[Editor's Note: This is a continuation of a multi-part series of articles on the Grant County Commission work session of Feb. 19, and regular meeting on Feb. 21. It will begin the presentations for and against HB 220 and HB 255.]
By Mary Alice Murphy
After four hours of public input, the Grant County Commission gave everyone a short break at about 1 p.m. on Thursday, Feb. 21, 2019 at the regular meeting.
After the break, Commissioner Javier Salas moved to adjust the agenda, so that the presentations for and against the resolutions, as well as the resolutions themselves would be heard and then voted on before everything else on the agenda, so that audience members could leave when the decisions they came to hear were completed.
Commissioner Harry Browne seconded the motion and the commissioners approved the adjustments.
The first presentation addressed the mining bills and the resolutions about them.
Allyson Siwik, Gila Resources Information Project executive director, described GRIP as the community watchdog for mining water quality and assurance for remediation of mining lands. "We work to protect community health. The annual toxic materials release is self-reported by Freeport."
She presented statistics, such as 3 million pounds of lead compounds released in 2017 at Chino Mine. Tyrone in the same year released more than 700,000 pounds of lead compounds, which was down from 9 million pounds in 2012. She said the data could be seen at EPA.gov at TRI, toxic release inventory. Siwik alleged that thousands of acres of groundwater contamination cover an aerial extent of 20,000 acres. The water quality monitoring shows arsenic, cadmium and other minerals.
She said in 2007, Freeport paid $7 million in damages to the state and has paid more than $5 million for damages to wildlife. With the opening of Cobre Mine, there have been complaints of fugitive dust and invasive lighting.
"I applaud Freeport for working with the residents to hear about the issues," Siwik said. "But when the mines play out, Freeport needs to clean up what's left. At Tyrone, they must pump and treat water forever to prevent contamination of the aquifer. Our program is not anti-mining, but protection of community health. We understand the need for copper for renewable energy, but the groundwater belongs to all of us. Freeport has the right to put the water to beneficial use, but we need protections. This is why GRIP strongly supports HB 220 and HB 255. These don't kill mining and are not designed to kill mining."
Charles De Saillan, a staff attorney with the New Mexico Environmental Law Center, spoke next. He said he worked at the New Mexico Environment Department implementing and interpreting water quality. "I dealt with permits. HB 220 would amend the Water Quality Act. It emphatically would not put mining companies out of business. I understand the importance of mining, and I appreciate the concerns of the miners. If enacted, the bill will not shut down the mines. I wouldn't be supporting it if it did. Copper is essential. It is a commodity used in houses, computers, vehicles, cell phones, solar energy. The bill clarifies an ambiguous statute, which has been litigated over the past decade. All groundwater is protected, and standards need to be met. The exception is if you have a variance. When I was at the NMED, mines asked for variances and we approved them. The Copper Mine Rule allows mines to pollute above the standards within the mine. They don't have to monitor within the mines for contamination and it is not clear that they have to clean up. The Water Quality Act includes a variance clause, allowing mines to apply for variances, which the Environment Department supported. The variance process is important. There is public participation and a certain amount of accountability is built into a variance. If HB 220 were enacted, it would not change the variance procedure or make it more difficult. I have heard it argued that variances won't be available. That is not true because the variance procedure is from water quality standards."
Siwik said HB 255 phases out a loophole in the statute on financial assurances for the mines. "Their financial assurance is at 75 percent. The mine operators can promise to pay for the costs, but if they don't, it pushes it onto the state and local taxpayers. The $104 million is a corporate guarantee, an IOU from Freeport Minerals. If Freeport Minerals goes bankrupt, they could not pay off the guarantee. We've all seen the tailings blow off near the airport. Contaminants are in the air and the piles have no liner. We need the assurance for the pumps to continue to treat the water to prevent contamination from spreading. HB 255 makes sure the assurance is more secure. After many defaults, it's up to the corporate guarantees. We've talked about what if the operators are not able to remediate. A number of western states no longer accept corporate guarantees. Colorado is also considering a bill similar to ours. In New Mexico, we have first-hand experience picking up the tab for remediation."
She cited Carlsbad where a former brine well has created the danger of a potential road collapse. "In 2018, the state put in $40 million to remediate the situation. Eddy County and Carlsbad had to put up $4 million each. HB 255 will phase out the corporate guarantees to a more certain funding."
Commissioner Javier Salas asked who sits for the variances. De Saillan said the water quality commissioners, made of up members of the New Mexico Bureau of Mines, agriculture and four members appointed by the governor. "They would usually be people with expertise in the topic."
In answer to Salas' question about the Copper Mine Rule, de Saillan said the Copper Mine Rule gives permission to exceed standards.
Commissioner Alicia Edwards asked where the members of the commission come from and whether the Water Quality Control Commission could be stacked.
De Saillan said the board could have bias, but "for the most part the commissioners realize their duty. They look at things from a technical standpoint, but the system is imperfect."
Commission Chairman Chris Ponce asked if someone sponsoring the bills could be on the quality control commission.
De Saillan said the commissioners are not legislators. To a previous question about variances, he said the commission had granted variances under the Richardson and Johnson administrations.
Swik said GRIP had supported both variances for Lee Hill and Savannah Hill. She said the New Mexico Mining and Minerals Division monitors the corporate guarantees, which require an SEC filing. "The concern to me is that the Freeport Minerals Corporation is not a public corporation, so they don't have to submit the same paperwork." She continued that by the time a company is in trouble financially, it cannot meet the stability requirement. And "it's already too late for the state of New Mexico. In 2015-16, Freeport came up with the cash needed."
De Saillan said usually if the parent company is not doing well financially, neither is the subsidiary.
Salas noted that history shows the company can come up with the cash.
"The whole point of this bill is to prevent a bad situation from happening," de Saillan said.
Salas and Siwik went back and forth with Salas saying the company had come up with the money and it was actively reclaiming property. Siwik alleged that it doesn't conflict with the needs for a more secure assurance. "We're talking about reclaiming when the mines play out to make sure the money is there when the company is no longer profitable."
Billings said: "Our watchdog at home is part of the family and we feed him. Do you as the watchdog feel like you're part of this mining family? Who feeds you?"
Siwik said GRIP was formed 20 years ago "by concerned citizens who felt the community needed a voice. We feel responsible for the community and to represent the voiceless. We advocate for people who live near the mine."
Billings asked whether the organization's funding came from local folks or out-of-state entities.
"It comes from the local community and grants and things like that," Siwik said.
The next presentation featured Tony Trujillo, long time lobbyist for Freeport; Dal Moellenberg, attorney with Gallagher and Kennedy, representing Freeport; and Tom Shelley, Freeport manager of reclamation.
Trujillo started out by saying: "It's really refreshing to see you, the commissioners, allowing all these views to be presented to you. The session is still going on. If I walked into a hearing room, only three people would be allowed five minutes each to give testimony on the many bills that are being brought forth. I have really enjoyed what you did here today. You showed up and got to work. This is my 31st legislative session representing Freeport. I've seen a lot of bad stuff aimed at mining. Unequivocally, these are the two worst bills I've ever seen. I brought Dal and Tom here today to help correct the misinformation you've just heard."
He said HB 220 was pre-filed on Jan. 11, 2019. "We knew it would be a hostile bill because it was filed by Rep. Matthew McQueen, a Democrat from Santa Fe. We refer to the bill as the discharge bill."
Trujillo noted that Charles de Saillan, who had spoken on behalf of GRIP, "was also an expert witness supporting the bill. Others that testified were GRIP, The Sierra Club, Amigos Bravos and two or three others. You hear them say they are not anti-mining. There has not been one time when I've been at the session in the hearings that I have seen these people ever supporting Freeport. We, Chevron Molybdenum and the statewide dairies tried to stop this bill. Other statewide business groups are trying to help us. The testimony by the expert witnesses? There was no question it was aimed directly at Freeport. It was first heard on Jan. 24 and it rolled over and was given two committee referrals to the House. One was the Energy and Natural Resources Committee, of which McQueen is the chairman. It passed out of committee 8 for and 5 against – straight party line. It passed to the House Judiciary Committee and it is still sitting there. If it starts moving and it passes the House, it will go to the Senate for two committee approvals and the full Senate approval."
[Editor's Note: It received a Do Not pass from the HENRC, but with a Do Pass with committee bill substitution on Feb. 5, 2019. It has not moved out of Judiciary.]
"The people's voices you hear today are being heard clearly in Santa Fe," Trujillo continued. "It hasn't moved because of that. I love what you're doing. In the committee hearing, they said Freeport was the largest employer in Grant County with 1400 employees. The bill would stop copper mining in Grant County."
Shelley said he is Chino reclamation manager and also served in Tyrone as environmental manager. "I've been with Freeport since 1993. I've been involved with environmental permitting the whole time." He referred to a handout that had been passed out. It gives the 2017 economic impact on Grant County as $163.2 million and the 2017 economic impact on New Mexico as $378.3 million.
"My company has always shown an incredible amount of restraint," Shelley said. "This bill is different. I was glad to hear that the Environmental Law Center has been talking to the Environment Department, asking them to be cool about the bill. I can read between the lines. Porphyry copper deposits involve lots of different minerals we are digging out. When it rains, it releases the minerals into the open pit. On the face of this, it says no one can dig a pit. The bill would force the Environmental Department not to give permits. You heard a previous speaker say that the Environment Department always permitted our requests. That's not true. The mine already was contaminated in 1993. The Legislature then recognized the valuable economic activity, but that it would not impact other water uses. This does not return us to business before the Copper Rule. That's a myth. You, community members and commissioners, ask the tough questions. We have not and will not impact the community drinking water supply. This safety vest doesn't protect me." He waved his hand toward the crowd of miners behind him. "He and she and everyone in the mine protects me. We are a team. We take great pride in our environmental stewardship. Protecting the environment and safety of our workers comes ahead of production. The original Water Quality Act did not have the intent to deny copper mining.
"Another myth is that the Copper Rule allows unlimited pollution," Shelley continued. "It is perpetuated by GRIP and the other groups that oppose mining. We've learned a lot about protecting the water. We practice it above and beyond the regulations. We have a containment system and we monitor it every day. We reuse the water where we can in the production process, so amounts of fresh water are minimally used. We don't want to scare people or cause them to worry. We want to go about our business while keeping the environment safe. We've been accused of scare-mongering. You heard the scare-mongering just now from the previous speakers. The majority of the minerals we are taking out of the overburden, so we can get to the ore. They are not truly being released to the environment. We have not and will not impact our neighbors' water supply. I love showing our more than 6,000 acres of reclaimed land. It's a key component of our environmental stewardship. We've received awards for our work."
He said HB 220 would cause the permitting to stop and therefore the mining to stop. "We go by what the act says. We've been honest about it."
Moellenberg said his firm, Gallagher and Kennedy, has represented Freeport and Phelps Dodge before the current owner regarding compliance with the Water Quality Act since the late 1980s. "I can confirm what Tom said. The mines did not and could never meet drinking water standards inside the mines yet permits were issued for many years. I have also represented the mines on reclamation efforts. I really appreciate all the public comments. You might call me an expert. But these comments from Grant County show that you don't need another expert from Santa Fe to inform you. HB 220 would compel the Environment Department to deny permits. You may have heard that the bill returns the situation to before the Cupper Rules. We were in hearings on the Copper Rules days upon end at the Court of Appeals and the Supreme Court, fighting for the lives of these mines. There was a big delay on discharge permits and the Environment Department is still catching up. Under the act, it requires groundwater to be for present or beneficial use. It gives flexibility to create rules to protect the groundwater, but it allows the mines to get permits. It gives discretion to come up with sensible regulations. The Court of Appeals and the Supreme Court all agreed that it is impossible to meet drinking water quality standards within the mine. Supporters know this and say that the mine can go get a variance. If that is true, what is the purpose of this bill? With HB 220, a lot of regulations will have to be changed. The Water Quality Control Commission would not be able to give variances from the act. We disagree that we would still be able to get variances. Some interpret it as the commission cannot give variances from the standards."
"This is a Stop Mining bill," Trujillo alleged.
Edwards asked why it would stop copper mining.
Moellenberg said the part that says no permit may be issued unless standards are met. "There is no dispute that if the Act were amended with this language, it would require groundwater standards to be met inside the mine. Stop right there, because groundwater standards cannot be met inside the mine, so permits must be denied. I feel very strongly that it is clear that it would change the process of variances. It would be written in stone that no variances could be issued."
Salas asked Shelley: "What are you doing to make sure my water is safe? I live in Bayard next to the mine."
"Two things occur," Shelley replied. "If groundwater is tending to flow offsite, we are required to install interceptors to keep the water from flowing outside the mine. The second way is to continually monitor the 800 test wells and report the results to the Environment Department."
Browne started out by saying: "I consider us frenemies. You are doing an excellent job of reclamation. I appreciate your clarity. I agree with much of what you've said. I think we could have come to an agreement on the Copper Rule with the stakeholder process we had in place."
"In recognition of what you said about the uncertainty of variances and the long process before we could invest in our mines and get our money back, I disagree," Moellenberg said. He said the language relating to what Browne said was in the draft of the Copper Rule, as created by the stakeholder process.
"It is my opinion that if the stakeholders had agreed to the process they all came up with, you wouldn't have to ask for variances, and we wouldn't have to get new legislation," Browne said. "If the Martinez administration hadn't interfered, we might have gotten something that pleased all of us. If you have to come back every five years to get a variance that shouldn't happen. All the monitoring Mr. Shelley does is so there are no exceedances of water quality outside the mine."
Moellenberg said he did not agree with Browne in respect to a number of statements. The Rule made no monitoring required inside the mine. "What is outside it is necessary to have monitoring wells inside the capture zone. Tyrone works similarly to Chino, but the hydrology is different. We know all the groundwater that is going to the bottom of the pit is not going to meet standards. That is another misconception that no monitoring is done inside the pit. A lot is done now, as it will also be done post closure. The Water Quality Act requires that water be treated. Right now, it's being reused in the mine."
Shelley said it was misleading to say the mine was not meeting standards. "We have an efficient way to contain the water. We've told the whole world that after closure we will need to continue to monitor the groundwater."
Moellenberg said Freeport got a discharge permit to reopen the Cobre Mine. "GRIP and the Environment Department gave comments that they didn't see the process for post-closure. We will continue to provide the monitoring."
Browne noted the difference between Tyrone and Chino. At Tyrone the company will have to pump and continue to treat for a very long time. "At Chino, if the systems fail evaporation will continue to pull contamination into the pit."
Shelley noted that Chino is dug under the water table. Tyrone must be pumped.
Moellenberg said a variance is not needed to accomplish the discharge permits that have to be renewed every five years. "The technology does not yet exist to reduce the sludge. But Freeport is spending millions operating labs to create the technology to eliminate the need to treat the water. The permits we renew every five year are subjected to hearings held in Silver City. Unfortunately, it's among lawyers and experts and not open to the public."
Trujillo then brought up HB 255, which was brought before the House Energy and Natural Resources Committee and the Judiciary Committee. "McQueen brought in a Montana consultant to support the bill, alongside de Saillan. The same folks, GRIP etc. came to testify. The bill is aimed at three businesses, Freeport, Chevron and Cimentos de Chihuahua in Tijeras. It has wheels under it and received two Do Pass recommendations along party lines 8-5 and 10-4 on Tuesday. On Wednesday (Feb. 20) I come to find out that Speaker Egolf didn't want to hear the bill, supposedly to roll it over because of what you heard. None of our legislators, Senator Gabriel Ramos, and Representatives John Arthur Smith, Rebecca Dow, Rudy Martinez or Candie Sweetser has taken a vote on it yet. Tomorrow we will know how they vote. Keep talking to our legislators. I talked to the Albuquerque representatives, and two said to me: 'There's copper mining in New Mexico?' We have to educate them up there if it's south of I-40."
Shelley pointed to the handout, which had a list of the financial assurance of funds obligated to the state of New Mexico to ensure the mines are closed and reclaimed after operations cease. Seventy-five percent of the funding is from cash, collateral, bonds and lines of credit by Freeport and 25 percent by third-party guarantees. The amounts total almost $204 million for Chino and almost $182 million for Tyrone. Shelley said the third-party guarantees are allowed by New Mexico law and are consistent with what is used by the federal Environmental Protection Agency, enforceable based on rigorous quarterly financial testing. Third-party guarantees for copper mines in New Mexico have a 100 percent success record, with no failures. He alleged that HB 255 would undermine current financial assurance agreements for New Mexico mines.
"The mix of financial assurances encourages investment and ensures stability," Shelley said. "We have completed all parts of the agreement. The state agreed to third party guarantees. It's disturbing to see the state try to pull their agreement."
Moellenberg said the agreement was made 15 years ago. "We had to put in cash, which was unheard of across the world. With the use of corporate guarantees, the money keeps growing. If it ain't broke, don't break it. It was a political deal at the time. I don't know what would happen if it broke. It works. New Mexico is doing better with guarantors. The resolutions, which you commissioners are considering, will help us. Santa Fe is hearing from Grant County. When they do the right thing in Santa Fe, we thank them. Our Senator Ramos is one of the five Democrats who voted against the bill. It would be nice to get five signatures on the resolution, but I realize Browne may have a conflict."
At that moment, a female miner came out of the audience with a safety vest to put on Trujillo. Earlier in the meeting, he said he needed a vest to feel like one of the miners. He got it.
"To me the reclaiming you're doing is exactly what should be happening," Browne said. "Government gives you the incentive, you do the work and reap the rewards."
He said after hearing the mine's interpretation of HB 220, he could understand why it was concerning to them. "But HB 255 is nothing like that. I heard when the Mining Act came into being that it was going to force the mines to close. It didn't. Do any of you know how much was paid in 2018 to Freeport shareholders?"
The three didn't right off hand, but said it was public record. Browne looked it up on his phone and said it was almost $300 million in one year for 1.5 billion shares at 20 cents a share. He said putting in $100 million on top of the $180,000 million they already have, would not shut down mining operations. "If the corporation so chose, it could choose to cut dividends by one-third for one year. Once only and it would be there earning interest."
Trujillo said when the Mining Act came into effect, "we said we would see no new mining open in New Mexico. And as I stand here today, we have seen no new mining in the state. It hasn't been amended since 1994. We need to amend it to encourage new mining."
Moellenberg said nothing is without consequences. "Nothing is free. If you cut the dividend, it may do a lot more damage to the share price. As a result of reclamation, the guarantee has been reduced, but you said earlier we would get the money back. We haven't."
Billings said he appreciated the way they had explained their worries about the bills.
Edwards said there is a long history in addition to the current history of extraction companies leaving behind disasters. "It seems to me that other than the third party guarantee it's not that difficult. A lot of the past failures have left communities in a bad way. A lot were third-party guarantees. If the mine left a mess, it would be a huge burden on the community."
Moellenberg said he heard a couple of examples given earlier. One being the brine well near Carlsbad. "The well had no financial assurances. It's the same with abandoned mines. With assurances, sometimes there are examples where there are poor estimates of the potential costs. We go through a rigorous process of cost estimates and updates. This bill just addresses the corporate guarantees. I'm not aware of any failure of corporate guarantees. It doesn't happen. If you don't meet the financial test, the New Mexico Environment Department hires an outside person to review it. The NMED has estimates, with a third party monitoring them."
The next article and hopefully final article on this meeting will cover the discussions on the resolutions opposing the gun laws going through the legislative process and the few items of business left on the agenda, all of which were approved.