Lawsuit alleges state violated its own laws in approving Piñon Ridge uranium mill permit

The scenic Paradox Valley would be home to a new uranium mill if Toronto-based Energy Fuels prevails against a pending legal challenge.

A Telluride-based environmental group claims state regulators violated various state and federal laws last month when they issued a radioactive materials license to the proposed Piñon Ridge Uranium Mill on Colorado’s Western Slope.

In a legal challenge filed in Denver District Court last week, the Sheep Mountain Alliance alleges the Colorado Department of Public Health and Environment (CDPHE) violated both the federal Atomic Energy Act and the Colorado Radiation Control Act when it issued a license for Toronto-based Energy Fuels to build the first new uranium processing mill in the United States in more than three decades.

The Piñon Ridge project hopes to capitalize on a resurgent interest in the nation’s nuclear power industry as a means of reducing the greenhouse gas emissions more prevalent with coal and gas-fired power plants. But environmentalists insist nuclear power is still too costly, consumes too much water and leaves a legacy of toxic waste from spent fuel rods and uranium mining operations.

The mill would be built in far western Montrose County, near the old uranium industry company town of Uravan – an EPA Superfund cleanup site. Many residents of rural and economically depressed Montrose County favor the mill, while the strongest opposition comes from neighboring San Miguel County – home to the famous ski town of Telluride and a more vibrant tourism, outdoor recreation and real estate economy.

The Sheep Mountain Alliance lawsuit alleges the state didn’t allow the public to ask regulators or Energy Fuels’ officials direct technical questions about the mill, which violates the Atomic Energy Act.

“Sheep Mountain Alliance exhausted all remedies before we decided to file this lawsuit,” Linda Miller, a member of Sheep Mountain Alliance board of directors, said in a release. “We participated in the approval process but our concerns were not addressed. We’re disappointed that the state did not issue a decision that would have protected the public interest and we must now rely on the district court to uphold the law.”

A spokeswoman for the Colorado Department of Public Health and Environment’s Radiation Management Unit did not return a call requesting comment.

Energy Fuels President and CEO Stephen Antony told The Colorado Independent that environmental groups and the members of the public had ample opportunity to ask any and all technical questions.

“They could have addressed questions orally or they could have put them in writing, and to our knowledge, the CDPHE said they addressed all questions,” Antony said. “They had something like 435 questions that they responded to.”

The lawsuit accuses the CDPHE of violating state laws designed to keep Colorado taxpayers from having to shoulder the costs of cleaning up uranium mills, which the suit claims have contaminated groundwater everywhere they’ve been built in the state.

Past facilities such as the Cotter Mill near Cañon City – also an EPA Superfund site – have cost anywhere from $50 million to $500 million to clean up and reclaim, the lawsuit claims, arguing the $11 million surety bond required of Energy Fuels for Piñon Ridge is woefully inadequate.

“If state regulators ignore basic federal and state law to permit this mill, how can we ever trust them to monitor the mill once it’s in production?” Miller said.

Antony counters that the bond is “$12 million roughly,” and that it comes from a fact-based formula.

“That’s calculated based on the state regulations and is sufficient to cover all the requirements of reclamation, and it’s calculated on actual contractor-estimated costs – in today’s dollars, of course,” Antony said. “It’s adjusted every five years when you renew [the permit]. They look at the inflation index and adjust the amount for inflation and any other factors.”

Opponents of the Piñon Ridge Mill have long assailed what they consider shaky financing should things go bad at the proposed mill, saying Energy Fuels can barely afford startup, let alone cleanup. The size of the surety bond has long been a sticking point.

By comparison, state regulators originally set a price tag of nearly $44 million to finish cleaning up the Cotter Mill, then settled on just over $20 million. That prompted a lawsuit last fall from a grassroots activist group in the Cañon City area, Colorado Citizens Against Toxic Waste (CCATW).

Antony said there’s no merit to any of the Sheep Mountain Alliance claims and that his company expects to prevail and proceed with the mill.

“Of course it’s contingent on raising the capital in the market to fund the mill,” he said. “We’ve always said that; that’s no different either. [Uranium] is $73 a pound and forecasted to still moderately increase. We don’t know where it’s going to end. All that does is increase our chances for funding.”

The Sheep Mountain lawsuit, he added, doesn’t affect the timetable for the proposed mill. Energy Fuels built six months into its schedule for anticipated legal challenges.

“It’s all subject to how that process winds its way through the judicial system, but we added about six months in the schedule, so that puts us breaking ground in the fourth quarter of this year and commissioning [a working mill] a year later in the third quarter of 2012,” Antony said.

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