Oxbow mine ready to disengage from operations
[ By Katherine Nettles ]
The Somerset Domestic Waterworks District has not determined what it will do to treat drinking water in the future, but the time is drawing nearer for a decision. Oxbow Mining Company operated the West Elk Creek coal mine in Somerset until 2013 and has maintained and operated a water treatment plant there since 2003, selling drinking water to the Somerset water district. The mining company informed the water district in January that it intends to step away from the role in the very near future as originally planned. Cost is a major factor in operating the water treatment plant though, and it is unclear what path lies ahead for the district.
Oxbow mine president Mike Ludlow initially said Oxbow would cease operating the plant in July, and the water district has been negotiating with Oxbow about timing and also consulting with the Colorado Department of Public Health and Environment (CDPHE) about the costs of running the treatment plant.
The water district is the only governing entity within the unincorporated town of Somerset, with just over 50 homes and approximately 130 residents. The district board will discuss the issue publicly at its monthly (virtual) meeting Friday, March 5 and expects to hear from some of its members during the meeting. Water district board president John Mlakar declined to comment further until after that meeting takes place, but said the board will need to determine what direction to take, whether that means signing a contract with the mining company to take over ownership and operation of the water plant or dissolving the water district.
Mlakar met with the CDPHE last week on February 25 to discuss what would be involved in the district taking over operation and ownership of the water treatment plant. Previous estimates predicted that operations would cost around $7,000 per month, which Mlakar has stated repeatedly is not feasible for such a small district.
Discussions of Somerset’s water quality challenges and need for a new treatment plant have been ongoing for several years, as have discussions of transferring ownership. On March 18, 2019, the water district board of directors filed a statement of purpose in Gunnison County asserting that “The district is in discussions with Oxbow to transfer operations and full ownership of the treatment plant to the district but a date for such transfer has not been fully established.”
Oxbow Mining Company has been providing water to the town since 1962, sourced from the Gunnison River. Oxbow is owned by billionaire Bill Koch, as is Gunnison Energy, which owns the water rights and the property on which the treatment plant sits.
The treatment plant was constructed in 2003, which Oxbow and the water district agreed to manage. A Memorandum of Understanding between Gunnison County and Oxbow, dated October 15, 2003, stated the need to construct a plant for supplying potable water to the district, and that the county would help facilitate that with a combination of grant funding from the state Department of Local Affairs (DOLA) through the Energy and Mineral Impact Assistance Program, a DOLA loan and a Gunnison County contribution of $50,000. Oxbow agreed to implement the work program for the new facility and eventually transfer ownership to the Somerset water district in the MOU. Despite the infrastructure, the water coming out of the treatment plant has failed several state drinking water regulations.
Gunnison County attorney Matthew Hoyt says Gunnison County upheld its commitments and it is now time for Oxbow and the district to work out their part.
“In 2003, the County partnered with Oxbow Mine and the Somerset Water Protection District to obtain a State grant and contribute money for the construction of a water treatment plant,” wrote Hoyt in an e-mail to The Crested Butte News. “The County provided this funding after receiving a grant from the Colorado Department of Local Affairs, and, with this money, the plant was constructed and continues to operate. The County is monitoring the situation and hopes for a good outcome. However, by law, the District is a wholly separate governmental entity with its own elected board, officers, and finances. Only the District, working with Oxbow and the State, can truly and fully address issues with plant maintenance and operations.
“The County urges the District to take appropriate and immediate steps to work with Oxbow and the State to resolve any and all issues with the water treatment plant. The County also encourages the District’s constituents to reach out to the elected leaders of the Somerset Water Protection District and join the County’s request that the District work to resolve this situation,” concluded Hoyt.
Oxbow mine representative Mike Ludlow was contacted for this story as well, but did not respond.