Small Claims, Big Problems

Are small-time miners wreaking havoc on Montana’s land?


From Bill McGinnis’ land at the top of the pass just east of Virginia City, you can see far into both the Madison and Ruby river valleys, just 40-odd miles south of the Missouri River headwaters. Here, in southwestern Montana, the land looks much as it has for tens of thousands of years: steep buffalo jumps line the Madison, giving way to glacial benches that rise like steps to the surrounding mountain ranges. Take away the fences and phone lines, the few roads that connect a scattering of buildings, and apart from the absence of glaciers, you’d be hard-pressed to date the scene.

Keep heading west a few miles, however, and that illusion is shattered. Virginia City, thanks to a rich vein of gold, was once the capital of Montana and the economic center of the state as well. While the town’s Old West flavor has been officially canonized by the state legislature, its architecture restored and significance proclaimed on placards, there’s no need for such reminders on the land itself: Every creek, every stream, every trickle of water in and around the town has been dug up, the gravel bars of old placer mines humped along the streambanks, the leavings of 140 years of gold mining.

But unlike Virginia City’s faded glory days, the legacy of placer mining, the process whereby gold is physically separated from the surrounding rock and shaken out, is still alive in Montana. According to McGinnis, small-time miners are wreaking as much havoc as ever on his land—the Cal Creek Ranch, where the mineral rights and surface rights were separated long ago—and elsewhere. A conservation-minded rancher who splits his time between Arizona and Montana, McGinnis runs 28,000 head of cattle on 18,000 acres. He’s careful about how he uses his land, and for the last 15 years has paid Chris Koonce, a former Coloradan with a background in wildlife biology, to manage the ranch.

Koonce talks about the operation he runs with pride. “It’s a lot of tough, rocky dry country. We run yearlings, it’s not a cow-calf operation. It’s a good place to do that,” he says. “The ranch, some parts of it are really spectacular and beautiful, then you drive by this mess.”

“This mess” is a football field-size pit, deep as a two-story house, surrounded by knapweed and abandoned equipment, with puddles in the bottom where the creek that runs through Brown’s Gulch used to be. “Downstream” a ways, the “creek” disappears entirely where a now defunct mining company dumped backfill from the pit in the 1980s. A culvert funnels water under the backfill, past other, older mining scars, down to a marsh where red-winged blackbirds have staked out territory.

In Montana, regulations on small miners are minimal. Those who disturb five acres or less at a time are exempt from the Montana Environmental Policy Act. They have to post little in the way of a reclamation bond—it was raised from $5,000 to $10,000 in the mid-1990s—and there are no reclamation requirements at all for most small timers (excepting only placers who filed their claim after 1989). This is the law which allowed the Stansbury Corporation to operate its vermiculite mine in Dillon. According to Pete Strazdas, who oversees small miners for the Department of Environmental Quality, this means that out of 580 active mining claims, 462 are operating virtually unrestricted.

“The thing to bear in mind is most small miners operate on previously disturbed ground because that’s where the mineralization occurs,” Strazdas says. “It’s not a situation where these 600 guys are disturbing five acres that’s not been disturbed.”

Alan Septoff, of the Washington, D.C.-based Mineral Policy Center, says no one knows what kind of cumulative effects small miners are having in the U.S. “There’s not a whole lot of information out there because the BLM doesn’t really keep track,” he says. But Strazdas says he knows his home turf pretty well, and the answer in Montana is not pretty.

“How much of an unreclaimed mess do they leave? Quite a bit,” he says. “Underground miners of course leave an underground opening and a waste rock pile. Open pit miners leave an open pit and a waste rock pile. If there’s a mill associated with the facility, then of course there’s the mill with typically a tailings impoundment.”

The worst of the damage at the McGinnis ranch was caused by a larger placer operation, the Brown’s Gulch Mining Company, the proprietors of which fled Montana in the middle of the night in 1989 after being confronted belatedly by understaffed state regulators. Strazdas says the company reportedly smuggled out “Seven-Up bottles full of gold,” but left behind a $30,000 reclamation bond, which paid for a drain to safeguard the ranch’s irrigation system.

“What we’ve ended up with is this big hole,” Koonce says. “The estimates for reclamation, which includes bringing all that overburden back up here, and getting an acceptable grade the way the valley would be naturally, is into the multiple millions of dollars and there’s no money available to do it, because the miners, they’ve gone broke or sold the mineral rights to someone else, and they’re not responsible for what’s been done in the past.

“Unfortunately as private land owners, the only thing we can do is take ‘em to court. We have judgements totaling $700,000, $800,000 dollars against the miners, but you never get it. It’s just on paper. It’s very frustrating. There are these situations all over the state.”

The whole situation has destroyed Koonce’s and McGinnis’ trust in the state’s ability to regulate mining, and has made relations with the miners who operate on their land difficult at best.

Their concerns are not entirely unfounded, according to 30-year mining veteran Bob Decker, who is managing the current mining operation in Brown’s Gulch for a company called Great Rocky Mountain Gold, owned by Utah businessman Ken Hamilton. “Most small miners have good intentions,” he says. “But when the economic viability of a project does not pan out, that’s where they get in trouble, because they don’t have deep enough pockets if something goes haywire.”

Decker says he intends to minimize problems in Brown’s Gulch by doing his homework on the ore body, putting up an $80,000 reclamation bond, and cleaning up as he goes along. In two or three years, if all goes well, his company will walk away with between $6 million and $12 million in gold, while the land will be in better shape than it is now.

“I hate to say it because it’s going to kill probably half the small miners, but bonding is going to have to be taken into consideration,” he says. “In other words you’re going to have to collect enough bond so that if the guy walks, then you can hire a contractor or somebody to come in and do the reclamation and not let the people in Montana or New York, their taxes pay for it.”

Miners should be required to clean things up as they work, he adds. “If the property is not profitable enough for them to reclaim the ground as they’re mining, then they shouldn’t be mining it. It’s that simple.” #


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