New owner, state, county and town all at the table
by Mark Reaman
A giant step was taken this week toward finding a permanent solution to the idea of a molybdenum mining development on Mt. Emmons (also known as Red Lady), resolving environmental problems in that area, protecting the water treatment plant on the site, and possibly taking the idea of a mine off the table.
Further steps will be taken over the next couple of weeks, but state, local and federal officials describe the latest development as “exciting” and “optimistic,” with the potential to finally end the decades-old fight over a moly mine just west of Crested Butte.
U.S. Energy, the long-time owner and permit holder of the potential mine and water treatment plant on Red Lady, entered into an acquisition agreement with the Mt. Emmons Mining Company (MEMC), a wholly owned subsidiary of Freeport-McMoRan Inc. last Friday.
Freeport is one of the world’s largest copper, molybdenum and gold mining companies and is based in Phoenix, Ariz. It owns the Henderson and Climax molybdenum mines in Colorado.
MEMC essentially acquired U.S. Energy’s mine site, located about three miles outside of Crested Butte. The acquisition includes the Keystone Mine, the water treatment plant and other related properties including buildings, land and mining claims. U.S. Energy made the acquisition announcement on February 12.
That deal now triggers several next steps outlined in a memorandum of understanding (MOU) between the new mine owner, the town of Crested Butte, Gunnison County and several state agencies including the Colorado Department of Public Health and the Environment (CDPHE), its Water Quality Control Division (WQCD) and Air Pollution Control Division (APCD), the Colorado Department of Natural Resources (DNR) and its Division of Reclamation Mining and Safety (DRMS).
The Crested Butte Town Council will look at and consider entering into the MOU on Friday, February 26 at a special meeting that starts at 6 p.m. The county commissioners will do the same on Tuesday, March 1.
Opportunity versus opposition
“I am excited and very optimistic about this latest development,” said Crested Butte mayor Glenn Michel. “But there are a lot of details to work out and the devil is always in the details. It is a great opportunity for the town and I feel we have great partners working toward a solution for the mine issue and we are extremely optimistic.”
Gunnison County commissioner Jonathan Houck agreed with that assessment. “This is a great stride forward. It shows we are starting to see opportunities instead of opposition and that is major shift. This is pretty promising action.”
Colorado governor John Hickenlooper lauded the deal. “This is a victory for the community,” said Hickenlooper. “We must continue to make progress on reducing mining-related impacts to our streams and rivers. We appreciate our partnership with Freeport, Crested Butte and Gunnison County; this kind of cooperation represents how we do business in Colorado.”
County attorney David Baumgarten said given the sometimes nasty history of the mine issue, a collaborative effort beginning to blossom is refreshing. “It is a big step, especially in perspective of where we have been the last 39 years or even the last couple of years. The coordination now with the owner of the mine, the state, the county and town is significant,” Baumgarten said.
“The real heavy lifting is still to come,” he continued. “There are a lot of knots still to untie but getting to the MOU has been a thoughtful, in-depth exploration of the issues and there is general agreement of desired outcomes. Now we have to roll up our sleeves and really dig into the details.”
And groups like the Red Lady Coalition (RLC) and High Country Conservation Advocates (HCCA) are ready to help in the detail work. “HCCA is highly encouraged by Freeport/MEMC’s commitment, along with the town, county, and state and federal agencies, to eliminating all rights to mine,” said Alli Melton, HCCA’s Red Lady program director.
MOU outlines path to the future
The proposed MOU outlines a path to eventually secure long-term operation of the water treatment plant as well as to possibly eliminate the idea of molybdenum mining in that location.
“The government parties will assist Mt. Emmons [Mining Company] in identifying and supporting cost-effective solutions at the site to ensure ongoing protection of public health, safety, welfare and the environment, in exchange for the other considerations given in this MOU,” the document states.
The agreement also includes several bullet points to address the future of the property. Among the goals stated in the document are:
• Pursue disposition of the mining and mill site claims and fee simple lands in a mutually beneficial way.
• Find and implement technical solutions to the environmental issues at the site.
• Discuss implementing technical solutions to environmental issues at the site, including long-term funding options therefor.
• Collaboratively work to develop site-specific water quality standards for Coal Creek that may include monthly technical meetings with interested stakeholders.
• Continue the current administrative extension of the CDPS discharge and storm water permits until after a final decision is issued by the WQCC in the June 2017 Gunnison Basin rulemaking proceeding.
• Work with the federal legislative delegation on any mutually acceptable legislation required to implement long-term solutions.
The MOU states that the Mt. Emmons Mining Company has agreed “as a goodwill measure” to voluntarily put two years’ worth of operating costs for the water treatment plant into an escrow fund. That amounts to about $1 million per year. Monthly invoices will be paid from the escrow account or other equivalent.
As for the spirit of the MOU, “The parties recognize that this MOU is only a first step in a long-term relationship. The parties commit to working together to achieve further agreements to address the actions listed above in more specificity… This MOU is intended as a measure of good faith and fair dealings between the parties and as a basis for long-term cooperation in furtherance of future agreements.”
Relationships helped everyone get to this point
“Part of why this is exciting is that it is a new way of doing business,” said attorney Barbara Green, who is working for the town on the issue as a special counsel. “It is a different approach and we see this as an example of people coming together to solve a problem. The idea that this will be done cooperatively is a great aspect of this agreement and we want to begin the first steps immediately.”
Crested Butte town attorney John Belkin agreed. “It is a big step forward,” he said. “We now have a willing partner in the mining company that is there to try to solve the problem that for decades has, quite frankly, been a battle against the mining company. Plus the state has been incredibly cooperative and instrumental in getting this progress going.”
Belkin and Green said the town and county began negotiating the MOU last fall. But the groundwork was set up with the state a couple of years ago when U.S. Energy applied to the state for a VCUP (Voluntary Clean Up Program) to clean up the old Keystone Mine on Mt. Emmons.
“Back then, the town and county contacted the relevant state agencies to express technical concerns when the idea of the first VCUP surfaced,” Green explained. “The Colorado Division of Reclamation, Mining, and Safety and the Department of Health convened a meeting immediately to address the concerns. So when the Freeport news came up last year, there were working relationships already established with the local entities and the state.”
Belkin added, “We engaged the state agencies last year when the precarious financial situation with U.S. Energy became obvious and we wanted to make sure the water treatment plant operation was protected. We then met again with the state over that matter and that helped solidify the relationships, culminating in discussions with the new owners.”
Green said the conversations with the mining company have been good and it seems apparent they want to address the big issues with the mine.
“Part of this means that the community and the organizations that have been involved with the issue will continue to be involved,” Green said. “HCCA, for example, will be there to verify the details as they move forward. It is a trust but verify situation. HCCA will continue to be a watchdog along the way.”
Belkin said the MOU outlines general goals for the parties that, if everybody puts their heads down, could be accomplished in the next several years—although Belkin admits that the final disposition of the unpatented mining and mill site claims will take longer since they require the passage of federal legislation. For that, the parties have been working closely with Senator Michael Bennet’s office.
Green said every indication is that everyone wants to roll up their sleeves and work on the solutions immediately. Both attorneys agreed it is obvious within the MOU that Mt. Emmons Mining Company intends to solve the disposition of the mining rights at the site. But only time will tell in terms of the execution of that goal.
Both Green and Belkin gave kudos to the state “for really making this happen,” Belkin said. “And frankly we have to credit Freeport for coming in and working with this. We look forward to continue to work with them to achieve the goals of the MOU.”
HCCA also sees some light at the end of the tunnel. “This marks the first time since the threat of a molybdenum mine on Red Lady arose in the 1970s that the owner of all the mine properties on Red Lady says it intends to dispose of all of its interests on the mountain with the goal of ending the threat of mining Red Lady,” said Melton.
“HCCA urges town and county elected officials and staff to continue placing this community-supported goal as a top priority. HCCA will, as it has for almost 40 years, continue our tireless advocacy to protect Red Lady and see that this iconic mountain will be permanently protected from mining as soon as possible. We are looking forward to working with all the interested parties to achieve this result,” said Melton.
All parties pointing in the same direction
In a prepared statement, HCCA said it was also pulling back on its current lawsuit against the Forest Service. “These issues are related to HCCA’s current lawsuit challenging the U.S. Forest Service’s failure to have any financial coverage for the operation of the WTP [water treatment plant],” the statement reads. “HCCA has agreed to suspend the beginning of legal briefing for a few months in order to facilitate these negotiations.”
“I think this is really exciting,” said Red Lady Coalition (RLC) president Bill Ronai. “It is a phenomenal development compared to where we have been in the past. I think everybody is on the same page and pointed in the same direction.”
“That includes the new owner, the state, the county and the town. Everyone has agreed to work together and that has not always been the case,” Ronai continued.
Ronai said from what he has seen with Freeport-McMoRan, “The company has acted incredibly professionally and done what they said they would do. I believe they will follow through with both the word and the spirit of the MOU.”
Michel agreed. “Freeport has the necessary resources to make this work,” he said. “And the town has so far been able to communicate well and work with them. We all appear to be heading in the right direction.”
Everyone involved is clear that there is a lot of heavy lifting to be done to complete the agreement.
“But there is a group of people involved who want to see all of this get done now,” said Ronai. “There’s a lot of hard work to do in good partnership together. It is a very acceptable road map to a final solution.”
Ronai said the RLC stands ready to assist in that work any way they are asked. “We have complementary resources and they will be available to help see this through to completion,” he promised. “We are happy to help out any way we can. And looking back, over the decades a lot of folks have contributed to where we are now. Many have done so anonymously, so thanks to all.”
HCCA too will be there to help verify details. “These developments,” said HCCA executive director Michele Simpson, “move us closer than ever to two of HCCA’s longstanding goals: (1) ensuring Coal Creek water quality is protected, and (2) a permanently mine-free Red Lady. Much hard work remains before we see the eventual disposition of mining and mill-site claims and fee simple land. HCCA looks forward to playing an integral role in protecting Red Lady and working with all the interested parties to achieve a permanent mine-free solution.”
“I am confident with the work that has been done so far,” said Baumgarten. “And I feel good about the relationships we are building.”
“The town and a lot of organizations have been working on this problem for more than 40 years,” said Michel. “There are so many people who have focused on this over the years. We happen to be sitting in the seats that will hopefully see this through to the end but there are hundreds of people who deserve a lot of credit for getting to this point.
“The fact is there will be a lot of eyes on this agreement and the entire process,” continued Michel. “It is a very broad-based effort and there will no doubt be a lot of smart people keeping an eye on this whole deal.”
U.S. Energy changing focus
According to a press release from U.S. Energy, “With the divestiture of the Mount Emmons Mining operations, U.S. Energy Corp. will have eliminated its mining related operating costs of approximately $3 million per year, a portion of which relates to operation of the water treatment plant. Under the acquisition agreement, MEM will replace the company as the owner and permittee of the water treatment plant, the associated mining assets and will discharge the obligation of the company to operate the water treatment plant upon closing.”
The U.S. Energy statement continued, “David Veltri, chief executive officer, stated, ‘This transaction will end our mining activities and together with the earlier reductions and savings will position U.S. Energy to execute our strategy to transform the company to profitability and to grow our oil and gas assets during 2016 and beyond.’”
“There are a lot of people who deserve a lot of credit to have gotten to this step. One group not mentioned in the MOU is Colorado senator Michael Bennet and his staff,” added Baumgarten. “They were stellar as we went through this process and very responsive. I am confident they will be very involved in the future as well.”
In fact, Senator Bennet said the MOU solidifies some issues for the valley. “This agreement is a tremendous step forward for the community. It will help ensure the long-term stability of the water treatment facility and the future status of Mt. Emmons. The agreement would not have been possible without the diligent work of Crested Butte, Gunnison County, the state of Colorado, and Freeport-McMoRan,” he said. “Freeport-McMoRan’s work ensures that water treatment of the acid mine drainage into Coal Creek will continue without interruption. The agreement also recognizes the community’s concerns about their future water supply and economy. Mt. Emmons is not an appropriate location for new mining activity, and this agreement moves us toward a final resolution of this issue.”
“The MOU represents a ‘maybe’ in the bigger picture,” concluded Michel. “To go from a ‘no’ to a ‘yes’ you need a ‘maybe’ and I feel this is a ‘maybe,’ but it is a very positive one.”
And HCCA promises to not take its eye off the ball until the big picture includes that ‘yes.’ “We are committed, as always, to ensuring that Coal Creek and the Red Lady are protected forever,” HCCA stated in its press release. “We look forward to working with these parties and others to make sure the result will be a long-term, sustainable, and protective solution for our watershed and Red Lady.”