Changing the Rules of the Game:

This is the fifth in a series of eight posts which together comprise an in-depth article concerning a proposed iron ore mine in the Penokee Hills of Northern Wisconsin and the widespread resistance to the project. Two installments of the article are posted weekly.

Money Doesn’t Talk, It Swears

I didn’t say that. Bob Dylan said that. You know, that guy from Hibbing, Minnesota, home of the world’s largest taconite mine. Maybe he discovered before he left the Midwest what people in Wisconsin are just learning now: money talks with a loud and sometimes nasty voice when it comes to mining.

Some people aren’t convinced that billionaire Chris Cline and his little company by Lake Superior ever intended to build their iron mine in the Penokees. They suspect that the intent was to grease the skids for something more substantial than low-grade iron ore. They point to the interest of international companies in mining copper, gold, zinc and other minerals known to exist in the region.

Dick Thiede, a retired engineer and scientist living in southern Iron County, maintains that the game all along for Cline and his company was to increase the monetary value of the land and build a prospectus. Thiede says that a friend of his, a mining executive, told him early on that “most money made in mining is not done by mining.”

Dick Thiede, Iron County mining blogger

Dick Thiede, Iron County resident and mining blogger

Activist and scholar Al Gedicks expanded on this notion: Cline and Gogebic Taconite (GTac) are what the industry refers to as “junior partners,” he said. “They have no experience in iron mining. They have experience operating coal mines with massive environmental violations … and putting their major investment into buying legislators and legislation.

“What GTac has invested in is essentially creating a permittable mine without having any expertise or, for that matter, any financial resources to go ahead with the full project. That’s what junior mining companies do.”

John and Connie Franke are the nearest full-time residents to what would have been the site of the GTac mine. They are a retired couple who met at UW-Stevens Point, where John studied water science. They purchased property in the Penokees in 1991 and built their home in 1999. For most of his life, John’s family has had a hunting cabin in these same hills.

John and Connie Franke-0880

John and Connie Franke, residents of the Penokees

John told me his parents had been approached way back in the early 1960s by people wanting to sample for minerals under their hunting land in Iron County. “The thing that always stuck in my mind was: the iron quality was poor, and it didn’t make any sense why they’d want to build an open-pit mine because of the difficulty of getting the ore body out. It just didn’t make any sense when you’re talking 70 to 80 percent of the material that would be removed is waste.

“Then, when the laws got changed to benefit GTac,” he said, “it started to make more sense to me that they’re not here for the iron ore. They’re here for what’s in the waste product. Now they’ve got the ability to remove this iron ore and extract whatever’s in that waste, whether it be gold, copper, silver or whatever.”

Wisconsin, once known for its staunch environmental standards, has now become a testing ground for new rules and regulations regarding mining. USA Today has reported that international mining corporations, policy-makers and scholars are all looking to Wisconsin to see how low environmental standards will go for open-pit mining. For those looking to loosen regulations, it didn’t hurt that Wisconsin now had a governor, Scott Walker, who took office proclaiming that the state was “open for business,” a governor with presidential ambitions eager to display his conservative credentials.

Early in 2011, Gogebic Taconite officials promised the people of northern Wisconsin that they would not seek to change the state’s mining laws. A few months later, they proceeded to do just that. The first bill they circulated met with a public outcry and was withdrawn, only to be followed by a very similar bill at the end of the year.

AB 426 met with strong opposition but was passed along party lines by the Republican-dominated State Assembly. But when the bill moved to the State Senate, it was narrowly defeated, with Senator Dale Schultz the only Republican voting against it. GTac left the state shortly thereafter.

It was acknowledged that GTac and mining industry interests played a large role in drafting this first bill. In early 2013, another bill was introduced and passed in the legislature. This time, it became apparent that the fingerprints of GTac and various other special interests were all over it.

Act 1 significantly changed the rules of the game in terms of mining regulation and the permitting process. The new law expedites the permitting process and limits the role of citizens and the DNR. It baldly states “that attracting and aiding new mining enterprises and expanding the mining industry in Wisconsin is part of Wisconsin’s public policy.” A particularly egregious section reads: “the use of wetlands for bulk sampling and mining activities, including the disposal or storage of mining wastes or materials, or the use of other lands for mining activities that would have a significant adverse impact on wetlands, is presumed to be necessary.” [Emphasis added.]

“It was not a law drafted with science in mind,” commented Kim Wright of Midwest Environmental Advocates. “It was drafted to allow them to create a mine where it makes no sense, economic, environmentally or otherwise. It’s incredibly dishonest and against Wisconsin’s way of doing law.”

One of the main accomplishments of Act 1 was to circumvent Wisconsin’s Mining Moratorium Law, passed in 1998 by an overwhelming majority in both houses of the legislature and signed into law by Republican governor Tommy Thompson. The law requires that before the state can issue a permit for mining of sulfide ore bodies, prospective miners must first provide an example of a metallic sulfide mine in the U.S. or Canada that has not polluted surface or groundwater during or after mining.

Act 1 attempts to distinguish between ferrous and non-ferrous mining in order to skirt the mining moratorium. “The premise of the legislation is that iron mining is different from sulfide mining,” explained Gedicks. “The existing regulatory framework for sulfide mining, which includes the Mining Moratorium Law, still applies to the iron formation in Iron and Ashland counties because it is mixed with sulfide, both in the ore body itself and in the waste materials, and there’s no geologic dispute about this.” USGS, GLIFWC and various scientists “have confirmed that the distinction between iron oxide and iron sulfide is meaningless because both are present in the ore body,” Gedicks said. “To base an entire regulatory framework on a false scientific premise that this is exclusively an iron oxide deposit has no scientific basis whatsoever.”

Shortly before Act 1 was enacted, the Wisconsin Democracy Campaign, a nonpartisan government watchdog group based in Madison, released a report indicating that special interests favoring mining deregulation had contributed $15.6 million to Governor Walker and the Republican-controlled legislature between 2010 and early 2012. They outspent environmental groups by a ratio of $610 to $1. The pro-mining groups making campaign contributions included manufacturing, construction, banking and transportation concerns.

Walker received over $11 million during this period including $67,068 from Chris Cline, his employees and other mining industry executives. Republican Senator Alberta Darling of suburban Milwaukee accepted $467,293 in contributions from pro-mining interests. She spent a record $1.23 million during the 2011 recall elections to retain her seat. Tom Tiffany, a rabid pro-mining and anti-environment legislator, received nearly $75,000.

Although this was not exactly “chump change,” it only became apparent two years after the 2012 elections that it took a lot more to change lawmakers and laws. It took “dark money” too.

The dark money that helped elect pro-mining legislators, re-elect Governor Walker and pave the way for pro-mining legislation was disclosed by accident. A Chicago Appeals Court hearing litigation regarding a John Doe probe into Walker’s campaign, the Wisconsin Club for Growth and other conservative groups inadvertently released a 24-page document for a few hours. The document revealed that Gogebic Taconite had secretly donated $700,000 to Wisconsin Club for Growth, a pro-business advocacy group led by Walker’s campaign advisor. An email contained in the court document, sent by a Walker campaign consultant to a Walker advisor and the Club for Growth, said: “Wisconsin Club for Growth can accept corporate and personal donations without limitations and no donor disclosure.”

The Wisconsin Club for Growth later donated nearly $3 million to the Issues Mobilization Council of Wisconsin Manufacturers & Commerce (WMC), the state’s largest business lobby. Together, the Club for Growth and WMC attacked Democratic State Senator Bob Jauch, who had worked for alternative mining legislation, and Dale Schultz, the lone Republican senator who had voted against the first mining bill.

When the dark money came to light in August, 2014, the Milwaukee Journal-Sentinel quoted Jauch as saying: “It is Louisiana-sleaze politics in which big money thinks it can spend enough to get the government it wants.” Schultz commented: “They have obviously tried to channel their money in places where the public won’t see it.”

Mike McCabe, the former director of the Wisconsin Democracy Campaign, said: “This is pay-to-play, and perhaps that’s become politics as usual. It’s not the way politics used to work in Wisconsin, but maybe it’s the new normal.”

In September, 2014 I heard Tim Cullen, a former Democratic state senator, speak in Janesville about the Penokee mine issue and the “new normal” in Wisconsin politics. It was about a month after revelation of the $700,000 donation and Cullen was addressing a group called the Rock County Progressives. He had represented Janesville and Rock County in the Senate and, with Jauch and Schultz, formed a triumvirate that attempted, unsuccessfully, to reach compromise and pass an alternative mining bill. He was sometimes perceived by his Democratic colleagues as being too moderate.

Cullen served in the Senate during the 1970s and 80s, including three years as Senate Majority Leader. After a hiatus of more than 20 years, he was re-elected in 2010. He also served as Secretary of the Wisconsin Department of Health and Social Services under Republican Governor Thompson.

“We now know from the emails that the Club for Growth dumped $2.5 million dollars, $700,000 at least which was from GTac, into the Issues Mobilization fund,” Cullen informed the group in Janesville. “Their lobbyist told me, in front of a reporter, that they dumped $2 million dollars of that $2.5 million into the 18th Senate seat election in the last 60 days.”

The 18th Senate District seat, held by first-term senator Jessica King, had been determined by Republicans to be the most vulnerable. “That was the most crucial election of 2012,” explained Cullen, “because it would give the Republicans what they called a ‘Schultz-proof State Senate’. They spent over $5 million dollars to beat Jessica King. Remarkably, she raised a million dollars. She was outspent five to one, lost by about 600 votes out of about 84,000. And they got the Schultz-proof Senate. That’s how this bill, this awful law we have now, came to be.”

Cullen went on to talk about the mine, GTac, and how the new law had changed the rules of the game. He said that 70 to 80 percent of what would be extracted from the mine would be waste, and that this amounted to 30 million tons a year, a billion tons over the projected 35-year life of the project.

Tyler Forks

Tyler Forks in the Penokees

“The problem GTac had was how to profitably mine there if they had to haul all that waste out by truck or train. They had to change all the environmental laws. They couldn’t mine profitably there if they couldn’t dump the waste in the water.

“What they did with the water was three things,” Cullen continued. “First, they said there’s just puddles up there in the Penokees, so they ought to be able to dump the waste in the puddles. Well, when we saw the bill, which is now law, a puddle turns out to be anything less than two acres, which is two football fields. That’s hardly what I think of as a puddle.

“Then they said, there’s these tiny streams and rivers up there, and they’re not a problem. As if this water doesn’t all come together and flow downhill together. So they said, any little stream or river less than two miles long you ought to be able to dump waste in. We actually looked at all the rivers and streams up there less than two miles long. If you put them end to end, there’s 108 miles of rivers and streams less than two miles long that now, with the law, they can dump waste in.

“Third, the old law said, when it comes to mining, there was a presumption it was unnecessary to dump mining waste in a wetland. Well, they fixed that pretty easily. They got rid of the letters un. Now the law says it is presumed necessary for a mining company to dump the waste into a wetland.”

Cullen pointed out that the taxation structure arrived at by Republicans was also controversial. “The bill I developed, patterned after Minnesota, said there would be a tonnage tax. You take a ton of iron ore out of the ground and you pay a tonnage tax that goes back to the local area. Instead, they put a net proceeds tax in the law. A net proceeds tax allows a company, a multi-national company, to shift costs from Wisconsin and never show a profit. No profit, no taxes.”

▪ ▪ ▪

All photos by Tom Boswell©2015. All rights reserved.

Next: Jobs and Economics: Not your grandfather’s mine anymore

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