By Gabriel Caplett
The Director of the Department of Environmental Quality’s (DEQ) Office of Geological Survey (OGS), Hal Fitch, has formed a 501(c)(3) non-profit corporation with Kennecott and Bitterroot Resources, two companies seeking to open metallic sulfide and uranium mines in the Upper Peninsula.
In an October 2007 e-mail, Fitch acknowledged “that there would be a problem with a state agency forming a corporation” but “came up with an innovative way to address the problem: formation of a non-profit corporation that is not a part of any state agency, but in which OGS is a participating member.”
On October 8, 2008, Fitch confirmed that “the State cannot form a non-profit corporation.”
Fitch went on to file applications for the “Northern Michigan Geologic Repository Association” (NMGRA) with the Michigan Department of Labor and Economic Growth’s Bureau of Commercial Services, the Internal Revenue Service (IRS) and the Michigan Office of the Attorney General, registering the non-profit under the DEQ’s address with himself as the primary contact.
A board was formed for the NMGRA consisting of Fitch, as President; Milton Gere (geologist with the Michigan Department of Natural Resource’s [DNR] Forest, Mineral & Fire Management division), as Secretary; Theodore Bornhorst (professor, Michigan Technological University’s Department of Geological/Mining Engineering & Sciences), as Treasurer; and additional board members Andrew Ware (geologist with Kennecott Minerals) and Michael Carr (President and Director of Bitterroot Resources).
While claiming, in a July 2008 application with the IRS, that the NMGRA “is not sponsored or organized by the MDEQ” or “any governmental unit,” NMGRA documents suggest, strongly, that the DEQ did, in fact, organize the non-profit.
As evidence of this, an April 2007 briefing paper expressed the intention of the OGS “to explore the possible establishment of a non-profit organization (NPO) to support and maintain the subsurface geology repository in Marquette.”
At a September 26 meeting of the Mineral Wells Advisory Committee, the DEQ and representatives from Kennecott, Bitterroot Resources, Prime Meridian Resources and Cleveland Cliffs International (now Cliffs Natural Resources) decided to establish an initial five-member Board of Directors for the NMGRA.
Additionally, NMGRA meetings were organized by Fitch’s DEQ secretary, Linda Sandborn, and held at the DEQ’s Lansing headquarters during regular business hours.
Steven Wilson, Minerals and Mapping Unit Supervisor at the DEQ’s OGS, crafted briefing papers, created a logo and offered to build a website for the non-profit. He was also listed as a contact on an NMGRA flyer. Wilson attended many of the board meetings and was occasionally joined by other DEQ staff, Melanie Humphries and Thomas Godbold.
A Freedom of Information Act (FOIA) request to the DEQ confirmed that all documents associated with the NMGRA are official DEQ documents, further suggesting the DEQ as the organizing body for the nonprofit.
According to the Michigan Office of the Attorney General, “The Freedom of Information Act regulates and sets requirements for the disclosure of public records by all public bodies in the state.”
The law identifies “public records” as document “retained by a public body in the performance of an official function.”
At a November 2007 board meeting, Fitch expressed his uneasiness with having formed the non-profit. The minutes note that Fitch was attempting to remove his, and Gere’s, official titles from NMGRA documents because he did not want “the perception that the State of Michigan is establishing the corporation.” Additionally, January, 2008 meeting minutes note that Fitch and Gere’s addresses were changed, in the Articles of Incorporation, from their agency to residential addresses.
It was the November 2007 board meeting that the mining industry’s motivation for its involvement was introduced. Representatives from Kennecott Minerals and Bitterroot Resources questioned how much it would cost to build two core storage facilities. Andrew Ware and Michael Carr inquired as to costs associated with operating the NMGRA and associated construction. The minutes noted that “Steve Wilson will put some information together.”
In March 2008, Carr confirmed that since the project has many “benefits to industry,” mining companies would be likely to contribute (tax-deductible) donations to fund the NMGRA.
Board members of the NMGRA also expressed an interest in utilizing public grant money in order to achieve the groups’ objectives. At a January 2008 meeting, Ware asked if anything would prevent the NMGRA from applying for federal or state grants. Fitch suggested that the NMGRA should pursue these grants while Carr said, “we should probably develop a business plan and identify needs for grants.”
According to the IRS, a 501(c)(3) nonprofit organization “must not be organized or operated for the benefit of private interests.”
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