In May, an employee with a company hired by Gogebic Taconite records details of a stream on the northern Wisconsin property where a $1.5 billion open-pit iron ore mine has been proposed. Gogebic’s costs of complying with state regulations are rising, but some costs also are being borne by taxpayers. Credit: Rick Wood

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Madison — To oversee a proposed iron mine in northern Wisconsin, the state has spent nearly $260,000 that it will not recover from the mining firm — an arrangement drawing questions and criticism from opponents.

That figure will continue to grow because of how the Department of Natural Resources is interpreting a law approved two years ago that eased environmental regulations in hopes of establishing the mine.

"As a taxpayer and someone that buys hunting and fishing licenses, it's truly unfair," said George Meyer, executive director of the Wisconsin Wildlife Federation and a former DNR secretary.

Outgoing Sen. Tim Cullen (D-Janesville) questioned whether the mining company, Gogebic Taconite, was getting special treatment because it gave $700,000 to a group that helped Republicans survive recall elections in 2011 and 2012.

"I think it's impossible to not have some conjecture about whether giving the kind of campaign contributions we know about resulted in them being treated with kid gloves by this administration," he said.

DNR spokesman Bill Cosh said the department's staff had properly accounted for its time in billing Gogebic Taconite.

Cosh and Bob Seitz, a lobbyist for Gogebic Taconite, said the firm is being billed for the costs that can be directly attributed to its proposal. The firm has paid $350,000 so far and is expected to pay more.

"We are a company trying to go through the permitting process to bring jobs here," Seitz said.

Sen. Tom Tiffany (R-Hazelhurst), a sponsor of the mining legislation, said costs the state is absorbing are in line with what he expected.

"This is one of the largest industrial projects in the state of Wisconsin," he said. "I don't think it should be a surprise that there are going to be regulatory costs that fall on the state."

In early 2013, Gov. Scott Walker and his fellow Republicans in the Legislature approved the law relaxing environmental requirements for iron mining. Gogebic helped write the measure as part of its effort to develop a $1.5 billion open-pit mine in Ashland and Iron counties.

The mine would run for four miles and plunge as deep as 1,000 feet. It would provide 700 jobs and operate for an estimated 35 years.

The legislation also lowered how much mining companies have to pay the state for the environmental review of their plans, a process that takes years. Lawmakers capped a key set of fees at $2 million and spared the firms from having to pay the fees for certain required air and water permits.

Under the process set up in the new mining law, the DNR is billing Gogebic for some of the costs it has to oversee the environmental review. But it has incurred $258,968 in costs that it is not billing to the firm, according to the department.

To cover those costs, the DNR used taxpayer money and revenue from funds that are made up of landfill tipping fees and hunting and fishing license fees.

The agency is not charging the firm for a range of expenses for gathering background data, meeting with county and federal agencies, alerting the public to information about the proposal, and developing rules and policies related to mining.

More study coming

Gogebic is in the early stages of its plans, so the state's costs will rise. In March, the DNR told Gogebic it must perform dozens of studies to analyze the effect the mine could have on groundwater, wetlands and air quality.

Gogebic's costs also will continue to rise, and it could ultimately pay millions of dollars for its efforts. While some of its fees are capped, its expenses for developing an environmental-impact statement are not.

The work that is now underway is being done in advance of filing a formal application. The company hopes to submit the application in the fall of 2015.

That will kick off a more intense round of scrutiny, and the DNR will have 420 days to approve or deny the proposal. Gogebic also will need approval from federal authorities and must contend with stiff opposition from the Bad River band of Lake Superior Chippewa, whose reservation is downstream from the mine site.

Rep. Nick Milroy (D-South Range) said he has doubts about whether the mining company is committed to seeing its proposal through and doesn't believe the state should subsidize Gogebic while it seeks state approval. The state typically does not incur costs for a business unless it has an agreement the business will create a specific number of jobs, he said.

Meyer, the former DNR secretary, said state costs are being handled differently than they were for the Flambeau mine and proposed Crandon mine.

"We were able to get virtually all of the funding reimbursed by the mining company" in both those cases, Meyer said.

The Flambeau mine in Rusk County operated from 1993 to 1997. The Crandon mine in Forest County was the subject of two decades of controversy but was never built.

An initial effort to change the state's mining law for Gogebic failed in 2012, when state Sen. Dale Schultz (R-Richland Center) voted against the proposal, along with all Democrats. A year later, Republicans had a bigger margin in the Senate and approved the measure.

Recall elections were staged in 2011 and 2012 against Walker and 13 senators over their stance on limits Republicans put on collective bargaining for most public workers. That situation — unique in the nation's history — prompted a furious round of fundraising.

During that time, the conservative Wisconsin Club for Growth spent heavily to help Republicans. Normally, donations to the club are secret, but court documents released in August detailed many of them.

Those records showed Gogebic gave $700,000 to the club around the time of the recalls. Walker has said he did not know about that contribution at the time.

The Wisconsin Club for Growth spent more than $900,000 on the 2012 race that saw Republican Rick Gudex of Fond du Lac defeat then-Sen. Jessica King (D-Oshkosh). That win gave Republicans the 18-15 majority they needed to pass the mining bill in early 2013.

Prosecutors have argued in court filings that Walker was closely involved in fundraising for the Wisconsin Club for Growth. One of his top campaign aides, R.J. Johnson, also was a key adviser to the club.

The records about the club's fundraising were made public as part of litigation over an investigation into Walker's campaign, the club and other conservative groups. Prosecutors had been looking into whether Walker's campaign and the groups were illegally working together, but the investigation has been effectively stalled for nearly a year because of a judge's finding that the activities in question were not illegal.

Lawsuits over the investigation continue, with the subjects of the probe trying to shut it down for good and prosecutors trying to revive it.