Mt. Emmons treatment plant deal in the works

State, county, town and now Freeport-McMoRan collaborating 

by Mark Reaman

In what has been described as a “serendipitous” and “interconnected” moment, there could be real headway in a permanent solution to the Mt. Emmons water treatment plant and overall molybdenum mine situation.

While very preliminary, the signals are good that this new path with new players, in part spurred by last summer’s dramatic Gold King Mine release into the Animas River, could bring about substantial changes to the Red Lady situation.

Gunnison County, the town of Crested Butte, several departments in the state, mining giant Freeport-McMoRan and U.S. Energy, the company with rights to the local molybdenum deposit, appear to be headed toward a collaborative deal to upgrade and permanently fund the water treatment plant on Coal Creek and address the idea of a potential mine.

This most recent chapter in a very long story started late last August when the county and the town sent a letter to the state and feds expressing serious concern over U.S. Energy’s ability to maintain the water treatment plant, especially if an accident occurred at the plant. U.S. Energy had been taking a giant financial hit with the decrease in energy prices and it has only gotten worse, with its stock selling this week for under 30 cents a share.

The two local governments sent a letter saying that the environmental and human health consequences of any release of untreated mine drainage are beyond the governments’ response capacity. They asked the Colorado Water Quality Control Division to reopen a permit renewal process for the mine’s discharge permit, which regulates the water treatment plant.

Several state agencies, including the Department of Natural Resources, the Colorado Water Quality Control Division, the State Attorney General’s Office and the Colorado Division of Reclamation Mining and Safety, set up a meeting in October. Crested Butte town attorney John Belkin, Gunnison County attorney David Baumgarten and special counsel for the town, Barbara Green, met with them to discuss concerns about U.S. Energy and its financial ability to continue operating the plant. By all accounts, it was a positive meeting.

Shortly after that, Freeport-McMoRan, a renowned international copper, gold and molybdenum miner that operates the Climax and Henderson moly mines in Colorado, also came into the picture. While it never had an interest in the molybdenum beneath Mt. Emmons, the company bought Phelps Dodge in 2007. That mining corporation had acquired the company that originally built the water treatment plant. Freeport in essence became tied to the site through a connection of mergers and acquisitions.

“The day after that meeting with the county and town, the EPA had a meeting with Freeport-McMoRan to discuss situations like the recent Gold King Mine incident near Durango,” explained Andrew Ross, senior water quality scientist for the WQCD. “It was understood the Mt. Emmons situation could be similar if treatment at the water treatment plant stopped, so EPA Region 8 officials asked Freeport to look at its Superfund liability. And they did. It was serendipitous timing.”

Under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), because Freeport has ties to the original plant operator, it now has some liability for the plant. CERCLA is part of federal Superfund legislation.

“Understanding the CERCLA liability, Freeport-McMoRan said they would step in if treatment stopped,” said Ross. “Under Superfund, if you touch something you are then liable and because Freeport bought Phelps Dodge they have potential Superfund liability. They can prevent that by addressing the situation as it stands. If it went into a Superfund situation up there, the company would lose all control and the government would take over. They want to avoid that. Freeport has told us it wants a long-term solution to the site so there is a commitment by everyone to continue the dialogue.”

According to Nicole Rowan, WQCD’s water quality control clean water program manager, “We are in a very collaborative place right now with the state, Freeport, the county and the town.”

Rowan said that while the state has not talked to U.S. Energy officials about the situation, Freeport has. The Crested Butte News reached out to U.S. Energy chief executive officer David Veltri by e-mail but he did not respond. He did tell the News in October that the company wanted a “final solution to the mine.” In a conference call with investors two weeks ago, he said, “We continue to work through multiple avenues for divestiture of the project.”

“There is an interconnectedness with the efforts everyone has made,” said Baumgarten. “And I am talking about decades of work from hundreds of people—the people who worked with HCCA [High Country Conservation Advocates], the town, the Red Lady Coalition and everyone who advocated regarding these community issues. We are reaching a point of critical mass where a solution needs to be reached. It is very preliminary but everyone appears responsive.”

Belkin agreed. “This is a different path and one that looks very positive,” he said. “So many people had a hand in getting to this point, including the various town councils over many years. While preliminary in nature, and there are a lot of details to work out, we all feel good with the direction this is going.”

Ross said the state is still not asking the company for financial assurance or a bond to make sure there is money to operate the plant, “but we recognize U.S. Energy has some financial issues based on their recent financial statements.”

“There is no plan in case the company cannot operate the plant,” admitted Rowan. “We are working on that. No one wants to get to that point.”

While no formal agreements are signed between the interested parties, the state, county and town, along with Freeport-McMoRan, all appear dedicated to a long term solution, according to Rowan.

Freeport-McMoRan director of external communications Eric Kinneberg did not go into detail about the evolving situation from the company’s perspective but told the News that they are committed to continuing dialogue. “In October of this year, the EPA and CDPHE officials invited Freeport-McMoRan to discuss the Mt. Emmons water treatment facility. Freeport-McMoRan expressed a commitment to ongoing discussions with the regulators on the issue.

“Freeport-McMoRan is the parent company of a non-operating subsidiary that previously owned the Mt. Emmons site and constructed the water treatment plant,” Kinneberg made clear. “Freeport-McMoRan’s non-operating subsidiary was not involved in prior mining, which took place on the site from 1881 through 1970.”

“Freeport seems to be a good neighbor type of company,” said Ross. “We haven’t always seen that in the past. We are excited to work with them.”

“They have a good plant up at Climax and they have expertise in treating mine water. We are cautiously optimistic with what we see happening,” added Rowan.

“The lines of communication are very positive and everyone is interested in moving toward a permanent solution with the water treatment plant,” said Ross.

HCCA’s public lands director Alli Melton said the new development is exciting. “This looks like an opportunity to move toward a potential permanent solution,” she said. “We are committed to working towards a long-term sustainable protection for our watershed and Red Lady.”

“We are waiting to see the developments on this front,” she continued. “Our lawsuit should not be an impediment to a permanent solution that will protect Red Lady.  It’s important to keep an eye on the prize and make sure a permanent solution that protects the local watershed, continues the operation of the water treatment plant, and resolves the mine threat in perpetuity crosses the finish line.”

While early in the first quarter, it appears that ballgame may have actually started.