Tuesday, June 18, 2013

Citizens demand federal investigation of collusion between state regulators and mining industry

By Michele Bourdieu, with information from a Save the Wild U.P. press release

Concerned citizens demonstrate near the Michigan Department of Environmental Quality (DEQ) Upper Peninsula office outside Marquette with signs calling for a Department of Justice investigation of the alleged "non-profit" Northern Michigan Geologic Repository Association (NMGRA), whose board members have included mining company executives and state regulating agency officials. (Photos © Sally Western and courtesy Save the Wild U.P. unless otherwise indicated.)

[Editor's Update: See below for a clarification concerning the geologic repositories from the DEQ's Melanie Humphrey.

MARQUETTE --  Local residents, including KBIC tribal members, Concerned Citizens of Big Bay, and Save the Wild U.P., rallied at a joint press conference on Saturday, June 8, 2013, calling for a corruption investigation related to activities of an unusual "non-profit" corporation, the Northern Michigan Geologic Repository Association (NMGRA), based in Marquette County.

Nearly two dozen citizens spent that Saturday afternoon in the Department of Environmental Quality (DEQ) Upper Peninsula office parking lot in Gwinn, holding hand-lettered signs that outlined corruption concerns, speaking with locals driving by, participating in a question-and-answer session, and reviewing what they call "the murky facts surrounding NMGRA."

Signs like this one at the June 8 demonstration refer to NMGRA's refusal to disclose financial information requested through the Freedom of Information Act (FOIA). Pictured here are, from left, Rich Sloat of Iron River (Mich.); Gene Champagne of Concerned Citizens of Big Bay; Kathleen Heideman, Save the Wild U.P. Board vice president; and Alexandra Thebert, Save the Wild U.P. executive director.

In 2008, while Rio Tinto was in the process of planning and constructing the mine at Eagle Rock, high-ranking state officials directly charged with enforcing mining safety and environmental regulations formed the Northern Michigan Geologic Repository Association as a "non-profit" corporation, whose Board of Directors featured Rio Tinto and Bitterroot Resources mining executives alongside DEQ and DNR officials. At the same time, according to Save the Wild U.P. and other environmental groups, these state officials were failing to enforce environmental and safety regulations enacted to protect the health and well-being of U.P. citizens.

Jeffery Loman, Keweenaw Bay Indian Community (KBIC) tribal member and former federal oil regulator, led the group on a walking tour of a large cinder block warehouse building located nearby, identified by signage as a "State Warehouse." The property is actually leased from the Marquette County Economic Development Corporation by the nonprofit Northern Michigan Geologic Repository Association -- and serves as its core shed, housing valuable core samples. Local workers report seeing only Rio Tinto vehicles accessing the warehouse.


This "State Warehouse" building at the former K.I. Sawyer Air Force Base, near the Upper Peninsula DEQ office outside Marquette, serves as a core shed for the Northern Michigan Geologic Repository Association (NMGRA). See UPDATE below.

According to Gene Champagne of Concerned Citizens of Big Bay, the warehouse building is a great place for hiding something.

"It looks totally neglected. Here’s this big building covered with peeling paint, surrounded by invasive knapweed and erosion gullies -- anyone driving by would assume it was a giant meth lab, not a top-secret core shed set up by mining executives and controlled by the Michigan DEQ," Champagne noted. "Peeking in the windows, you can see an emergency list of contact people that includes not  only police agencies and  hospitals, but Kennecott/Rio Tinto employees, and DEQ officials."

Near the Upper Peninsula District Office of the Department of Environmental Quality (DEQ) in Gwinn, this map taped to the wall of a large warehouse labels the facility a "State Warehouse." Core samples are stored within, but the DEQ claims no further association with NMGRA, the non-profit that has leased the warehouse and is attempting to raise money to make it a state geologic repository. (Photo courtesy Save the Wild U.P.)

Champagne says citizens can FOIA information on this for a reason.

"We need to be the watchdog of government to ensure that our business is conducted in the light of day and in the best interest of the people, not special interest," he explains. "Our elected local, state, and federal representatives and officials who all decry this type of secrecy in government need to demand action and ask questions of the DEQ."*

DEQ: State not part of NMGRA but new repository needed

Despite the "State Warehouse" sign, though, the warehouse is not (yet) an official state repository, according to at least one DEQ official.

"It's not officially part of the state at all," said Melanie Humphrey, geological technician in the Michigan DEQ Office of Oil, Gas and Minerals, Upper Peninsula District. "NMGRA is hoping to make it a geological repository for core, rock samples and records that have geological information."

Humphrey is the contact person for anyone who wishes to visit the existing geologic repository in Harvey, near Marquette. That facility is full to capacity -- thus the need for a larger storage area such as the warehouse in Gwinn. At present the repository in Harvey receives visits from the U.S. Geological Survey, graduate students, archaeologists and other persons interested in studying the core and rock samples. The repository serves as a library. Anyone can come and visit the facility in Harvey by making an appointment with Humphrey, who will open it for visitors.**

"I think it would be very nice to have a research center up here," Humphrey said.

UPDATE: In response to a question from Keweenaw Now, Melanie Humphrey sent an email today, June 18, to explain that, while NMGRA's warehouse building at the former Sawyer Air Force Base site is not owned by the state, she sometimes stores cores there because the repository in Harvey is full to capacity: "As a result, NMGRA has given permission to store core samples that have recently been released to the state from various Upper Peninsula exploration projects at the Sawyer building. I can get access to that core if needed. The core at the Sawyer building is stored on pallets and not organized; but, if someone is interested in looking at this core, I could arrange a visit to the Sawyer building with NMGRA’s permission," she writes.**

The Geologic Repository (there is a second one in Kalamazoo) is needed because of a law that requires industries (oil, gas and mining) to give the state core samples or related documents left over from exploration on state land or land with state mineral rights, Humphrey explained. If the drilling is on private property the company is not required to do this.

"It could be valuable information," Humphrey noted.

While NMGRA was formerly associated with the DNR, which leases surface state land, and the DEQ, which regulates it, apparently the non-profit organization is now separate from the state but trying to raise money to pay for the warehouse in Gwinn with the idea of making it a new state repository. Humphrey described it as "a group of people that see the value of having this repository for the state to preserve geological information."

"We wouldn't get core from an active mine, but once the mine closes the leftover core could be donated to the repository," Humphrey added. "The core that we have at our repository in Harvey is all open-record."

Hal Fitch, state geologist and chief of the DEQ Office of Oil, Gas, and Minerals in Lansing, explained that the repository fulfills a function required by Part 601 of NREPA (Natural Resources Environmental Protection Act 451), which states, "The Michigan geological survey shall provide for the collection and conservation of cores, samples, and specimens for the illustration of every division of the geology and mineralogy of this state, to the extent that facilities and funds are available to do so."***

Fitch was a member of the NMGRA board of directors when the non-profit was established in 2008 but is no longer associated with it, he said.

Fitch told Keweenaw Now he is aware of the community group's intention to request a Department of Justice investigation of NMGRA.

"I would say go right ahead because there's nothing improper (about the non-profit), and at the time we (the DEQ and the DNR, Department of Natural Resources) were involved there was nothing improper about our involvement," Fitch said.

Because of the Part 601 requirement and the fact that he was unable to secure state funding for a suitable repository to continue to collect and preserve core samples and related data, Fitch was involved in establishing NMGRA in order to provide for the future support of a repository, he explained.

"We were looking for people who utilized the core repository to support the concept," he said. "We didn't get to the point where we were soliciting funding while we were members."

Geologic repositories are a function of the Geological Survey. In 2008 Fitch's department, the Office of Geological Survey, was the Geological Survey established by Part 601. In 2011 Part 601 was revised, and the Geological Survey was established within Western Michigan University. While that is a state university, the Geological Survey is no longer part of the DEQ, Fitch explained.

Fitch was unable to say exactly when he and the DNR representative on the NMGRA board, Milton A. Gere, Jr., who is now retired, left NMGRA; but it was before 2011, he noted.

"I never contemplated seeking funding from an outside source, such as industry, for the state of Michigan or for the association (NMGRA) during the time I was a member of it," Fitch added. "The association would be a separate entity that would receive funding later. That was the concept."

Fitch noted he just wanted to get the association established. He said he believed industry, academia or grant sources might fund NMGRA later, when he would not be a part of it.

He also said there was no connection between NMGRA and the issuing of mining permits.

"No mining company or outside source offered any money to NMGRA while I was on the board of it," Fitch said.

An Oct. 28, 2008, article in the Lake Superior Mining News, states that Hal Fitch (at that time director of the DEQ's Office of Geological Survey, or OGS) formed a 501(c)(3) non-profit corporation with Kennecott and Bitterroot Resources, "registering the non-profit under the DEQ’s address with himself as the primary contact."

The article also notes, "In an October 2007 e-mail, Fitch acknowledged 'that there would be a problem with a state agency forming a corporation' but 'came up with an innovative way to address the problem: formation of a non-profit corporation that is not a part of any state agency, but in which OGS is a participating member.'"****

Electric infrastructure for Eagle Mine "core shed" installed without permit

In October 2008, Rio Tinto claimed it needed a 10-megawatt substation and miles of private power lines to electrify a core shed adjacent to the Eagle Mine site.

This was approved by Jim Sygo, DEQ deputy director, in a letter to Rio Tinto (Kennecott Eagle Minerals, or KEM) dated Nov. 7, 2008, in which he says,"The DEQ considers the planned core shed to be part of KEM continuing exploration program. It does not constitute nonferrous metallic mineral mining or reclamation and therefore is not subject to a mining permit under Part 632, Nonferrous Metallic Mineral Mining, of the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended."

This October 2010 photo shows power lines being run along the AAA Road leading to the Eagle Mine without a request from (Rio Tinto's) Kennecott Eagle Minerals Co. (KEMC) for an amendment to their mining permit for this infrastructure. (File photo by Keweenaw Now)

However, once the power had been installed, the core shed was deemed unnecessary, and Eagle Mine was electrified instead -- a bait-switch move that sidestepped permitting, due process, and public participation.

"This core shed symbolizes Rio Tinto's end-run around Part 632, the legislation governing non-ferrous mining in Michigan," said Loman.

Mining companies fund core shed for state

During recent Rio Tinto community forums in Marquette and in L'Anse, Loman asked Matt Johnson, Rio Tinto Eagle Mine government and community affairs manager, about funding for the NMGRA non-profit and questioned its report of an annual income of less than $25,000 (an amount that exempts them from reporting financial information) when it has signed a 5-year lease totaling $400,000 for the core shed in Gwinn. The non-profit receives tax-deductible donations but will not reveal information about the donors or amounts.*

During the May 15, 2013, Rio Tinto Community Forum in L'Anse, Michigan, Jeffery Loman, Keweenaw Bay Indian Community member and former regulator, asks Rio Tinto's Matt Johnson questions concerning the non-profit (NMGRA), FOIA requests about it that were unanswered, and the 14th Amendment. (Videos by Keweenaw Now)

Johnson later commented on Loman's questions. In the following video clip, Johnson says state officials are not members of the NMGRA non-profit:


Matt Johnson, Rio Tinto Eagle Mine government and community affairs manager, speaks about NMGRA, the non-profit Northern Michigan Geologic Repository Association, in response to questions from Jeffery Loman at the May 15, 2013, Rio Tinto community forum in L'Anse.

"Their continual denial of access to information about their core shed (warehouse near the DEQ office) is a violation of the 14th Amendment," Loman said. "Something smells bad here. Why create a private non-profit to perform a function of the state of Michigan? The circumstances surrounding these dealings between state officials and mining companies look like a bad rash on this administration," he added. "Sunshine is the best disinfectant. Hopefully Governor Snyder will agree."

Mary Ellen Krieg, a resident of Big Bay, called the situation "a barrel of rotten apples."

No response to FOIA requests for facts about NMGRA

Attorney Jana Mathieu, who represents the Sugar Law Center for Economic and Social Justice, has sent a FOIA (Freedom of Information Act) request for financial information to NMGRA's registered agent, Ron Greenlee, a Marquette attorney; but Greenlee has repeatedly failed to respond. Mathieu eventually served him with a lawsuit for violation of the Freedom of Information Act, to which he also has refused to respond.

In her Feb. 11, 2013, FOIA request sent to Greenlee, Mathieu asked for any and all of the following: year-end reports on activities, full annual budgets and/or year-end financial statements, audits of finances, year-end reports on assets and liabilities, reports on equity ownership, statements regarding tax-exempt status, tax statements and filings, and lists of the board of directors and/or officers for three entities -- the Northern Michigan Geologic Repository Association, the Northern Michigan Geology Data Library, and the Northern Michigan Geological Repository.

"The citizens of Michigan have consistently been denied access to information with regard to this so-called non-profit," Mathieu said. "Today we are pulling back the veil of secrecy."

Demonstrating for access to information near the Upper Peninsula DEQ office on June 8 are, from left, Jana Mathieu, attorney; Jeffery Loman, KBIC member and former federal regulator, Kathleen Heideman, Save the Wild U.P. board vice president; and Gene Champagne of Concerned Citizens of Big Bay.

NMGRA is a public body under the Freedom of Information Act because the DEQ and Michigan Office of Geological Survey were key players in the formation of the non-profit, Mathieu explained.

The non-profit status of NMGRA allows mining companies to make tax-deductible donations to state (public) agencies, she noted.

"They're donating this money to the state regulators who are responsible for regulating their mines and enforcing safety and environmental regulations against these mining companies," Mathieu said.

Loman agreed: "I just think it's an extremely bad way to do government business -- to form a non-profit with mining companies that the state is supposed to regulate," he added.

Mathieu noted the question becomes "What are these mining companies getting from this?"

"That's why we're calling for an investigation by the Department of Justice of this non-profit," Mathieu said. "There's a strong argument that it does violate the Michigan Ethics Act."*****

Attorney Michelle Halley of Marquette said, "As things stand, there’s no plan for any independent review of the quantity, content and grade of the ore removed at Eagle Mine. Essentially, that means the state is allowing Rio Tinto to self-report its income which serves as the basis for the taxes due the state. The DEQ's Hal Fitch will just take Rio Tinto's word for it; and in turn, Hal Fitch wants every taxpayer in Michigan to take his word for it."

For several years Halley represented the National Wildlife Federation in a contested case against the DEQ and Kennecott (Rio Tinto), challenging the mining permit for the Eagle Mine. The case is now at the Michigan Court of Appeals. Other parties challenging the permit in the case are the Keweenaw Bay Indian Community, the Yellow Dog Watershed Preserve and the Huron Mountain Club.

"It was through the contested case, for which I was one of the attorneys, that we found out about this non-profit organization," Halley said. "I support citizens finding out the truth and state officials being accountable for accepting money from private industry, especially when it's the same state officials who make the permitting recommendations for those same companies."

"There are serious concerns about the connections between the mining industry and the regulatory role of the state," agrees Alexandra Thebert, executive director of Save the Wild U.P. "In the best interest of all Michiganders, we are calling for the Department of Justice to investigate."

Projected sale of Eagle Project to Lundin Mining Corporation would not alter plans for investigation

The news (released last week) about Rio Tinto's plans to sell the Eagle Project to the Lundin Mining Corporation does not change the plans by Save the Wild U.P. and other groups to call for a Department of Justice (DOJ) investigation.

"No change here -- same mine, same state permits and lousy state regulators," says Jeffery Loman. "If Rio Tinto executives violated the law, selling Eagle Mine isn't going to get them off the hook."

Gene Champagne agreed: "As far as I am concerned, it does not change my call for a DOJ investigation. The NMGRA is going nowhere and neither is RT. They still have large landholdings and mineral leases in the UP. RT is just moving on to another deposit in the UP and leaving Lundin with the mess they started at Eagle."

In response to a question from Keweenaw Now, Rio Tinto had little to say about the potential investigation.

"We are aware of the recent allegations made by a group of community members," said Dan Blondeau, director of communications and media relations for Rio Tinto Eagle Mine.

Concerning Rio Tinto's future plans in the region following the sale of the Eagle Project, Blondeau said, "The binding agreement between Rio Tinto and Lundin Mining Corporation is for Eagle Mine -- which includes the mine, mill, and selected property  adjacent to the mine. Rio Tinto controls roughly 400,000 acres of mineral rights in the UP and is assessing future plans with other exploration efforts."

Notes:

* Click here for an overview of NMGRA's non-profit status.

** Click here for the DEQ page on Michigan's two geological repositories. The page gives contact information for Melanie Humphrey and links to information on the repositories. UPDATE: According to Humphrey, NMGRA’s intention is that at some point the building at Sawyer will be run by a state agency or the Michigan Geological Survey, which is not a state regulatory agency. The Michigan Geological Survey is currently an entity within Western Michigan University, which oversees its operations.

*** See Part 601, Section 324.60105: Michigan geological survey; collection and conservation of cores, samples, and specimens.

**** See the Oct. 28, 2008, article, "DEQ and Kennecott Form a Non-Profit Corporation," in Lake Superior Mining News.

***** Click here to learn about the Michigan Ethics Act.

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