Idaho

$21 million and rising
Government pours resources into Silver Valley case
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Karen Dorn Steele
Staff writer

Dozens of Justice Department lawyers have tallied up 38 years' worth of legal work suing mining companies in the massive Silver Valley Superfund case filed in 1996.

They've spent nearly $21 million in taxpayer money so far on billed hours, expert witnesses and other costs as they seek to recover more than $1 billion in cleanup costs and natural resources damages from heavy metals pollution in the Coeur d'Alene Basin.

It's the largest Superfund case ever to go to trial. In big pollution cases like the Exxon Valdez oil spill, the government usually settles with the polluters.

The 1991 Exxon settlement was the biggest in history. Exxon agreed to pay $1billion in restitution for damaged natural resources.

The government's big legal tab -- and the unusual scope of the Silver Valley case -- are detailed in a Justice Department response to The Spokesman-Review's recent Freedom of Information Act request.

Among the expenditures by the Justice Department's Environment and Natural Resources Division from 1995 through June:

•Justice Department attorneys have billed 76,992 hours on the case -- the equivalent of 38 years' legal work for one busy attorney in private practice who bills 2,000 hours a year.

•Including work by its paralegals, the Justice Department has spent 143,398 hours on the case so far.

•127 attorneys have been assigned to the litigation, some working thousands of hours, others only a few.

•Justice Department lawyers and staff spent $747,377 in travel to prepare the case and try it for 76 days in Boise last year.

The government has spent millions because "the United States' monetary claim is large" and the case is very complex, the Justice Department said.

The $21 million bill isn't out of line, said Darrell Scott of Lukins & Annis, a prominent Spokane litigator.

"This is a major case, and that figure doesn't surprise me at all," Scott said.

Environmental cases tend to be very complex and require close attention by the attorneys involved, he said.

"It would take a coalition of private law firms to mount a case that size, but it wouldn't be surprising to see firms spend $20 million or $30 million on such a case," he said.

Scott helped bring a class-action lawsuit against the makers of fen-phen, a diet drug combination linked to heart problems. Out of a $3.75 billion settlement, attorneys who worked on the case over three years were awarded $80 million, Scott said.

Attorneys from Washington, D.C., to Seattle have worked on the high-stakes Silver Valley case, USA v. Asarco, for more than six years.

The lawsuit started with five mining companies. Sunshine Mining, Coeur d'Alene Mines and Callahan Mining have settled. The two remaining companies, Hecla and Asarco, are by far the biggest players.

The first phase of the trial ended in July 2001. Seventeen months later, U.S. District Judge Edward Lodge has yet to rule whether the government can collect any damages.

It's "way beyond unusual" for a judge to take so long to make a ruling, said a government lawyer in Seattle close to the case.

The mining companies aren't obligated, as the government is, to make their legal costs public.

When told how much the Justice Department has spent, an Asarco official said the mining companies have spent "less than half that."

"You could see at trial that the government had spent a lot of money. They had experts from all over the country," said Chris Pfahl, Asarco's last employee in the Silver Valley.

In addition to the Justice Department, the U.S. Geological Survey and U.S. Fish and Wildlife Service have spent "millions more" preparing for the case, Pfahl said.

Hecla has spent about $3.5 million over the past decade defending itself in court and about $20 million on cleanup, said Vicki Veltkamp, vice president of investor and public relations.

"We don't have the unlimited resources that the government has," she said. "We'd rather have put that $3.5 million into cleanup."

A mountain of data

A few years ago, the mining companies listed 121 lawyers on the case. The largest firm was Covington & Burling of Washington, D.C., Asarco's lead litigators. Last March, the firm dropped out because Asarco hadn't paid them.

"They no longer work for Asarco for various reasons," Pfahl said. "Everyone who works for us gets paid eventually."

The Coeur d'Alene Basin case was filed during the Clinton administration. Its inch-thick docket sheet includes 1,200 pleadings and court orders.

Under legal discovery rules, the government located, reviewed and produced several million pages of documents from 15 states concerning a century of mining in the Silver Valley.

It hired Aspen Systems of Wheat Ridge, Colo., for litigation support services, paying nearly $2.5 million to have the firm scan and organize the documents into a huge, searchable database used during trial.

Numerous consultants researched mine ownership.

Historical Research Associates of Missoula received $487,174 to review archives and gather evidence about historical mining activities.

The Justice Department requires confidentiality agreements with its contractors so they can't discuss their work on the case, said associate historian Ted Catton of the Missoula firm.

Historian Frederick L. Quivik of Alameda, Calif., was paid $134,846 for his research, which emphasized the metallurgical processes, the transfer of ore, and the methods of discharging tailings from the mills. He also testified about floods that washed the tailings downstream.

W. Rex Bull of Precious Metals Technologies Inc. of Golden, Colo., got $202,190 for his expertise. Bull, a mineral process engineer, explained how the mills processed ore and estimated the amount of tailings discharged into the waters of the Coeur d'Alene Basin.

The government and mining companies took and defended approximately 185 depositions to gather information for trial.

Lawyers for both sides used 67 scientists and other expert witnesses -- 31 retained by the mining companies.

Risk assessors, biologists and other scientific experts were used heavily in the government's effort to prove natural resources damages to streams, birds, fish and other aquatic life.

Daniel Woodward, a retired U.S. Geological Survey fisheries biologist, immersed fish in cages in the South Fork of the Coeur d'Alene River in the mid-1990s to see if they'd be affected by dissolved heavy metals in the water. All the fish died, he testified.

Between January and July 2001, the expert witnesses traveled to Boise for the trial.

The trial was lengthened by several weeks -- increasing its costs -- when the mining companies refused to stipulate to some facts "which they ultimately did not contest at trial," the Justice Department said.

"We didn't agree we had a release of hazardous substances" in the Basin, Pfahl said. "It was all kinds of issues like that" that lengthened the trial.

In the case's early stages, the government's lead lawyer was Thomas Clark II, the son of former attorney general Ramsey Clark.

Clark billed 6,658 hours on the case -- equivalent to three years' full-time work at a private law firm. Clark was promoted to another position in the Justice Department's Environment Division several months before the trial began, the agency said.

He was replaced by senior lawyer Thomas Swegle, who had billed 9,000 hours through June.

Most costs fall on taxpayers

Some legal work for the EPA can be paid from the nation's Superfund account, but the Justice Department's bills for the natural resources damages claim are paid from general agency appropriations, the department said.

The agency is seeking to recover approximately $360 million to address mine pollution from Mullan, Idaho, to Lake Roosevelt over the next 30 years. That's the price tag of the cleanup alternative selected by the EPA in September.

Since the EPA's plan is only an "interim" cleanup that won't completely restore water quality and wildlife habitat, the ultimate cleanup cost could be much higher.

The EPA has already spent $212 million at the 21-square-mile Bunker Hill Superfund site at Kellogg -- the first phase of the big project. The government's Superfund account was tapped for the Bunker Hill cleanup because the main polluter, Gulf Resources, moved its assets overseas and sought bankruptcy protection in 1993.

The mining companies have already spent about $41 million on cleanup at Bunker Hill.

If Judge Lodge finds the mining companies liable for heavy metals pollution outside the Superfund site, a second phase of the trial will put a price tag on that liability.

Even if the government wins, U.S. taxpayers will share the ultimate cleanup cost, Justice Department attorney Thomas Swegle said.

The mining companies "just don't have the resources" to pay the full tab, Swegle said.

Asarco and Hecla have countersued, saying the government was partially responsible for the pollution due to the nation's need for metals during World War II.

The mining companies also say the state of Idaho is the real natural resource trustee, not the federal government. The mining companies settled with Idaho for $4.5 million in 1986 -- a sliver of the $253 million total that's been spent so far to clean up the former Bunker Hill smelter site at Kellogg.

Asarco official Pfahl said the government's case against the mining companies is weak. "We think the Justice Department hasn't settled because they don't have a case," he said.

Environmental groups want the mining companies to pay more.

"This case is really critical. It sets a precedent for whether the polluters will really pay and be responsible," said Mike Petersen of The Lands Council in Spokane.