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Consolidated contested case hearing on three water permits is delayed until October; final NRC license is nowhere in sight

Posted March 11, 2013

Powertech is unlikely to receive its permits for the proposed Dewey-Burdock uranium mining project this year, contrary to official pronouncements by the Canadian penny stock company.  Federal and state permits have been delayed due to vigorous and sustained opposition from potentially affected landowners, water users, and Indian Tribes.

In a January 2013 corporate presentation posted on its website, Powertech tells investors that it expects to obtain all permits for Dewey-Burdock by June of this year.  The cash-strapped Canadian firm recently raised $1.5 million through a private placement of company stock, giving it enough cash to survive through June or perhaps July.

On the state permitting front, the South Dakota Water Management Board recently set a date for the consolidated contested case hearing on two water rights permit applications and a ground water discharge permit application for the proposed project.

The hearing will held the week of October 7, according to someone familiar with the matter.  The Water Management Board set the hearing date at its regular meeting on March 6 in Pierre, South Dakota.  It is not known where the hearing will be held.

There are approximately 290 "parties of record" who could potentially participate in the hearing on the three permit applications. Each of the parties filed a Petition to Intervene or a Petition to Initiate a Contested Case for one or more of the permit applications.

The two water rights permit applications seek approval to pump water from the Inyan Kara and Madison Aquifers to mine uranium by the in-situ leaching process.  An undetermined amount of pumped water would not be returned to these aquifers as a result of evaporation and deep well injection.  The ground water discharge permit application is for disposal of mine wastewater on the ground via multiple center-pivot irrigation systems.

With respect to federal permits, Powertech has been less than transparent with investors concerning two issues that cast doubt on Powertech's schedule for obtaining a Source Material License from the U.S. Nuclear Regulatory Commission.

One is the pending "Subpart L" hearing process.  Pursuant to federal regulations, the Oglala Sioux Tribe and three other parties have intervened in the NRC's licensing process for Dewey-Burdock.  The hearing will be conducted by the NRC's Atomic Safety Licensing Board panel.  The ASLB has already admitted seven legal contentions proferred by the intervenors.  Eighteen new contentions are currently pending, and several more will likely be offered by the intervening parties after the the NRC issues a Final Supplemental Environmental Impact Statement for the project.  The hearing process is expected to extend into 2014, and any final ruling will likely be appealed.

The second obstacle to obtaining an NRC license is the Section 106 process, a federal requirement to identify and mitigate potential impacts to historical properties and sites that have religious and cultural significance to Indian Tribes.

Federal law mandates this process for any federal actions, including licensing decisions by the NRC.  Section 106 consultation with Indian Tribes must be conducted by NRC officials, not by Powertech, since the consultations are considered to be government to government.

In the case of Dewey-Burdock, the Section 106 consultation process has so far been unsuccessful.  After over a year of formal meetings between NRC staffers, consultants, and representatives of several Tribes, virtually no progress has been made.

NRC staffers have managed to alienate the seven Sioux Tribes that have the the closest historical connections to the project area, insulting the Tribes and issuing ultimatums in various official communications.  In late 2012, NRC staff attempted to transfer control of the field survey process to non-Sioux Tribes and North Dakota consulting firm Kadrmas, Lee & Jackson, relegating the Sioux Tribes to a subordinate role.  The maneuver failed when KLJ backed out.

The NRC's machinations drew sharp letters of protest from several Tribes, including a detailed four-page letter from John Yellow Bird Steele, President of the Oglala Sioux Tribe.  The Oglala Sioux President painstakingly explains why NRC staff has not complied with federal laws, regulations, and related court cases.  Addressing the KLJ fiasco, Steele writes "The Oglala Sioux Tribe strongly objects to the use of persons without any expertise in Sioux TCP to identify Sioux TCP."  (Traditional Cultural Property)

The letter concludes on a defiant note:

 "For the above reasons, the Oglala Sioux Tribe will not bow to the October 31, 2012 ultimatum of the NRC that it join in the survey proposal.  The Tribe issues a continuing objection to NRC's conduct of any survey without written agreement from all seven Sioux tribes on the scope of work, including survey methodology, survey area, consideration of direct and indirect effects, costs, use of Sioux experts in identifying TCP, and privacy concerns.  If the Commission fails to stop and consider the many laws which it will break in its haste to meet its self-imposed Project time and cost deadlines, the entire EIS will be inadequate and far more time and money will be needed to correct the problems."

A major point of contention between NRC staff and the Sioux Tribes has been the scope of the field survey to identify properties of religious and cultural significance to the Tribes.  The Tribes have insisted on a field survey of 100% of the "area of potential effects", as seemingly called for by federal regulations.  The Tribes identify this area as the 10,000 acre proposed permit area.  In contrast, NRC staff claimed that a survey need only include the 2,637-acre "area of known disturbance".  This is the area that Powertech and NRC staff have determined may be disturbed during the first phase of the project. 

After having to back down from an ultimatum to the Tribes to complete the field survey in the fall of 2012 in order to meet the agency's licensing schedule, NRC staff is taking a new approach.  In a February 8, 2013 letter, NRC official Kevin Hsueh invites the Tribes to participate in a spring 2013 survey by sending up to three representatives from each Tribe to "examine areas of their choosing" within the proposed Dewey-Burdock license area.  Tribes must respond to the invitation by March 12. 

Hsueh states that Powertech will reimburse Tribal representatives for a portion of their costs, with the condition that the survey activity must be conducted between April 1 and May 1, 2013.  The NRC's offer requires all participating Tribes to submitt written findings to the NRC by June 3, 2013.  It remains to be seen if the Sioux Tribes will consider the NRC's plan, timeline, and cost estimates to be reasonable and workable.  Tribal responses to the proposal have not yet been released by the NRC, even though at least one response letter was delivered to the NRC as early as February 21.

After properties of religious and cultural significance to the Tribes are identified in the survey, NRC staff must consult further with Tribes.  Individual properties must be evaluated for eligibility for listing in the National Register of Historic Places, assessments of adverse effects on the historic properties must be made, any adverse effects must be resolved through avoidance buffers or mitigation measures, and a Memorandum of Agreement must be concluded by the NRC and the consulting Tribes. 

The Section 106 consultation process must be completed before the NRC can issue a Final Supplemental Environmental Impact Statement for the project.  Following issuance of the FSEIS, NRC staff may issue a final Source Material License.  The Subpart L hearing will be conducted by the Atomic Safety and Licensing Board sometime after the issuance of the final license.  A final Source Material License will not become effective until the ASLB rules on the intervenors' contentions and issues a Record of Decision, or ROD.  A Record of Decision is subject to judicial review in federal court.  It is hard to envision a scenario under which Powertech could receive an effective NRC license before 2014.  More likely, the licensing process and any legal challenges will extend into 2015.  

Powertech has avoided discussing both the Subpart L hearing process and the Section 106 process in filings with Canadian securities regulators.  A case in point, Powertech's March 1 Management Discussion and Analysis omits any discussion of these matters.  Powertech will undoubtedly avoid publicizing the October hearing date for its state water permit applications, just as it has been silent on the reasons why it won't obtain a final and effective NRC license by June.