interviewed about the parcel and what, if anything, makes it unique or deserving of non-development status, and his statement entered into the public record. If Smith and Madison still disagree on the status of this parcel, then that disagreement should be aired publicly and accounted for in whatever report you file. The public deserves this measure of transparency.

For his part, Madison could state more clearly why he reversed Smith in this 2014 review and did not do so previously. Why proceed with “care and respect” for Smith’s review, then suddenly change course after Lundin Mining shows interest in the parcel? Madison seems to be arguing in his comment that Fisheries should place no restrictions on the parcel because he can identify “no water or aquatic resources” directly on the parcel; this seems to be Stampfly’s position as well. But the Yellow Dog River is only a few hundred feet away from the boundary of the proposed site. Maybe, for Smith, that proximity was enough.

As Smith may have known, there are a number of ways in which industrial development on this parcel might seriously compromise the Yellow Dog River. Groundwater flow in the glacial aquifer underlying the Yellow Dog Plains would make it difficult to limit water contamination from drilling to the parcel itself. Even a well-run drilling operation will see lapses: Yellow Dog Watershed Preserve has “photo documentation of ripped sump pit liners, drill bit wash basins that are overflowing, and broken fences” from the exploratory drilling done for the Eagle Mine. Exploratory drilling is also bound to require some roadwork and other infrastructure build-up on the Yellow Dog Plains, and it will increase traffic to and from the parcel. That, too, puts the Yellow Dog River at risk.

YellowDogRupture

Roadside mitigation efforts in October of this year. The Eagle Mine haul route has already put the Yellow Dog watershed at risk and contaminated the Salmon Trout River.

As you are no doubt aware, just this past summer, a road crew working on the Eagle Mine haul route ruptured a perched groundwater seep, dumping sediment and releasing turbid water into the Salmon Trout River, in violation of the Natural Resources and Environmental Protection Act. Mining’s risks never end at the mine’s gate.

In closing, I urge you to take your time looking into the confusion over Smith’s 2003 review and all other questions and comments you receive regarding this parcel. One newspaper account I read has you saying that you intend to finish your analysis by January, having received written comments from the public only a month before that. Wouldn’t it be better to allow time for follow-up interviews or requests for further information? I trust that you and the DNR do not want to give the impression that this request for public comment is merely pro forma, and want to do the right thing by the public you serve.

Sincerely,

Louis V. Galdieri