Asarco and Atlantic Richfield Co. together will pay $37 million to state and federal agencies as part of the effort to clean up decades of mining waste in the headwaters of the Blackfoot River, according to government officials.

In exchange, federal and state agencies will drop claims against the companies regarding their environmental liabilities in the 50-acre Upper Blackfoot Mining Complex, about 15 miles east of Lincoln. Richard Opper, director of the Montana Department of Environmental Quality, said Asarco will remain responsible for some repositories, water treatment and work on some parts of the site, including some mine adits.

State officials are expected to announce at a press conference today in Bonner that Asarco and Atlantic Richfield — or Arco — will each pay the state $8 million as part of the Upper Blackfoot Mining Complex cleanup. The agreement says the state also will receive $19.77 million from Asarco, and the federal government will get $1 million to oversee the state implementation of the cleanup effort. In addition, the federal government will receive $230,000 for past costs.

Rob Collins, an attorney with the state Department of Justice’s Natural Resource Damage Program, cautions that the settlement still has to be approved by the judge overseeing Asarco’s Chapter 11 bankruptcy proceedings. Often in bankruptcy cases, creditors are paid a fraction of their total claim, but Collins is cautiously optimistic that with the high price of copper helping buoy Asarco’s bottom line, and the fact that the government initially sought more than $70 million from natural resource damages from mining, that the judge will approve the deal.

“We expect to get 90 to 100 percent of the settlement,” Collins said, adding that he also anticipates Asarco’s parent company, Grupo Mexico, will protest the arrangement as it has other recently made Asarco settlements.

According to Montana Attorney General Mike McGrath, the bankruptcy court’s approval may happen as soon as late June or July this year.

The agreement was hailed by state officials as a positive step toward the recovery of the Blackfoot River. The stream was made famous in Norman Maclean’s novel “A River Runs Through It,” but was decimated in 1975 when the Mike Horse Dam blew out, spewing a toxic mix of aluminum, arsenic, zinc and iron-laden water and soil downstream, killing all aquatic life in a 10-mile stretch.

By the time director Robert Redford brought Maclean’s novel to the screen in the early 1990s, it had to be filmed elsewhere.

“It is ironic that the river that Maclean loved was too polluted to be the star of the film,” McGrath said in a press release. “It is critical that this impoundment will be removed before we have another incident like the one in 1975.

“This settlement will provide sufficient resources to do that.”

The dam was rebuilt shortly after the blowout, but three years ago questions arose regarding its stability, and an investigation revealed large holes, or “voids” in the structure. The Forest Service reported that the dam was a compromised structure that should be removed from service.

“We can’t turn back the clock, but a skillfully engineered cleanup will restore the health of the river and fishery and return the area to a more pristine condition,” Opper said in the press release. “It’s a safe bet that the native fish will appreciate the removal of 300,000 tons of mine waste from the area.”

The legal paperwork for the settlement is expected to be filed today both in a federal bankruptcy court in Texas and with the U.S. District Court in Helena.

Asarco engaged in mining and milling activities in the upper Blackfoot headwaters area from 1889 through the 1960s, pulling silver, zinc and lead from the Mike Horse Mine. It processed ore on site as part of its mining activities, known as milling, and the mill tailings — crushed rocks and soils that had metal ores extracted from them — were placed in a nearby pile. Eventually that pile dammed Beartrap Creek, creating a large pool of water.

The U.S. Forest Service owns the land upon which the dam sits.

A predecessor of Arco assumed a lease to a number of patented and unpatented mining claims at the Upper Blackfoot Mining Complex site in 1964, and acquired additional properties after that. The company engaged in exploration and assessment activities in the area, which included repairing the Mike Horse Dam when it failed in 1975.

An engineering estimate by the U.S. Forest Service put cleanup costs at the site at $27 million. Collins said the state’s cost estimates include much less for government oversight, but more for stream restoration, which is why the final settlement is for $37 million.

“For example, the Forest Service put the cost of remediation of the creek at $33 per foot, but we’re adding on another $100 a foot for restoring the creek,” Collins said. “A lot of (west slope) cutthroat and bull trout habitat was really adversely affected from mining in this area, and by working with Fish, Wildlife and Parks, we expect we can bring that back to a healthy state pretty soon.”

Beth Ihle with the Helena National Forest’s zone minerals program has been active in preparing the plan for the Mike Horse Dam’s removal. She said the pool behind the dam drained after the Forest Service installed a diversion last year, but that it probably will entail a year or more of planning before the actual dam removal begins.

She hopes that during that time, some of the moisture will evaporate from the sodden soils.

“Or we might have to take the tailings and spread them out on a temporary drying pad and expose them to the sun,” Ihle said. “The soils are pretty fine-grained.”

David Bowers with the state DEQ is part of a team working on the reclamation project. While the Forest Service estimates they’ll have to remove about 455,000 cubic yards of mine waste material in and around the dam, and truck it to a nearby lined landfill for disposal, he said the amount of soils removed could increase once additional investigations take place now that the pool of water behind the dam is gone.

He added that reclamation work will begin by removing the dam, then they’ll work their way downstream.

Asarco also recently received approval from the bankruptcy court judge to pay $303,000 for the design of a plant capable of treating anywhere from 63 to 130 gallons per minute of water contaminated with aluminum, copper and iron as it flows through the underground Mike Horse Mine shafts.

Taking out the Mike Horse Dam is the second such effort in Montana undertaken within the past few years, beginning with last summer’s removal of the Milltown Dam on the Clark Fork River near Missoula. The Blackfoot River flows into the Clark Fork.

“Removing this dam and repairing 100 years’ worth of damage is another example of the state’s restoration economy in action,” Gov. Brian Schweitzer said in the press release. “Together with the Milltown Dam removal, we’re creating good-paying jobs and bringing the Blackfoot — and its native trout — back to life.”

Officials from Asarco and Arco did not return calls for comments by the Independent Record. But in bankruptcy court documents, Asarco has disputed its burden at the Mike Horse impoundment, and Arco has denied liability.

Asarco also owns the mothballed East Helena lead smelter, as well as other properties throughout the nation, and is trying to reorganize and emerge from Chapter 11 bankruptcy, which it filed for in August 2005.

Reporter Eve Byron: 447-4076 or eve.byron@helenair.com