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Energy outfit seeks oil in Mohave County

TUCSON — A Denver-based energy company is suing for the right to mine up to 1.2 million acres in northwestern Arizona for oil, gas and other hydrocarbons.

The case involves Mohave County land owned by Santa Fe Pacific Railroad Co. It signed a lease with Santa Fe Energy Co. in 1987 that allowed the energy outfit to drill for oil and ask for an extension once the lease expired.

But several mergers and transactions have occurred by the time the 20-year deal expired. Now the new energy company, Prize Energy Holdings, is staking its claim to the old lease.

In its seven-page complaint, Prize accuses the railroad of reneging on the lease even though it filed all the right paperwork. It also accuses the railroad of trying to sell the leased land to the U.S. Bureau of Land Management in 2004 and Arizona Acreage LLC in 2005.

The company is asking a federal judge in Tucson to honor the lease and order the railroad to pay all costs and attorney’s fees.

Phoenix lawyer Jennifer Dioguardi and Denver lawyer James Kilroy, both of Snell & Wilmer, are representing Prize Energy Resources.

Toxic rock soils town, Colorado River

CIBOLA – When Ron Swan first found this tiny riverside town in 1970, he was struck by its remote beauty and fertile lands. The jagged Trigo Mountains loomed off in the distance, and wild ponies and burros would soon roam freely in a wildlife refuge nearby.

Swan took one more look at his life in arid Casa Grande and never looked back.

“Water,” he says simply. “There’s a river here and an opportunity to really farm…In June, I’ll have been here 35 years, so I guess I like it.”

Today, Swan is 74. He runs one of the largest businesses in town, River Bottom Farms. It grows alfalfa, cotton, corn, wheat and Bermuda grass on the Arizona side of the Colorado River.

But Swan, like most of Cibola’s 200 residents, unknowingly face a colossal public health hazard.

The entire town – from its front yards to its unpaved streets – is covered with manganese, an element used mainly as an alloy in steel. It can be toxic if ingested or inhaled in even modest quantities. A few tablespoons of the stuff can pollute an entire swimming pool.

For years, this flaky, dark-colored ore has been spread all over Cibola as dust-control in a dusty town. Farming equipment grinds it up into dust that floats around people and crops. During the rainy season, washes that are normally dry deliver it to the Colorado River floodplain.

Long-term inhalation of unsafe levels of manganese have been shown to clog the lungs, damage the central nervous system and human reproduction or inhibit learning ability in children, according to the few studies conducted by Centers for Disease Control and Prevention. There’s even a condition called “manganism,” which is due to chronic exposure suffered mostly by miners.

Although some government officials are aware of Cibola’s problem, they have yet to host a public meeting on the subject. Interviews and public records suggest that officials are unable to pin the liability on anyone, and that no solution is in sight.

Public records also show that the federal Bureau of Land Management, which owns and operates most of the land surrounding Cibola, has been aware of the problem since August 2002 but done little to address it for lack of Congressional funds.

A state investigation brought the issue back to the forefront. And it shows that in a town full of ghost stories, the tale of Cibola’s manganese problem is only too real.

A HISTORY OF FARMING, MINING

Cibola dates back to the late 1880s, when settlers moved to the region to farm along the riverbank and mine the mineral-rich Trigo Mountains. Its name is derived from the 14th-century expeditions Spanish explorers made of the Southwest in search of the Seven Cities of Gold. They found Native American tribes instead.

But Cibola’s townsfolk persevered centuries after the Spanish left. Around 1900, they built a steamboat landing to move goods up and down the river. They built a 16-mile canal from the river to their farms (which ultimately failed) and a bridge to move goods across the Colorado into California (which was too low for boats to pass under).

By the late 1950s, mining had caught up to farming as one of Cibola’s leading industries, thanks to a stockpiling program initiated by the Department of Defense in the name of national security. With the Cold War heating up, the federal government was paying twice the market rate for manganese – an alloy in steel used for everything from heavy equipment to semiconductors – and then transporting it to larger piles in remote locations.

Miners in towns like Cibola responded by scrambling out into the hills, staking new claims or digging without permission. The piles grew and grew as miners cashed in; most of Cibola’s manganese tailings ended up in a massive stockpile near Wendon, Ariz., according to officials for the state Department of Mines and Mineral Resources.

But pay dirt quickly became dirt again. The U.S. government ended its subsidy of the national stockpiling program, and miners walked off the job in Cibola in 1959.

Yet the manganese piles remained, a hulking pile of toxic rock just a mile or so from Cibola Lake and the Colorado River. People drove ATVs around and over them, used them as a backdrop for makeshift shooting ranges and, eventually, tapped them as groundcover to knock the dust down in Cibola.

AUTHORITIES AWARE, UNABLE TO HELP

A state investigation now shows that federal officials first caught wind of the ad hoc gravel pit’s existence in August 2002. That’s when Lowell Jeffcoat, a BLM hazardous materials coordinator, wrote to his superiors after noticing that large amounts of the manganese had eroded into a nearby wash that feeds the Colorado River.

At the time, Jeffcoat said it was a threat to water quality and the riparian habitat of the Cibola National Wildlife Refuge nearby. Two months later, soil samples taken at the site indicated manganese levels exceeded safe levels.

Shortly after the results were in, BLM employees reported a strange occurrence at the site. They noticed about 10,000 tons of manganese tailings had disappeared, and that two men in a green pickup truck and a white dump truck had hauled off a load of the material, according to an inter-office email at the time. The memo also mentioned that the material was spread all over Cibola.

In January 2003, BLM employees notified officials with the Arizona State Land Department – which also owns land that one of the mines sat on – and the Department of Health Services in nearby Imperial County, Calif. The health official dismissed their environmental concerns, but BLM employees fretted about people inhaling manganese dust, according to a recent state investigation.

In June 2003, the firm studying the soil samples confirmed the BLM employees’ fears. The agency pledged $100,000 to help clean up the site with monies available in March 2005.

But Jeffcoat was eventually transferred to the BLM’s Utah office, and neither of the piles were ever fully contained and capped, BLM officials told TZR recently.

Then, on June 13, 2007, the phone rang inside ADEQ’s Solid Waste Inspections and Compliance Unit. The anonymous caller had a tip: Manganese tailings were on the roads and most of the yards in Cibola, Ariz.

Twelve days later, an ADEQ team was in town collecting soil samples that would ultimately lead to the most detailed look at Cibola’s toxic problem.

TZR obtained the results of that investigation under a state public records request. The details of that report make up the bulk of this story.

MANGANESE LEVELS UNSAFE

Just days after Thanksgiving in 2007, five inspectors from ADEQ set out for Cibola. The town is about 30 miles south of Ehrenberg, which is where they met officials from BLM and La Paz County, which manages the unincorporated town of Cibola.

From there the group headed south for a tour of the manganese piles and roads and yards of Cibola. It visited two manganese piles, the county’s public works gravel pit, an old rock quarry and four locations within Cibola, including the town’s main trailer park, roads and bridge.

Investigators found that the concentrations of manganese in the soils near the piles and in the washes were between five and seven times the safe levels for residential remediation. Arsenic levels were also highly unsafe.

They were also able to match the manganese from the piles to the gravel covering the Cibola’s yards and roads.

“In places, it appears the tailing piles are partially situated in the historic drainage path of the wash,” wrote ADEQ compliance coordinator Henry Darwin in his Jan. 10 summary. “If the tailings continue to remain in an un-stabilized condition, then erosive processes will continue to transport them to the wash.

“ADEQ believes this material could become an air quality concern if the same material becomes further broken up and crushed by vehicles,” Darwin adds.

During the visit, La Paz County Public Works director Tom Simmons told investigators that over the years, three different independent contractors working under a county road maintenance contract spread the manganese throughout Cibola, and that the companies were no longer in business because their proprietors had died.

The state investigation connected the dots and caught everyone by surprise – including Simmons himself.

“I was flabbergasted,” he told TZR months later. “I was probably the most surprised person in the world. Honestly, I had no idea.”

QUICK CLEANUP IS FAR OFF

Local, state and federal officials agree that there are two ways to solve Cibola’s manganese problem: Crews can either dig up the roads and haul the waste off to a special treatment facility, or they can cap all of the roads and yards with a glue-like sealant or pavement. [Simmons and interim La Paz County Manager Donna Hale say they are waiting from guidance from state and federal officials.]

But both of those solutions cost money that officials for the agencies involved say they don’t have. And that excludes the costs to fence off and seal the manganese mills themselves.

In addition, officials don’t have anyone to hold liable – and thus extract money from – because there is no documentation supporting the manganese mill’s existence, says William Harris, who now leads the BLM’s hazardous material program in Phoenix.

Harris says that at least $200,000 is needed to seal up the larger manganese pile for good. “But for us, that’s a lot of money to secure,” he adds.

That’s because his agency only receives about $2 million to $5 million annually to cap thousands of mines nationwide. In Arizona alone, state mine officials believe there are 100,000 abandoned mines.
Harris says there are about 20,000 abandoned mines on BLM land in Arizona.

That means there is a waiting list, and priority is given to those mines that pose a greater threat to the environment.

Most of the BLM’s mine cleanup money is currently being used to clean up lead and arsenic at Saginaw Hill outside Tucson, Harris says. Any future funding for other mines would literally require an act of Congress.

Harris says Cibola’s best shot at getting money from Congress would fall under the groundwater effects of the manganese piles, not the public inhalation of manganese dust.

But even if Harris’ agency received congressional funding for Cibola’s manganese piles today, it would take six to nine months to clean it up the mess, Harris says.

As a backup plan, Harris says he is negotiating with a branch of the Department of Defense that cleans up and processes these abandoned stockpiles of raw materials. However, the manganese in and around Cibola is of a lower grade – about 20 percent pure – that is not marketable, according to state mining officials and Richard Farkas, a local mining expert in Cibola.

So the chances of re-processing Cibola’s tailings for a commercial profit seem slim. Yet Harris says the cleanup discussions include Cibola’s manganese piles and two other stockpiles in Arizona.

Either way, Cibola’s townsfolk must wait for solution as they enter another dry, hot and dusty summer.

“We’re not ignoring them,” Harris says of Cibola’s townsfolk. “They’re on our radar screen. They’re in our long-term plan. It’s all about funding.”

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>>Email the editor at aklaw@zoniereport.com.