Judge rules no need to bond wastewater treatment plant

30-day review unlikely to yield an appeal

An administrative law judge has rejected a bid by local clean water advocates to require a bond from the operator of the wastewater treatment plant on Mt. Emmons.

The 30-year-old industrial wastewater treatment plant treats waste and surface water that comes from the old Lucky Jack Mine property on Mount Emmons and the Keystone Mine. The treated water is discharged into Coal Creek, 75 feet down stream of Crested Butte’s municipal water intake.
Gunnison County, the town of Crested Butte and High Country Citizens’ Alliance (HCCA) teamed up in mid-2008 to force Colorado’s Water Quality Control Division (WQCD) to include a guarantee like a security bond in the permit requirements for the Mt. Emmons facility, operated by U.S. Energy.
U.S. Energy got a permit from the WQCD last July to operate the plant for five years at a cost of about $1 million annually. The company then signed a two-year contract with Frank Environmental Services to run the plant. Frank Environmental operated the plant for previous mine owner Phelps-Dodge.
The three proponents of the financial guarantee first argued last year against the state WQCD’s assertion that it didn’t have the authority to require a bond.
Administrative law judge Robert Spencer agreed with the proponents that the WQCD does have the authority to require a financial guarantee, and gave proponents an early victory in the hearings.
“We had a huge victory back in May,” Crested Butte town attorney John Belkin said. “We established that the state has the legal authority to require it. Think about all of those communities that didn’t have [security] as an option before, and now they do.”
The proponents’ second challenge was to show the judge that, because of the plant’s proximity to the town and the consequences of failure at the plant, the state should require U.S. Energy to put up some money now to operate the plant in the future if, for any reason, it were left unattended.
But the burden of proof that such an assurance would be necessary for compliance with the permit requirements lay with the town and county, and in the end their arguments fell short.
“We are disappointed with the decision but we’re still evaluating our data from this past year,” HCCA water director Steve Glazer said. “The permit [to operate the plant] does have an expiration in three-and-a-half years, so we’ll have another opportunity to ask [for the guarantee].”
In the October 30 decision, Judge Spencer explained that nothing about U.S. Energy’s past performance or financial standing would suggest they might walk away from the plant. If U.S. Energy did fail to meet the requirements of the permit, the company would face stiff fines from the state, he said.
U.S. Energy corporate counsel Steve Youngbauer said his company is proud of its environmental record, which is why they fought the security requirement. He said the company also has a very qualified operator to make sure the plant remains in good working order.
During the hearings, U.S. Energy revealed that it has been “exploring arrangements with other companies to mine molybdenum deposits on the property.” Those arrangements are with Thompson Creek Metals, which has an option to buy into the project.
Citing that information, Judge Spencer said, “The property therefore may well have a value that makes it economically advantageous for U.S. Energy to maintain the Treatment Plant in good working order.”
Part of the proponents’ goal during the hearings was to show the judge what the condition of Coal Creek was before the water treatment plant was installed, and what it might be again if the plant failed to function.
Prior to the closing arguments, town attorney John Belkin said, “We want to remind the judge that Coal Creek used to run orange through town.”
But since the treatment plant has been in place, Coal Creek hasn’t been orange and during the hearing, the judge heard no evidence that it will be again, or that “untreated effluent has ever escaped the Treatment Plant to enter the Town’s water supply or is ever likely to do so.”
If any of those conditions were to change, Glazer said the WQCD could reopen the permit and add conditions as necessary. He also said the proponents would review the decision and respond in the allotted 30 days, but thought an appeal would be unlikely.
One possible course of action would be to ask the WQCD to set some standard that a project would have to meet before a financial guarantee would be a permit requirement.
Town attorney Belkin said he was pleased with the effort the proponents gave to the hearings. “It’s always easy to Monday Morning Quarterback these things, but making it past the first step was huge,” he said. “Whenever you get involved in litigation you don’t know what the outcome will be. We did what we could and I think we can be proud. It’s unfortunate that the judge saw it the way he did.”