Union Carbide's toxic Uravan mill

Energy Fuels Inc., a Toronto, Ontario-based company seeking state approval for the Piñon Ridge Mill in far western Colorado, admits in its own financial filings that “there is a significant doubt as to whether the company will be able to continue as a going concern and realize its assets and pay its liabilities as they fall due.”

In a consolidated financial statement for the six months ending March 31, Energy Fuels states: “The company’s cash balances have reached a point where they can support current operations only through early calendar year 2011 without additional financing.”

That lack of cash is a serious concern, say environmentalists and state public health officials. Set against the backdrop of the British Petroleum Gulf oil spill and its astronomical environmental and business costs, they say any company looking to mill uranium in Colorado has to be prepared to pay the enormous costs of catastrophe clean up and reclamation.

Environmentalists and residents of both Montrose and neighboring San Miguel counties bitterly opposed the proposed milling project during special-use permit hearings last fall. News of the thin cash reserves of the company behind the proposal is fueling further opposition.

Frank Filas, Energy Fuels environmental manager, downplayed concerns in an interview with the Colorado Independent:

“So far this company has been able to raise $45 million. A lot of that went into investing in mine properties. A lot has also gone into investing in the mill property and the permitting associated with it,” Filas said.

“So yeah, our cash resources are much smaller than they were, so we’ll be financing this project in phases, and basically the next phase will be to get investments to carry us through the permitting and the final design phase of the project.”

Put up or shut down

Documents obtained by the Independent indicate Energy Fuels is spending between $250,000 and $285,000 a month and had cash reserves of a little more than $2.6 million as of March 31 – or about enough to last through January of 2011, which is when the state must wrap up its permit process for the Piñon Ridge Mill.

Proposed for an 880-acre site in the Paradox Valley about 12 miles west of Naturita, the mill would produce about 770,000 pounds of uranium a year by processing 500 tons of ore each day from surrounding mines in the Uravan Mineral Belt.

The area once supplied yellowcake for Cold War-era weapons but left a toxic legacy that lingers to this day. Still, there is a considerable push for a nuclear-power renaissance to replace carbon-spewing, fossil-fuel-fed power plants. Energy Fuels is banking on that resurgence, first abroad and then domestically.

“Once the permits are approved, that’s going to allow us to go after and get the financing we need for the mill, which we don’t know what exact dollar amount that is, but it’s in the neighborhood of about $150 million if you include the bond with the state also,” Filas said, referring to the company’s proposed $12 million surety bond in the event of a worst-case cleanup scenario.

“That’ll be a big chunk of change that we’ll need to come up with, but we think we’re in pretty good position to do that, and obviously some of it depends on things that are currently outside of our control like the current long-term price of uranium and those types of things.”

The true cost of a uranium disaster

Travis Stills, managing attorney with the Durango-based Energy Minerals Law Center, which is suing Montrose County over the Piñon Ridge special-use permit, said: “$12 million to clean up a $150 million project seems out of line, and with the existing cleanups – the Cotter Mill – the most recent numbers are coming in around $43 million.”

Currently the state’s only uranium mill, Cotter Corp’s Cotter Mill near Cañon City, is an EPA Superfund Cleanup site with its own contamination issues from the 1950s and ’60s. In an April Site Reclamation Plan filed with the state, Cotter put the cleanup price at $23.2 million and the Colorado Department of Public Health and Environment (CDPHE) countered with $43.7 million.

Besides imploring the state to demand a much higher surety bond from Energy Fuels, Stills generally questioned the strategy of using county and state permit approvals as a basis for rounding up more investors.

“[Energy Fuels] suggested that they would be able to raise a lot more money and capital to work with once they got the county permit, and if I’m correct, the stock price has dropped by more than half in that amount of time, so their ability to raise money just by announcing a permit, if that’s what it is, that’s a pretty questionable goal,” Stills said.

Energy Fuels’ stock was trading at 16 cents a share on Tuesday, down from 40 cents a share a year ago.

“It wouldn’t be the first operation that made all of their money by mining investors instead of mining the resource,” Stills added.

Taxpayers on the hook for industry catastrophes

CDPHE spokesman Warren Smith said the state will thoroughly review the Energy Fuels’ bonding proposal and make its own recommendation at the appropriate time.

“The worst case scenario would be, say, the company goes out of business and walks away and the state has to clean it up,” Smith said. “They have to have enough financial assurance that the state wouldn’t have to bring money to the table to do that.”

Smith also said there is precedent for the state rejecting an application on socio-economic grounds.

“Several years ago Cotter Corp. had an application for a radioactive materials license where they wanted to accept out-of-state waste to put into their impoundment, and we rejected that application due to the information that we had about the potential socio-economic impacts on the town,” Smith said. “Yeah, we can do that, and we have done that.”

Again, Energy Fuels’ Filas downplayed the financial concerns.

“It’s a moot point actually,” he said. “The bottom line is that, assuming the state approves our license, they are not going to give us the go-ahead until we place that bond money in their hands. It’s not like they have to worry about it too much; it’s just not going to happen without a reclamation bond in place for whatever amount that they think is necessary.”

A series of meetings on the project will be held in southwestern Colorado in June, starting with a CDPHE public-input session from 6 to 9 p.m., Tuesday, June 8, at the Montrose Pavilion in Montrose and followed by a special session of the San Miguel County board of commissioners from 4 to 7 p.m., Wednesday, June 9, at the Telluride Firehouse in Telluride.

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Paradox Valley, Montrose County

According to the Telluride Daily Planet, documents challenging the completeness of the Energy Fuels’ application were sent by the Sheep Mountain Alliance in time for state consideration but, according to state officials, they were never received.

The Piñon Ridge mill proposed for the Paradox Valley sparked a massive debate before the Montrose County commissioners this past fall, deeply dividing economically strapped locals and residents of nearby San Miguel County.

The area produced some of the first yellowcake enriched for nuclear weapons during World War II and the Cold War and is now being eyed to supply a potential nuclear-energy resurgence supported by Colorado Sen. Mark Udall. But uranium mining in Colorado also has a checkered environmental past.

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Paradox Valley in western Montrose County. (Creative Commons photo by Iversonic via Flickr)

MONTROSE — Actress and environmental activist Daryl Hannah says all the heated rhetoric over who should have the most say about the proposed Piñon Ridge uranium mill — western Montrose County mining families or affluent residents of Telluride and surrounding San Miguel County — is a moot point to Mother Earth.

“The earth doesn’t know about these sorts of lines that we draw,” said Hannah, who didn’t want to reveal what town in San Miguel County she lives in, but did say it isn’t Telluride. “These boundaries and these borders are manmade, but the air and the water and the soil and the wildlife don’t really recognize those boundaries.”

Supporters of the Piñon Ridge mill, proposed by Canada-based Energy Fuels for the Paradox Valley on the western edge of Montrose County, say the plan will revive the area’s long-dormant uranium-mining industry and provide a much-needed economic boost. But determined opposition cites health risks, environmental issues and transportation problems in seeking to block the mill.

In a special meeting this morning, Montrose County commissioners will have to weigh the potential risks against the possible rewards of reviving the yellowcake boom in the area around the toxic ghost town of Uravan, which produced some of the uranium ore for the first atomic bomb produced by the Manhattan Project. The commissioners have to decide on a special-use permit for Piñon Ridge because the land is currently zoned agricultural.

“It’s kind of mindboggling to me to hear people say I worked at the Uravan mill, and it was a booming economy at the time and I wish that we could go back to it,” Hannah said of the EPA Superfund site, which she said she lives closer to than most Montrose County residents.

Uranium mining holding ponds near Uravan in Montrose County in 1972. (Photo courtesy National Archives via Wikimedia)

“But you look at Uravan now and it’s completely fenced off and it says, ‘Radioactive, do not enter, dangerous, use caution.’ The whole thing was torn down and you can’t even climb around in there, you can’t even go for walk in there. It’s a completely toxic waste site now.”

Proponents say technology and government regulation have improved dramatically since the atomic heyday of the 1950s and ’60s, and they point to growing demand for nuclear power as a carbon-free power source to combat global warming.

Even Democratic U.S. Sen. Mark Udall of Colorado, once hesitant to push for a full revival of the nuclear power industry, joined a Republican colleague, John McCain of Arizona, in calling for nuclear as a “part of the mix” that will reduce dependence on fossil fuels and hopefully reverse climate change. The two addressed the topic together late last month in Estes Park.

Udall on Tuesday clarified his position to The Colorado Independent as it relates to a revival of Colorado’s uranium-mining industry:

“You can’t consider expanding nuclear power without uranium mining, but that does not mean supporting irresponsible mining,” Udall said. “It’s important that the state — which is the delegated agency for permitting authority for uranium mining — ensures that uranium mining is done safely, responsibly and with the full input of the affected communities.”

Energy Fuels is expected to apply for a permit from the Colorado Department of Public Health and Environment by the end of next month. Environmentalists want the county commissioners to put off their decision until the state has fully analyzed the Piñon Ridge plan.

“We would prefer that they would deny this altogether, but I don’t think that’s going to happen, so we would like them to delay their decision until there’s more information available from the state,” said Hilary White of the Telluride-based Sheep Mountain Alliance. “Our organization is considering a legal challenge of any approval [the commissioners] issue.”

Meanwhile, a front page story in the Montrose Daily Press on Tuesday focused on federal litigation aimed at forcing the U.S. Department of Energy (DOE) and other agencies to perform comprehensive environmental impact studies (EIS) on expanded uranium mining in the area under the National Environmental Policy Act (NEPA).

In 2007, the DOE’s Office of Legacy Management Uranium Leasing Program assessed no impacts from extending leases for 13 existing uranium mines and up to another 25 mines in western Colorado. On behalf of a coalition of environmental groups, the Durango-based Energy Minerals Law Center and managing attorney Travis Stills filed suit against the DOE.

“Travis Stills doesn’t want to see any uranium mining or milling of any kind. He’s out to stop us,” Energy Fuels CEO George Glasier told the Montrose Daily Press. “If DOE, [the Bureau of Land Management] and [U.S. Environmental Protection Agency] end up having to do EISes on whatever facilities the courts or agencies decide, then the final output of that is one more regulatory process we will comply with, but it is a federal problem and not Energy Fuels.”

Stills told the paper: “I’m waiting for a mill that is totally responsive to protecting the environment and workers and that recognizes the great risks involved. So far Energy Fuels is a back-of-the-envelope project. We have to see what they really plan to do.”

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Colorado's Paradox Valley, in Montrose County (Creative Commons photo by Iversonic via Flickr)

The Pinon Ridge Mill would be located on the far western edge of Montrose County, in the Paradox Valley near the Utah border, but the uranium and vanadium processing mill — capable of producing enough fuel rods to power a city one and half times the size of Denver — has been meeting with stiff opposition from residents of Telluride and Ridgway.

They argue the mill will re-stigmatize the area once known as the capital of the global uranium industry, irreparably damaging the region’s new reputation as an outdoor recreation mecca and international tourism destination.

Proponents counter the western end of Montrose County has been severely depressed for decades, struggling for jobs and a sustainable economy since the last big uranium boom tapered off in the 1970s and ’80s in the wake of nuclear power-plant disasters at Three Mile Island and Chernobyl. They also say technology has changed dramatically since the days when Uravan produced uranium for the first atomic weapons but is now a toxic ghost town.

Frank Filas, environmental manager for a U.S. subsidiary of Ontario-based Energy Fuels Inc., called Pinon Ridge a small facility that will revitalize the once-vibrant industry, but in a way that avoids the mistakes of the past and won’t impact outdoor recreation and agriculture.

“Energy Fuels feels strongly [uranium processing and tourism] are compatible and not mutually exclusive, but I would point out tourism on the west end has not been particularly robust,” Filas said. “We think rural areas benefit from a diverse economy.”

Mark Goldfogel, owner of small farm in Paradox and a technology company in Telluride, urged the commissioners to reject the special-use permit allowing for industry in an area zoned agricultural. His argument was based purely on economics.

“If the mill is allowed, the stigma of a uranium mill in Paradox Valley will make agriculture and tourism extremely difficult,” Goldfogel said. “There is no market for organic produce grown down the road from a uranium mill. There is no market for my farm if you allow this mill.”

The mill would have 85 on-site personnel, with another 282 miners expected to find work at nearby mines, an additional 256 support staff, management and transportation jobs, and 766 indirect jobs. The Western Small Miners Association put the annual economic benefit at nearly $50 million in annual income.

But those numbers are based on the current renewed interest in nuclear power as carbon-free fuel source that could replace coal- and gas-fired power plants and reduce greenhouse gas emissions. Many activists on the Western Slope are skeptical that interest will last, predicting another bust that could leave another toxic legacy for decades to come.

Still, the numerous residents of Naturita and Nucla who spoke in favor of the mill and bristled at the invasion of concerned residents from Telluride and Ridgway, are convinced it’s a gamble well worth taking given improvement in technology and their nostalgia for the good old days.

Uranium mining holding ponds near Uravan in Montrose County in 1972. (Photo courtesy National Archives via Wikimedia)

There were countless stories of fathers, grandfathers and uncles who later worked the mines in the Cold War heyday swimming in evaporation ponds and playing on tailings piles as children, with no adverse effects.

Lee Sutherland said his father started hauling uranium ore in 1942 and lived to be 85. He talked of pumping water out of a mine and using it to irrigate his garden, pointing to his five healthy children as evidence of the benign effects of uranium mining and processing. Besides, he added, it’s the right thing to do for the planet.

“They’re all talking about global warming, and if we go to nuclear power, it’ll stop a lot of that,” Sutherland said. But even Energy Fuels’ Filas acknowledged the cavalier attitude of the early days of the uranium industry can’t be repeated today.

“You just can’t use [tailing] for sandboxes the way they were in the 50s and 60s,” Filas said. “But comparing our situation to historic situations is a little disingenuous.”

He called a finding by the Colorado Medical Society that uranium mining is not safe “mostly political” based on opposition to the proposed Powertech mine in Weld County.

Still, Dr. Christine Gieszl, an internal medicine specialist in Montrose, cited a long litany of studies linking uranium mining and processing to everything from lung cancer to birth defects and infertility. And a Colorado Springs attorney testified she successfully represented numerous victims of contamination from a mill in Canon City that has since been shut down.

Jerry Cope of Placerville noted the irony of a Canadian company “pointing to us as outsiders,” and warned of creating another mining-ravaged Appalachia in southwestern Colorado, which would result in a “loss of tourism, real estate values and spikes in cancer rates.”

But proponents countered places like Moab and even Telluride with long mining histories still thrive as legendary recreation destinations, but that low-paying service-sector jobs in the tourism industry or agriculture-industry jobs in other areas aren’t nearly as desirable as high-paying mining-sector jobs, however fleeting.

Bobby Calhoun, owner of the 5th Avenue Grill in Naturita, said if organic farming can come close to mining wages, she’s all for it. “I’ll be the first person in line to pick your tomatoes for $45,000 to $75,000 a year. The people in Telluride have enough of their own problems without worrying about what’s going on in the west end [of Montrose County].”

Many opponents called on the county to delay a decision until the Colorado Department of Public Health and Environment can begin reviewing the license application from Energy Fuels once it’s filed next month. At that time the company will have to provide $50,000 to the county for an environmental assessment, and the state will take up to a year to review the application.

Officials from San Miguel County, where Telluride’s located, spoke in favor of additional hearings to allow them to provide feedback on the state’s findings. Montrose County Commission Chairman David White seemed open to that continuing dialogue with neighboring San Miguel.

The next hearing was set for 10 a.m., Sept. 30 at Friendship Hall in the Montrose County Fairgrounds and Event Center.

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According to a story in the Grand Junction Free Press, Gunnison County broke away from the organization for that reason earlier this month, and San Miguel County may follow suit in January.

“The comment I hear too frequently is [Club 20’s] been taken over by the oil and gas industry,” Gunnison County Commissioner Jim Starr told the Free Press.

San Miguel County Commissioner Art Goodtimes chimed in: “The oil and gas group has taken Club 20 over and is dismissive of minority views. We’re splintering, which is always weak and unfortunate.”

Club 20 has made headlines in recent months for positions deemed by some to be too pro-energy, and some political statements by individual members have also been construed as too conservative and in lock step with the oil and gas industry. The recent division underscores the political split on the Western Slope in the wake of the current energy boom.

But Club 20 Executive Director Reeves Brown told the Free Press that every year one or two local governments drop their membership for either financial or ideological reasons. “They don’t stay out for long,” Brown said.

The progressive movement within Club 20 might have taken a step forward recently, but with Goodtimes’ resignation on Tuesday under the charge that energy companies have taken over, Club 20′s attempt to politically diversify seems to have now taken two steps back.Club 20 is a civic and political organization that has represented the interests of 23 counties on the Western Slope on issues such as growth, energy development, the environment, transportation and public policy since 1953. Several months ago, Club 20 Executive Director Reeves Brown acknowledged those interests have had a conservative Republican and pro-energy industry bent in the past because it reflected the political will of the Western Slope. However, as more Democrats have been elected west of the Divide and as environmental groups have gained influence, Brown claimed Club 20 has slowly moved to more moderate views.

In fact, just last year, former Republican legislator and current CU Regent Tillie Bishop said he had noticed the change: “Club 20 is modifying its philosophy to be more sensitive to the environment and the development of natural resources.”

The San Miguel commissioner couldn’t have agreed more at that time. Goodtimes had been a Club 20 board of directors member for a decade, and he had also observed the recent turn. “The old guard has seen the writing on the wall,” Goodtimes said at the 2007 Club 20 fall meeting last September. “To reinvigorate Club 20, they realized that they had to start shifting to the middle.”

However, also on the horizon of political changes on the Western Slope has been the rapid growth of the energy industry, especially in the Grand Junction-based Club 20′s back yard. Recent former Club 20 chairs with oil and gas interests have included Craig area rancher and former Republican Moffat County commissioner, T. Wright Dickenson and Colorado Oil and Gas Association lobbyist and former Republican Mesa County commissioner, Kathy Hall. Over half of Club 20′s corporate sponsors are from the energy field.

Featured on a new Club 20 member recruitment brochure was a photo of the longhaired, hippy-looking Goodtimes. “Art was the poster child of the organization’s diversity of interests and political philosophies,” Pitkin County Commissioner and another decade-long Club 20 activist, Rachel Richards, observed.

Yet, ironically, that association had abruptly ended by the time the brochure was distributed two weeks ago. Goodtimes had lost his quest to unseat the president-elect and Moffat County Natural Resources director, Jeff Comstock, a Republican, whose job includes reviewing the bids and terms for county mineral leases. “I wanted to break the pro-industry chain of command,” Goodtimes said. “So I ceremoniously ran for president.”

Then oil and gas consultant and Republican Mesa County Commissioner Craig Meis successfully ousted Goodtimes after a two-year stint as executive board secretary. “When Club 20′s executive board chose Meis, their true colors were showing,” Goodtimes claimed.

With accusations that the oil and gas industry has taken over Club 20, Goodtimes decided it was time to quit his 10-year association with the organization.

In his open resignation letter to Club 20, Goodtimes wrote:

I am sorry to have to end my decade-long association with Club 20.

I thought I offered the Club a diverse perspective from one of the more economically successful counties on the Western Slope, and I did my best to work in partnership with other interests in order to arrive at collaborative positions appropriate to our far-flung membership. However, when an organization gives an officer a vote of no confidence, I believe that the only appropriate action is resignation.

Still, I believed that Club meetings provided a valuable regional forum for diverse interests and at times in its 60+ year history this Western Slope institution has done exactly that. But not so currently. The Club has been taken over by the oil & gas industry, from its recent leadership to its big gun funders.

Goodtimes said he tried to convince the chair, who can appoint members to the board, to consider progressive members like Democrat Rachel Richards in Aspen. That attempt failed, too.

“People from San Miguel thought I was crazy to try to work with Club 20 all these years,” Goodtimes noted. He admitted Club 20′s conservative political philosophy is not in line with residents from Telluride. “I’m going to present a formal proposal to the San Miguel commissioners next week, but as far as I’m concerned, our ties are severed with what I now call Club 19.”

Duke Cox, interim director of the environmentalist group Western Colorado Congress, said that although the WCC is a member, Club 20 continues to be less and less a voice of Western Colorado and more of oil and gas mouthpiece.

“I think Goodtimes is right in his assertion,” Cox said. “Club 20′s claim of diversity has lost its message. The majority of people on the Western Slope want to protect air, water and environment from the negative impacts of energy development, but Club 20′s actions are in exact opposite of that desire.” Cox said Club 20 has earned the nickname ‘COGA-20′ in some political circles.

  As an example to support Goodtimes’ claim that oil and gas interests have taken over Club 20, Richards said at the spring executive board meeting, she offered the amendment to move some of the bullet points around under Club 20′s energy development policy.

“The first point says, ‘Be it resolved that Club 20 believes that rules regarding the development of Colorado’s oil and gas reserves should be to support and encourage the development of Colorado’s oil and gas reserves,’” Richards said. “But I felt that people should be put first, so I suggested the bullet point that reads, “To provide appropriate protections for public health, wildlife and the environment’ be moved up to the first position. With arguments to the contrary led by COGA lobbyist Kathy Hall, the committee flatly refused to consider it.”

Reeves acknowledged Club 20 has had to deal with the stigma of conservatism, but he denies the energy industry has a pull over membership. “We still have a one person, one vote rule. Even though Hall may be vocal, she has only one vote,” he noted. “Art has scared some traditionalists but our board and committees have diverse representation and what comes out of them is good policy. Our future depends on who is active. People can embrace change or fight against it,” he said.

Richards disputes some of Reeves’ statements. “I haven’t checked everyone’s political affiliation on the 14-member executive board and committee chairmanships, but I have yet to find a Democrat or an environmentalist now that Art is gone. That’s diversity?”

However, Richards says she is going to continue to be active in Club 20. “Art had his reasons for leaving, but I can’t let the organization become even more one-sided,” she said. “Art will be missed. He was more than willing to collaborate on key issues, saying this is how we grow consensus. But now, in my opinion, Club 20 has a winner-take-all attitude.”

She was especially unhappy with the recent policy change that allows one representative from the pool of top corporate sponsors, of which five out of six include energy companies such as Chevron, Williams Production and EnCana, to have a seat on the executive board. “The biggest loss to Club 20 is the perception that they are an industry puppet and now any position they make, is taken with a grain of salt.”

Richards reflected on one incident during the spring meeting that highlighted her concern about the influence the energy companies have on Club 20. “During the invocation before the main dinner event, the minister asked for a blessing on the two main oil and gas dinner sponsors. Frankly, I would have rather had beanies n’ weenies to eat than to thank God for Chevron and Shell,” she said.

Top photo: San Miguel County Commissioner Art Goodtimes. Second photo: Reeves Brown, executive director of Club 20. Third photo: In the audience at the spring meeting, Colorado Oil and Gas Association lobbyist and former Club 20 chair, Kathy Hall (lf) with Meg Collins, president of COGA. Fourth photo: In the hall of the 2008 Club 20 spring meeting: Left to right, Pitkin County Commissioner Rachel Richards; David Nesbitt, director of Colorado Oil and Gas Conservation Commission; Russell George, director of Dept. of Transportation, and Harris Sherman, director of Dept. of Natural Resources. Fifth: graph of counties in Club 20. All photos by Leslie Robinson — except for Reeves Brown and map from Club 20