Digging For Answers 

No permit. No profit. Failed inspections. Fears of Libby. Dillon’s little vermiculite mine is raising some big questions.

When a vermiculite mining company moved into Dillon with almost no public announcement, local activists woke up and got involved.

Holly Miller didn’t plan to spend the past six months as an environmental activist, turning her hometown on its ear as she battled the expansion of a vermiculite mine on the outskirts of town.

“It all happened in a minute,” she says. “We couldn’t believe it had happened under our noses.”

But it did. And her efforts have borne fruit. Within the next two weeks, the Department of Environmental Quality and the Bureau of Land Management are expected to issue a decision on whether or not to require a complete Environmental Impact Statement (EIS) on Dillon’s Stansbury vermiculite mine, rather than just the “checklist” environmental assessment (EA) which was done a year ago. The story leading up to this decision is one of high risks and low profiles, and it’s not over yet.

It all started last December, when a reporter from the Seattle Post-Intelligencer walked into Dillon’s Patagonia outlet store where Miller works and asked her and her co-workers what they thought of the Stansbury Holding Corporation operating a vermiculite mine in their town. They were all caught by surprise.

“He wanted us to respond based on what had happened at Libby,” Miller remembers. “To begin with, we just laughed. That mine had been there for years and nothing was being done with it. But when we checked, we found out we were wrong.”

Legal notices of a request to expand the tiny mine’s scope of operation had appeared in the local newspaper a year earlier, and no one had bothered to comment on—or protest—the proposal. The mine had been there for 50 years and had operated sporadically with little impact on the town. In April 1999, the Montana DEQ moved to upgrade the mine’s operating permit to allow mining on 75 acres, compared to the five acres mined earlier, but only on the condition that Stansbury post a $258,000 reclamation bond with the state.

The state never received the bond. As a result, the permit was never issued. Nevertheless, Stansbury went ahead and improved the road, put culverts in the creek, opened up a significant amount of pit area, and even shipped a load of processed vermiculite to a customer in California in December.

During the interim, the state DEQ requested an additional $64,500 bond. When neither bond was received and the mine was still operating without permits, the DEQ fined Stansbury $42,500. That fine is now the subject of “negotiation” between DEQ and the company, according to Warren McCollough, chief of the DEQ’s Environmental Bureau.

Things seemed to take a turn in March, when the mine was shut down by federal safety officials. During a spot inspection, the mine was found to be in violation of federal standards—including not having a safety plan in place, and not notifying the feds that the mine was operating—and Stansbury was ordered to cease and desist. But the closure is only temporary, and Stansbury continues to operate on a smaller, five-acre scale, which doesn’t require permitting. In the meantime, Dillon’s little vermiculite mine has managed to raise a lot of big questions, like how could a mining company operate for so long without permission? Who is watching to keep Dillon from becoming another Libby? And what exactly is the Stansbury Holding Corporation? Those were the questions that Holly Miller, and others, set out to answer.

The townspeople got involved.

Miller and other concerned citizens had followed the press reports of the asbestosis-related health problems emerging from the now-closed W.R. Grace vermiculite mine at Libby, as that case unfolded this spring. Soon, they began to inundate the DEQ with requests for information about the vermiculite mine in their own back yard. In response, the DEQ reopened the public comment period on the Stansbury project, and the Dillon City Council’s Public Health Committee hosted a public hearing in mid-May.

Dillon’s tiny town hall meeting room was packed to overflowing that evening. The room seemed airless as 70-plus residents, spokespeople, and public officials crowded together. On one side of the room, four DEQ representatives sweated in suits and ties. Stansbury president Aldine Coffman faced them from across the room, flanked by hired experts from the mine consulting firm of Behre Dolbear and the University of Edinburgh, Scotland. A crowd of more casually dressed citizens and members of the media lined the center of the room. At the upper end of the room, the impatient-looking mayor, George Warner, was flanked by members of the town council’s health committee.

Despite the presence of figures from all sides of the matter, the testimony that night raised more questions than it answered.

McCollough of the DEQ spoke first, telling the crowd that there had been a lot of “bad science” in the media and a lot of inaccurate information about the Libby project. McCollough said he had not worked for the DEQ when the Libby vermiculite mine was in operation so he couldn’t address concerns about that project. However, he said the geological formations at Libby and Dillon are vastly different and the Ruby Range does not have the same asbestos content as the mountains near Libby.

He added, however, that community concerns were strong enough to warrant further investigation and that his bureau was willing to consider health risks, impacts on the land, project size, increased traffic, the company’s financial status and their record of general compliance with the DEQ. “Basically, we’re back to the EA [environmental assessment] stage and we may raise that to an EIS [environmental impact statement],” McCollough told the crowd.

Stansbury President A.J. Coffman spoke next, painting a rosy picture of the mine project and the future of vermiculite. He assured the Dillon citizens that a former partner, who has since been bought out, was at fault for expanding the mine and operating without a bond in place. He called the Dillon ore body “the best west of the Mississippi” and said the mine could have a long and profitable future for his company and the Dillon community.

The citizens in attendance didn’t buy what Coffman or his experts had to say. Dr. John Addison of Scotland, who set the European standards for asbestos in finished products at .001 fibers per million parts of air, tried to assure people that the mining and milling standards would be extremely strict. He said the apparent amount of asbestiform fibers was less than 1 percent in the ore body, based on tests conducted by Behre Dolbear. He compared the danger of exposure to asbestos fibers from the operation as the equivalent of smoking one cigarette in a lifetime.

But people were listening closely to Addison’s comments: Fiber fragments he examined were “mostly not asbestos.” Some asbestos was present but “probably at levels lower than .001 percent.” Asbestos was “very dangerous” but that was “not what we’re finding in the most part.” He had not found asbestos in the samples he had studied from the Dillon mine site but he had only studied a small number of samples “in depth.” Risks to miners would be “disappearingly small” and risk to the Dillon population 13 miles away would be “acceptable.”

When Miller spoke, she explained the concerns of the citizens with whom she was working and asked for asbestos testing by independent evaluators. “I felt like the people I cared about were listening to me,” she says. “But some people had their minds made up before they even got there.”

Nathan Miller, Holly’s 22-year-old son, works in the talc mine located near the vermiculite mine site. He said he knows the economic advantages of mining and its importance to the community. However, he added bluntly, “I don’t trust you guys. You’re not from here and you won’t be knee-deep in it like the rest of us.”

Words of warning came from Libby.

The most powerful testimony at that meeting came from four victims of vermiculite—citizens of Libby who suffer from asbestosis and who will die from that disease. Their illness has been blamed on the vermiculite mine that operated there for decades.

“Put your hands around your neck. Choke yourself very slowly, cutting off a little more air each minute until you have to fight for even the tiniest breath of air,” ordered Les Skramsted. “You can take your hands away. I can’t. For me it just gets worse.”

Skramsted, his wife Norita and two of their five children have been diagnosed with asbestosis. “In 1980, we were told it was ‘safe.’ In 1990, W.R. Grace closed the mine. In 1995, the state gave Grace back a half-million dollars that was left from the reclamation bond and the mine property sold to a family to use for a nursery. Now it’s five years later, and 300 of the 2,700 people in Libby have been diagnosed with asbestosis.”

“They say what you don’t know can’t hurt you,” Norita Skramsted added. “Don’t believe it. It can kill you. It’s killing us. If they say it is safe, don’t believe them. Make them take the tests. You people have the right to ask questions.”

Dillon native Randy Piper, a Ph.D. who taught technology and business development at Montana Tech in Butte, questioned the methodology used in gathering and testing samples from the Dillon mine, the milling methods to be used, and the safety of air quality for miners and the general population.

Bonnie Gestring, representative of the Montana Environmental Information Council challenged Addison’s conclusions with a study performed by Dr. Jonas Kalnas of Denver. She also called for a full EIS, saying the Kalnas study showed significant problems with airborne asbestiform fibers at the level Addison claimed was totally safe.

Gestring also objected to the sampling. “This was composite testing,” she said. “They mixed the core samples together and took an average so it is impossible to tell where there might be much higher concentrates of asbestos. There is no safe level of asbestos. Period.”

The issue is still undecided.

May’s public meeting ended with a recommendation from the Dillon City Council’s health board to call for a full EIS on the project. That recommendation did not please Mayor Warner. At the June City Council meeting, he told the council to seriously consider the economic impact their request for a full EIS would have on the community. Warner said he was “profoundly” impressed by Addison’s expertise and was sure that, if the recommended standards were followed, “there will never be a problem.”

Warner did not allow additional public input from the roomful of citizens who attended the meeting. He did, however, allow Coffman to give additional “relevant information” about the proposed project. Coffman, who makes a salary of $125,000 a year as president of Stansbury said the company could not afford to pursue a full EIS. “We’re not prepared to put out a lot of money on an EIS,” Coffman said flatly. He said the company was negotiating with the DEQ for an extended permit based on the existing EA and the company’s willingness to implement Addison’s European Standards for asbestos fibers in the vermiculite.

Councilmember Marty Brennecke called for a vote on the issue, saying, “In the best interests of Dillon, there should be an EIS. There is asbestos in the talc mine too. If the state can get something in writing, it will benefit the entire state. Let them come up with some figures to go into the books.”

The council voted unanimously for the mayor to write to the DEQ asking for a full EIS. More than a week later, according to Patrick Plattenberg, DEQ section chief, the letter has not arrived.

There are roots in the Bitterroot.

It was 14 years ago that the then-Utah-based mining company announced plans to reopen an unused vermiculite mine in the Sapphire Mountains east of Hamilton. Stansbury first announced it had purchased land and almost 100 mining claims—some of which are on U.S. Forest Service land—on Skalkaho Mountain. The company planned to start mining in 1987. Plans were to mine 400,000 tons of ore per year to get an estimated 25,000 tons of product.

People in the Bitterroot Valley were just as surprised as Dillon residents and reacted in a similar fashion. At the first public meeting, Stansbury’s CEO stated there was no asbestos in the Hamilton ore body. He was forced to rescind that statement the following day. Public outcry led to a decision by the DEQ to call for a full EIS. Bitterroot opponents of the mine, who insisted on the EIS, then challenged the Health Risk Assessment that was prepared.

In 1989, an accountant for a firm of New Jersey dentists who invested in Stansbury traveled to Hamilton, expecting to find a working mine and exfoliation plant in production. He returned to New Jersey with photos of the pit which had not been worked in years and reports of a halted EIS project due to non-payment of consulting firm bills. The EIS took more than five years to complete due to the missing and late payments from the company. The peer review of that EIS was damning: None of the reviewing scientists gave the document a passing grade. The eventual cost of the EIS and peer review was more than $3 million, according to company records.

Although the Stansbury website says the Hamilton EIS is complete and the operation there is fully permitted, the DEQ says that is not the case. Given the lapse in time, the DEQ may require an amendment to the earlier EIS. But in the future, any work at the Hamilton mine may depend on a fish and a tiny yellow flower. Any addendum will have to take a hard look at the cutthroat trout habitat downstream from the mine. In addition, a member of the mustard family, Arabis fecundus Rollins, is known to grow in only two spots in the United States—one about 100 yards from the mine haul road and the other about six miles away. That flower rests alongside what a Stansbury press release calls the “the largest known undeveloped resource of vermiculite in North America, near Hamilton.”

Nevertheless, the website claims that “Hamilton, already generally permitted by a full EIS, is planned to be brought to limited seasonal production during the year.”

Is Stansbury a good investment?

In 1995, Stansbury went through bankruptcy, and the company and five former officers were indicted in a federal lawsuit alleging violations of the Securities Exchange Act.

Since then, Stansbury Holding Corporation has resurrected itself and has announced mining plans again and again. The company has had more than a dozen CEOs, issued millions of shares of stock, merged and split and done business with a half dozen other companies.

The company’s required annual report to the Securities and Exchange Commission paints an even less-optimistic picture. The company is deeply in debt and has had no income since 1991. It went into Chapter 11 bankruptcy in 1985. For the past year, its stock has traded from a low of about 10 cents per share to a high of 40 cents. Debt was often restructured with the issuance of more common stock, and there are now 14,846,000 shares on the market. The remaining shares are held by company officers and lien holders. The company owes $596,815 in judgments to seven individuals and corporations, including one to the state of Montana’s Workmen’s Compensation Division.

In the “liquidity” section of the SEC documents, Stansbury admits, “The company has been inactive and non-operating for years. Consequently, it is questionable as to whether or not it can remain a going concern.”

At this point in time, Stansbury states, it holds the vermiculite mining rights in Hamilton and the Dillon mining rights are leased to International Vermiculite, which is jointly owned by Stansbury and Nevada Vermiculite. Nevada Vermiculite is, in turn, owned by Channel and Basin Reclamation of Pennsylvania, which is the company that has been providing operating capital to Stansbury.

Although the company has had no earnings since 1991, by its own SEC documents, the four company officers are earning salaries in excess of $450,000 a year. In 1999, Coffman received $107,000 in salary and other compensation. Both Addison and Behre Dolbear were hired to do the assessments at the Dillon site and to attend the public hearing and meet with DEQ officials on Stansbury’s behalf.

Since 1994, the company has stayed afloat on loans of $2.9 million from stockholders, borrowed for “development costs, operating expenses, taxes and fees and to reduce pre-existing debts.”

In April 1999, the company’s stockholders voted to expand from 25 million shares of stock (valued at 25 cents per share) to 100 million shares of stock (valued at .001 cents per share). At present the company has actually issued 53,627,197 stock shares. As of June 9, the shares were trading at 32 cents per share. At one point in 1988, stocks traded for $1.25 per share, with 10,886,000 shares on the market. It dropped to a low of 17 cents a share in July 1997 and hit a recent high of 55 cents a share in February 1999.

In the last SEC filing, dated Dec. 31, 1999, Stansbury listed cash assets of $40,363 and mining claims, buildings and equipment worth $19.5 million. Liabilities were listed at $4.7 million.

Where do things go from here?

Holly Miller says she’ll continue her fight to educate people about the proposed mine and its possible effects on the community. This weekend, in fact, she travels to Yellowstone National Park to participate in the Caldera Field Studies. Andrea Barnett has been asked to speak on the vermiculite mine at Libby, and Miller will spread the word about the Dillon mine and the community’s grassroots activism.

“People need to know this information is available if they just look for it,” Miller says. “Someone has to speak out.”

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