It wasn’t the silver-bullet outcome Jefferson County had hoped for — but a judge’s decision offered some hope that the 15-year-long struggle with Montana Tunnels Mining Inc. over unpaid taxes might someday reach resolution.
On Dec. 11, at the urging of U.S. Bankruptcy Court Judge Benjamin P. Hursh, the County, Montana Tunnels, the state’s Department of Environmental Quality (DEQ) and other parties agreed to enter into a judicial settlement conference — sort of like couples counseling for endlessly intractable corporate disputes.
Hursh declined to rule on the County’s motion at hand, which sought a reversal of the court’s decision in July to dismiss Montana Tunnels’ Chapter 11 bankruptcy. The County, along with DEQ, wants the court to convert the case into a Chapter 7 liquidation, which could lead to a sale of the company’s long-shuttered gold mine outside Jefferson City — and, possibly, to the recovery of $3.1 million Montana Tunnels owes in unpaid Metal Mine Taxes.
That could still happen. But Hursh noted that “sometimes, [parties in dispute] are the best architects of a solution.” He appointed Whitman L. Holt, chief judge of the bankruptcy court for the Eastern District of Washington, to oversee the judicial settlement conference, suggesting in his order that discussions will begin in January.
The conference will be the latest attempt to resolve the fate of Montana Tunnels’ mine outside Jefferson City, which has been inactive since 2008. Patrick Imeson, the company’s CEO, has described a plan to restart operations, eventually generating revenue that could be used to repay his company’s debts.
But Terri Kunz, the county treasurer who was the complainant in the County’s motion, said the judge’s action was unsatisfying. “I’m not sure what we’re supposed to be negotiating” I the settlement conference, she said. “I agreed, and we’re going to go along with it. But is it going to change the fact that Mr. Imeson continues to promise and never delivers?”
The County’s concern, and its latest motion before the court, is focused on the ownership of the mine property. In 2021, when Montana Tunnels failed to pay the county $5.1 million in property taxes, Imeson created a new company, Goldfields Funding Partners, to pay the taxes and thereby acquire a lien on the mine.
The County and DEQ believe that the transfer of mine deed to Goldfields, which had been scheduled to take effect in August, could relieve Montana Tunnels of responsibility to pay its remaining debts — including the unpaid Metal Mine Taxes, whose proceeds ultimately would go to Clancy Elementary School, the Jefferson City Volunteer Fire Department, and Jefferson High School, among others.
At the Dec. 11 hearing, Kunz told the court, “I don’t believe that Mr. Imeson has any intention of paying his taxes.” Imeson responded that he was entertaining “a number of proposals now to finance the mine to move the process forward.” He also said that Montana Tunnels was “negotiating with DEQ” to recover its operating permit for the mine. In February, DEQ moved to suspend the permit in the wake of the company’s persistent failure to pay the full amount of a $42 million bond meant to cover the costs of repairing environmental damage from the mine. That decision branded Imeson as a “bad actor,” meaning that no company he controls can operate a mine in the state.
Sam King, a DEQ attorney, disputed Imeson’s claims. “There is no scenario where he can reacquire that permit. DEQ has been clear that that is not an option… To get out of bad actor status he would have to remedy site and come up with $20m, neither of which on the face is possible.”
King suggested that Montana Tunnels was trying to use Goldfields’ lien on the property to compel DEQ to reinstate the operating permit. If the mine deed was, in fact, transferred to Goldfields and Montana Tunnels abandoned its debts, DEQ would pursue the $17 million it is still owed in state court, King said – but ultimately, he said, taxpayers could bear the brunt of the clean-up expense.
King also said that, if the court’s dismissal of the bankruptcy was upheld, DEQ would contract with a company this spring to begin the reclamation of damage at the mine site. That would be a more aggressive timeline for clean-up activities than the state has previously suggested. A DEQ spokesperson would not confirm that timeline, citing the pending litigation.
For its part, Montana Tunnels criticized the County’s motion as both besides the point and too little, too late. “All of these issues were discussed six months ago in this room,” said attorney James A. Patten. “Jefferson County didn’t bother to appear. Jefferson County didn’t bother to appeal. And now they want to upset everything because they don’t like the decision.”
In fact, the County was not represented at the June 5 hearing that informed Hursh’s decision to dismiss the case. Kunz told The Monitor that the County didn’t appear then because it had objected to Montana Tunnels’ bankruptcy plan for reorganization and because the attorneys in the case had agreed “that we didn’t need to be there.
“Would it have made a difference? I don’t know,” Kunz said.
In his order, Hursh noted that “Jefferson County’s absence and failure to make any effort to meaningfully participate in earlier proceedings is inexplicable.” He also “DEQ’s refusal to acknowledge that the outcome it challenges now, dismissal of this case, was the very outcome it bargained for when Debtor’s plan was negotiated and ultimately confirmed.”
But Hursh reserved his harshest words for Imeson. At the hearing, he noted: “Mr. Imeson, you’re like Sysephus, you’ve been pushing this boulder up the mountain, trying to figure out how you’re going to turn this into a viable operation since 2009.”
“At some point, everyone’s got to embrace the reality that’s facing them and ask themselves, what’s going to change in the next six to 12 months that hasn’t been the case in the last 15 years.”
