The Man Behind Wisconsin’s Iron Mine

Problems in Illinois

In the case of the Shay Mine owned by Foresight Energy, the Illinois EPA says the company has been too slow in cleaning up the sulfate, iron, manganese and total dissolved solids that have leached into the groundwater under the property. The pollution comes from coal slurry produced during coal processing and can contain arsenic, heavy metals and other pollutants. Millions of gallons of slurry are stored on site in massive unlined slurry impoundments with walls more than 100 feet high.

The situation now requires urgent action because pollutants in the groundwater are spreading and have been found outside of the mine’s property. According to the Illinois Sierra Club, “this facility has contributed to groundwater and surface water contamination for several years with no penalties.” In 2013 the Illinois EPA referred the case to the state attorney general’s office for enforcement; EPA spokesperson Andrew Mason said the agency “feels that the seriousness and scope of the violations makes legal action the most appropriate path forward.”

Other problems arose with the Deer Run Mine in Hillsboro, one of the largest longwall coal mines in Illinois. The coal reserves at the mine are leased to Hillsboro Energy, LLC, owned by the Cline Group. The CEO of Hillsboro Energy is Dwayne Fransico, formerly the president of Massey Energy’s Aracoma Coal Company. He was the president of Aracoma when the company pleaded guilty to “willful” safety violations in the 2006 mine fire that led to the suffocation deaths of two workers there.

When the Illinois Department of Natural Resources’ Office of Mines and Minerals approved the Deer Run mine permit in 2009 there was no mention of a massive coal slurry impoundment to be located within the city of Hillsboro. After the permit was approved, local residents learned the mine was allowed to construct an 88-foot tall impoundment that will cover one square mile and is next to a hospital, school, nursing home and day care center. It is rated as a high hazard dam because if the impoundment were to fail, it would result in loss of life and property in Hillsboro and Schram City and could send pollution downstream into Old Lake Hillsboro.

The Illinois Sierra Club and others asked for an administrative review hearing to object to the Illinois Department of Natural Resources coal slurry impoundment permit because the permit was incomplete and misleading. This was just the beginning of the controversy.

In 2011 local residents were informed a second high-hazard coal slurry impoundment would be constructed next to the first because the first impoundment was designed to last just five years. The impoundment would be twice the size of the first and be located in the City of Hillsboro. According to Citizens Against Longwall Mining, the Deer Run mine secured a revised permit from the Illinois DNR allowing it “to build the entire base of the high hazard coal slurry impoundment and begin dumping coal slurry there before any opportunity for public comment, and before the mine received a dam permit from IDNR…”

In response to citizen complaints, the Illinois Attorney General’s Office sent a letter to IDNR in 2011 raising concerns about whether there was adequate public notice and opportunity for public participation in the permit decision. Rather than halt construction of the impoundment until these issues were resolved, the IDNR granted the mine an emergency dam permit allowing the mine to proceed with construction before responding to citizen complaints. In 2013 a new IDNR hearing officer dismissed CALM’s petition to challenge the impoundment dam permit.

Cline Comes to Wisconsin

In July 2011, Gogebic President Bill Williams spoke to a crowd at the Deep Water Grill in Ashland, Wisconsin. He cited his previous experience at the Cobre Las Cruces (CLC) open pit copper mine near Seville, one of the largest in Spain, as an example of environmentally safe mining. This same technology, he claimed, would eliminate toxic runoff from the massive waste piles at its proposed Penokee Hills iron mine.

In fact, there have been big problems at the CLC mine. In January 2014 the Seville Office of the Environment in Spain filed criminal charges against Williams and two others for arsenic contamination of an aquifer while he was director of mining for CLC from January 2006 to January 2011. Cobre Las Cruces is owned by the Canadian company First Quantum Minerals, which had purchased the mine from Inmet Mining Corp. in a hostile takeover in 2013.

Mining companies routinely “dewater” mine sites by pumping out underground water at staggering rates to keep the mine accessible as it drops below the water table. When the CLC mine opened in 2009 the company began pumping groundwater out of the open pit as part of the dewatering process. When the company re-injected the wastewater back into the aquifer on the same property it was a violation of the mine’s permit and resulted in concentrations of arsenic in local groundwater well above the maximum permitted for human consumption, prosecutors contend. The aquifer was reserved for irrigation and human consumption in times of drought.

First Quantum Minerals maintains the company and its directors will be cleared of the charges, and Williams told the Journal Sentinel the mine built a treatment system to clean the water before injecting it back into the groundwater. However, according to a story by the Wisconsin Citizens Media Cooperative, Spanish authorities charged the mining company promised an innovative, new treatment system and later followed a different approach, illegally extracting clean water and re-injecting wastewater back into the aquifer. Whether Williams will be extradited to stand trial in Spain remains to be seen. Bob Seitz, a spokesperson for GTac, told the JS the case would have no impact on GTac’s operation in Wisconsin.

Williams gave a deposition on September 7, 2010 to answer questions about his role in CLC’s numerous permit violations. Four months later, he left this job to become president of Gogebic, which is based in Florida but has an office in Hurley Wisconsin. Gtac’s interest in the mine began in 2010, before Williams joined the company and around the time that Cline Resource and Development Group purchased Gtac.

In Wisconsin, Cline, Williams and their supporters followed the West Virginia style of buying political influence. Pro-mining groups gave Gov. Walker and state legislators almost $16 million, according to the Wisconsin Democracy Campaign. Documents recently released in the John Doe investigation of Walker’s campaign show that GTac contributed an additional $700,000 to the #Wisconsin Club for Growth#, an organization directed by the governor’s campaign adviser, which has run ads supporting Walker. Walker claims he was unaware of this donation to his campaign. Nonetheless, the governor met with Gogebic lobbyists to draft an iron mining bill shortly after taking office in January 2011, the same month that Williams took over as GTac president. GTac lobbyists were heavily involved in crafting the language of a new mining bill which eliminated restrictions on dumping mine waste in wetlands.  The new language stipulated that iron mining will result in adverse impacts to wetlands and that such impacts are presumed to be necessary.

The bill was defeated by one vote (17-16) in the Wisconsin Senate in March 2012. To insure a Republican majority the next time the bill came up for a vote, Wisconsin Manufacturers and Commerce and others spent almost $2 million to defeat Senator Jessica King (D-Oshkosh) because she had voted against the ferrous mining bill. The WMC spent $964,603 and #Wisconsin Club for Growth# spent $919,400 in attack ads in the last three weeks before the November 2012 election, as the Milwaukee Journal Sentinel reported.  She was defeated by Republican Rick Gudex by 600 votes.

The Republican-controlled Assembly ultimately passed the bill. “Because #Wisconsin Club for Growth#’s fundraising and expenditures were being coordinated with Scott Walker’s agents at the time of Gogebic’s donation, there is certainly an appearance of corruption in light of the resulting legislation from which it benefited,” argued Dean Nickel in a legal filing. Nickel is the former head of the state Department of Justice’s Public Integrity Unit who investigated the fund-raising scheme for the state Government Accountability Board.

Everything, in short, went swimmingly for Cline and company. But he was to learn that Wisconsin is not West Virginia, largely due to a long history of grass roots opposition to mining led by Indian tribes located in the state.

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