HEAL Announces Green River Nuke Appeal
Feb 09, 2012
PRESS RELEASE *** FOR IMMEDIATE RELEASE
February 9, 2012
APPEAL ANNOUNCED OF STATE ENGINEER’S GREEN RIVER NUKES’ DECISION
AMONG KEY ISSUES RAISED ARE BLUE CASTLE’S HOLDINGS’ QUESTIONABLE FINANCES
HEAL Utah and more than 20 other parties announced at a press conference Thursday morning that they have filed an appeal of the recent decision by a top Utah official to award a massive amount of water from the Green River to the proposed nuclear power project.
They are formally asking State Engineer to reconsider his decision. Among the issues they are raising is whether Blue Castle Holdings, which wants to build the reactors, has adequately proven it has the financial ability to complete the project, as Utah law requires.
That question has become particularly pressing over the past few weeks, since news broke that the only named investor behind Blue Castle – a New York hedge fund called LeadDog – was facing federal charges after allegedly swindling elderly investors.
“Obviously, the State Engineer will need to take a cold hard second look at Blue Castle’s finances,” says Matt Pacenza, policy director for HEAL Utah. “It certainly doesn’t make sense to award all of this precious water to a project with such a shaky financial base.”
HEAL is joined by more than 20 parties in its appeal, known formally in state law as a “request of reconsideration.” Those include residents and small business people in and around Green River – such as the Vetere family which grows the region’s famous melons and the owners of a pair of river-rafting companies – in addition to concerned citizens from across Utah and representatives of several environmental groups: the Sierra Club, Utah Rivers Council and the Center for Biological Diversity.
The appeal – which was formally filed with the State Engineer on Wednesday – raises issues other than Blue Castle’s finances. The parties also asked that Jones take a second look at whether the project will harm the natural stream environment of the Green River, if in fact there is fact plenty of water in the river for the reactors and whether this huge water appropriation will interfere with the rights of other water users.
In addition, a second request was filed this week as well. A trio of Moab-area groups – Uranium Watch, Living Rivers and the Center of Water Advocacy – joined by several area residents, also submitted a formal appeal on similar grounds, from questioning whether Blue Castle has the financial ability to complete the project, to challenging whether there is sufficient water in the Green River for the reactors during low flow conditions to urging the State Engineer to more deeply consider impacts to the public welfare of the proposed project.
“The State Engineer did not do the kind of in-depth analysis of the feasibility and economic viability that should be required to approve a large amount of water for such an expensive and risky project,” stated Sarah Fields, Uranium Watch's Program Director. “The State Engineer did not consider that Blue Castle Holdings is a newly-formed entity, with no financial or management track record and no experience in the funding, licensing, construction, or operation of a nuclear reactor."
Blue Castle’s involvement with LeadDog has certainly raised a lot of questions. The two firms announced their joint venture on June 30, 2010, when LeadDog pledged “up to $30 million" to BCH "over a 3 year period."
However, according to the Securities and Exchange complaint against LeadDog, the hedge fund had only approximately $4 million in assets at that time, raising the questions as to whether its pledge to Blue Castle – the only investment that the company has ever named – was ever legitimate.
“Did Blue Castle have no idea how little money its biggest investor had?” asks Pacenza. “Or did they know, but chose to go ahead and announce the sham pledge, in order to make it seem like there was actual financial interest in the project? Basically, Blue Castle was either woefully incompetent – or deliberately misleading. Certainly, either possibility should trouble the State Engineer – and all Utahns.”
Since the news of the LeadDog scandal broke, Blue Castle has sought to minimize its impact. It has said that it decided roughly a year ago not to do business with LeadDog, although interestingly during that whole period the company never chose to share that decision with the State Engineer. Blue Castle now says its financing comes “primarily” from a subsidiary it bought in December of 2010, a Grand Junction-Colo.-based pipeline company called Willow Creek.
However, it doesn’t appear that Willow Creek produces anywhere near enough revenue to pay for the $100 million Blue Castle has said it needs to obtain federal approval to site the nuclear reactors. The company projected, in a filing with the State Engineer, that it needed between $10 and $26 million a year over a six-year period.
But, a document obtained by HEAL Utah from the business information firm Dun & Bradstreet shows that Willow Creek in 2010 had annual sales of $5.6 million. It is not possible to precisely know the profit margin on those gross receipts, but clearly Willow Creek alone cannot provide more than a fraction of the money that Blue Castle has indicated it needs.
“The more you scrutinize this company, the less you find,” says Pacenza.
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