From Dust to ... Golf?

Jerry Wiley, outgoing town mayor and volunteer librarian, checks out books the old-fashioned way, by stamping dates onto inside covers.

The library in Clarkdale, a north-central Arizona town of 2,500 cloistered at the base of Mingus Mountain, is a busy place on this springlike afternoon. Middle-aged hippies wait in line to check out classic-film videos; a mother stands patiently with an armful of children's books.

Wiley is familiar with the books lining the stacks, having spent many afternoons here. He is especially familiar with a row of public documents pertaining to Phelps Dodge Corporation's proposed 1,700-unit housing development, Verde Valley Ranch.

For several years, the merits of Verde Valley Ranch have been vigorously debated in Clarkdale.

The reason: The project will be constructed around a golf course created atop four million tons of copper-mining tailings--tailings containing elevated levels of cadmium, copper, lead, mercury, silver and zinc, which can cause serious health problems. Phelps Dodge and the Arizona Department of Environmental Quality have repeatedly asserted that the metals in the tailings will be "contained" by a system of complicated environmental checks and balances that will prevent humans from being exposed to the toxins.

For years, the 116-acre tailings pile in Clarkdale has been an environmental embarrassment to Phelps Dodge. The tailings have already contaminated groundwater with metals and salts; the site has been assessed for possible inclusion on the federal Superfund list.

In 1990, Phelps Dodge was cited for violating the Clean Water Act because tailings-contaminated groundwater had oozed out of the earth, forming acidic "rusty-red" seeps with high concentrations of sulfates and metals. The seeps continuously leaked into the Verde River.

Clarkdale itself has not escaped the scrutiny of federal environmental regulators.

The town had been dumping its treated sewage on the tailings for at least a decade. The effluent had percolated through the tailings and was thought to be one of the primary causes of the contaminated seeps. Clarkdale needed--still needs--anew sewage-treatment plant.

Phelps Dodge offered to pay for the $5 million plant in exchange for Clarkdale's annexation of Verde Valley Ranch property and--perhaps more important--the town's cooperation in the environmental permitting process for the development.

The treatment plant became a hot issue in recent local elections.
Wiley, who was running for reelection to the town council, which selects the mayor, lost. He had supported accepting Phelps Dodge's offer to build the plant; he contends that deal was the town's only reasonable option. Clarkdale's bonding capacity is limited to $2.3 million, too little to build the plant on its own.

But Michael Bluff, who defeated Wiley in the council race, says the town should not rely on Phelps Dodge, but should take control of the plant. Bluff says his family company builds sewage plants and, yes, his family would bid on the facility should Clarkdale reject Phelps Dodge's offer.

The town should build the plant, Bluff says, because of the environmental brouhaha that has enveloped the Verde Valley Ranch proposal.

"This litigation could go on for a long time," he says.
The permitting process has already taken five years.
Six months ago, Clarkdale and Phelps Dodge finally obtained from DEQ the necessary "aquifer-protection permits" required by state law to protect underground water reserves, or aquifers. The permits had to be obtained before the development could go forward.

Nothing's going forward, however.
In fact, the project is indefinitely stalled.
The short-term fate of Verde Valley Ranch hinges on an administrative protest lodged in February by a coalition of the Sierra Club, the Audubon Society and a handful of local citizen-activists that has long opposed the project. The protesters have appealed the two essential aquifer-protection permits. The state Water Quality Appeals Board is expected to rule on the appeals this month.

The environmentalists, who claim the permits are scientifically and legally flawed, say they won't be happy until more tests are conducted to ensure the project won't be an environmental calamity. Should they lose their appeal, they vow, they'll take their fight to Superior Court. The strategy is to buy time, sway public opinion, force the company to negotiate on the infrastructure of the development and to guarantee further environmental studies.

Phelps Dodge, which would not comment for this article, has portrayed the protesters as antidevelopment obstructionists who want to drive the company out of the community by focusing on frivolous issues that have nothing to do with the environment. The company continues to promote Verde Valley Ranch as a fail-safe, "win win" for the environment, Clarkdale and the mining company.

Phelps Dodge and DEQ say the tailings and a reserve of groundwater that has been polluted by the tailings sit in a geological bathtub called the Verde Formation. The bathtub consists of layers of sandstone, siltstone and limestone.

The argument boils down to this: Phelps Dodge and the state contend that with minor technological tweaking, the bathtub will not leak its polluted groundwater into either the drinking-water supply for the town, which lies underneath the bathtub, or the Verde River, which runs right alongside it.

Environmentalists, however, contend the bathtub might very well leak and that there simply have not been enough studies to satisfy them that the Verde Formation will, indeed, protect drinking water from the tailings.

The conflict over the project has taken on technical and legal sophistication, but in Clarkdale it remains a typical environmental catfight.

With extremists on both sides.
One highly visible anti-Verde Valley Ranch proponent, John Bond, fears the tailings will give people epilepsy. Bond, who says he is concerned because he himself has epilepsy, once likened a DEQ official to a Nazi.

The company, for its part, plotted bullylike lobbying to pressure DEQ officials, through the governor and other state officials, to "expedite" the permits.

The extreme behavior on both sides of the dispute clouds the real significance of Verde Valley Ranch.

Arizona is the largest copper-producing state in the country. Hundreds of active and inactive copper mines have produced millions of tons of tailings, many of which carry with them the threat of state or federal environmental enforcement. Verde Valley Ranch is a complicated experiment, carefully designed as a profitable alternative to federal environmental enforcement actions.

If Phelps Dodge wins court challenges and administrative appeals, it may set a precedent. Phelps Dodge and other Arizona copper-mining companies may take similar actions to deal with ugly, potentially health-threatening tailings cast about the state.

In fact, no one can predict with any real certainty how Verde Valley Ranch will turn out.

But that reality hasn't stopped it from becoming the focus of the type of polarized spectacle that Phelps Dodge and environmental regulators hoped the development would prevent or shortcut.

"The biggest problem I see on both sides," Jerry Wiley says, "is that neither side wants to tell the truth. The environmentalists present a worst-case scenario with embellishments, and the other side presents a best-case scenario with embellishments."

Internal documents made public at the appeals board hearing in February reveal just how carefully Phelps Dodge deliberated over Verde Valley Ranch before concluding it was the most practical, cost-effective alternative for dealing with the problematic tailings.

Nowhere in these internal records, however, is there any indication that the company hashed over the possible adverse health effects caused by heavy metals or salts found in the tailings.

In March 1992, a team of Phelps Dodge environmental employees huddled in the 15th-floor conference room of the mining company's downtown Phoenix office building.

The topic of concern: whether to proceed with plans to develop Verde Valley Ranch. Federal environmental regulators were pressuring the mining company to clean up groundwater and the seeps leaking into the river. And state regulators were demanding more environmental data that could stall the project for years.

Nothing seemed to be working out.
Two years before, weeks after the company was cited for violating the Clean Water Act, high-level EPA officials met with Phelps Dodge executives in San Francisco. The EPA had ordered Phelps Dodge and Clarkdale to immediately cease the discharge of sewage onto the tailings. It had demanded intensive monitoring of groundwater for contaminants as well as further studies of the underground geology--prerequisites to cleanup that would make any company nervous.

As an alternate solution to the tailings problem, Phelps Dodge persuaded EPA to accept the Verde Valley Ranch project, which would be supervised by state environmental officials. The company also obtained EPA approval for Clarkdale to continue discharging effluent onto the tailings until Verde Valley Ranch made it through the state permitting process.

The advantages of having DEQ oversee the "politically palatable" Verde Valley Ranch were rehashed at the 1992 internal Phelps Dodge meeting. One of the most attractive advantages--to Phelps Dodge, atleast--was that Verde Valley Ranch allowed Phelps Dodge to escape potentially huge financial liability under state and federal Superfund laws.

And, really, the company couldn't come up with much else that could be done with the tailings.

Relocating or remining the tailings would simply move the problem to another location and could expose workers and residents to unhealthful dust. And moving tailings would subject the company to further environmental cleanup and permitting regulations and costs. (Either option would cost $30 million. In the last quarter of 1995, the company earned $190 million on sales of $1.1 billion.)

Canceling the development part of the project--that is, reneging on the deal to build Clarkdale a sewage-treatment plant, covering the tailings with plastic and attempting some cleanup of polluted groundwater in the area--might be far cheaper in the short run. The estimates run from a high of $6.4million down to $3.6million.

But taking that route would render the company vulnerable to inclusion on state and federal Superfund programs. Superfund programs are famous for dragged-out, costly legal disputes, often generated by the polluters themselves, that for decades stall cleanups and drive up costs.

For Phelps Dodge, Verde Valley Ranch was the only financially promising option. The cost of complying with state environmental regulations was projected to be $7.4million. Although Phelps Dodge has not publicly put a value on Verde Valley Ranch, internal documents reveal that the project itself would generate an 18.5percent internal rate of return.

So the plan to pursue state environmental permits and develop the land seemed the most reasonable.

What Phelps Dodge had no way of knowing in 1992 was how hotly those state environmental permits would be disputed.

Except for the Clarkdale tailings, which are the color and consistency of dry Chinese mustard powder, the site of Verde Valley Ranch, about 110 miles north of Phoenix, is postcard pretty. It is 750 feet from a scenic stretch of the Verde River, where bald eagles nest in trees on the banks. It sits below the hilltop site of the ancient Sinagua dwelling now known as the Tuzigoot National Monument. And it borders Tavasci Marsh and the oxbow-shaped Peck's Lake, both havens for hundreds of migratory birds.

Clarkdale, named after copper baron Bill Clark, who purchased the United Verde Mining Company in the late 1800s, had always been a company town.

Ore from Clark's huge Jerome copper mine was processed in Clarkdale. In the 1930s, Clark sold the mine to Phelps Dodge, which operated the mine until 1953 and continued Bill Clark's lucrative practice of chemically separating copper from ore and dumping the liquid waste slurry right next to the Indian ruin, marsh and lake.

Before he sold the mine, Clark built Peck's Lake by diverting water from the Verde River into an old, abandoned channel it had once flowed through. The purpose of the oxbow lake was to provide a picnic and fishing spot for miners. Near the lake, Clark added a golf course and a bandstand.

Today, the residents of Clarkdale are sharply divided over whether Verde Valley Ranch is a good idea.

Merchants and businesspeople and local retirees, especially, seem to want the project to go forward. Matt Pecharich, an 82-year-old tavern owner, is a native of Jerome. He remembers the liquid tailings in the huge pond. After Phelps Dodge stopped dumping tailings in 1953, the pond eventually evaporated, leaving the tailings pile that has become the town's most controversial landmark.

Pecharich is convinced that if the tailings were dangerous, they would have caused damage when they were in a liquid state and, in his mind, far more potent. But no one ever got sick, he says. The way he sees it, the tailings pose no environmental hazard.

"I'm an optimist," Pecharich says.
Some citizens, however, are pessimists, and they have joined the Audubon Society and the Sierra Club in opposing Verde Valley Ranch.

They are not convinced the project is environmentally sound.
Some suspect that Phelps Dodge will abandon the housing development just as it abandoned the Jerome mine, leaving an environmental disaster in its wake.

Curtis Linder, a Clarkdale resident who works in a mobile-home park, has lived in Clarkdale most of his life. His grandparents were Clarkdale pioneers, and many members of his family worked in the Jerome mine. He remembers that as a child he played at the company golf course, and people fished in Peck's Lake--until a 1985 federal study detected unhealthful levels of heavy metals (the same metals found in the nearby tailings pile) in the fish.

Linder says his family owns the local water company, which would serve Verde Valley Ranch. And he points out it is certainly not in his best financial interest to oppose the development.

Linder is not a particularly articulate man, but his instinct tells him that capping the tailings with plastic and covering them with a golf course is utter folly.

Like many longtime residents of Clarkdale, Linder also has proprietary feelings about Peck's Lake and Tavasci Marsh. He is offended that public access to the area would be partially restricted by private homes if Verde Valley Ranch is built. (The details of public access are still being negotiated by environmentalists and Phelps Dodge.)

Linder has set up an office for activists in his grandmother's house in Clarkdale. It has become headquarters for citizens angered by what they see as Phelps Dodge's continuing control over the town. "Yanking away Peck's Lake from everybody seems like a shameful thing," says Tom Evans, a Clarkdale carpenter. "The only reason Phelps Dodge is here is to make money."

Auduboners are more concerned over wetlands destruction and public access to the wetlands, which the federal government deems public "waters of the United States."

What all the dissidents have in common is a visceral distrust of the mining company.

"Phelps Dodge is dodging their responsibility to remediate," says Sedona resident Kendall Demollicq, of the Verde Valley chapter of the Sierra Club--one of several groups that lodged the administrative protest at the appeals board last month.

The coalition claimed in thehearing that the recently issued DEQ permits are illegal because, among other things, a Clarkdale town representative lied to the state about the town's financial status.

The coalition also contends the state failed to force Phelps Dodge to publicly disclose its environmental enforcement history, even though state law requires such a disclosure.

Phelps Dodge's attorney Bob Boatman claimed at the hearing that the environmentalists were disputing legal fine points that really didn't have much to do with the critical issue--environmental protection. He vigorously defended Verde Valley Ranch as the "Cadillac solution" to a complex set of problems.

"The environment, Phelps Dodge and Clarkdale all come out ahead," he said. "Everybody wins with this plan. ... The appellants misapply the law. They focus onthe trivial and irrelevant. ... And what they are trying to do is set unrealistic and unfeasible standards that no one could meet."

The town fathers of Clarkdale are insulted by what they see as elitist attitudes of outsiders--like the Sierra Club--stirring up local discontent.

"The Sierra Club and Audubon Society seem to have the feeling that people in Clarkdale are not very smart. Therefore, these Sedona-ites have the responsibility to protect us from our folly," says outgoing mayor Wiley, a retired chemical engineer who believes the project is environmentally sound.

"His resentment is unjustified," says Anita MacFarlane, a Sedona Auduboner who has long opposed the project. The river and wildlife, she says, belong to everyone, not just Clarkdale town fathers and Phelps Dodge.

Of course, Wiley is also upset that MacFarlane and others have managed to stall the project, postponing the construction of Phelps Dodge's gift to the town--the $5 million sewage-treatment plant.

For its part, Phelps Dodge is paying for more than just a sewage plant. By having Clarkdale co-apply for the aquifer-protection permits, the company was able to thrust the little town into the forefront of the environmental fray. With Clarkdale taking the lead, the mining company would net "political gain with EPA and State because of Phelps Dodge's willingness to cooperate in solving the problem," a Phelps Dodge internal document says.

And, actually, using Clarkdale fits with the company's historical political strategy of behind-the-scenes lobbying.

For instance, when the permitting process with DEQ seemed to take too long, it was Clarkdale, not Phelps Dodge, that complained. Ed Fox, who was director ofDEQ during most of the five years it tookfor the permits to be issued, recalls hedidn't hear "squat" from Phelps Dodge, but Clarkdale was "upset and unhappy" because the permitting seemed to be taking too long.

In 1993, the Mineral Policy Center, a Washington, D.C.-based environmental-advocacy and clearinghouse group that frequently lobbies against mining activities, concluded that Phelps Dodge, the largest copper producer in the world, was an "environmental laggard" that often used its considerable political influence to pressure local regulatory agencies.

At the time the Washington group issued its report, Phelps Dodge was mulling over how, exactly, to hasten the permitting process for Verde Valley Ranch.

The problem was Ed Pond, the DEQ project manager who eventually issued the two aquifer-protection permits to Clarkdale and Phelps Dodge in 1995.

Upon taking over Verde Valley Ranch permitting from a co-worker in 1991, Pond sent Phelps Dodge a 24-page letter requesting volumes of additional environmental data.

Pond, a middle-aged man who still gathers his hair in a long, scraggly ponytail, is a renegade bureaucrat. There's something about the way he plants his short, heavyset body on the earth that betrays his stubborn nature.

Pond has never been afraid of taking on large mining companies. He was eventually transferred out of the mining unit of DEQ's aquifer-protection-permitting section in 1995 after a different mining company complained that he was difficult to work with and had an "antimine" attitude, accusations he vehemently denied.

Pond did not deny at the hearing that DEQ project managers "get in trouble with management if they agree with the other side that you're being unreasonable. You know, you can be sanctioned within the agency.

"On the outside, you have the industry folks who want to see this [aquifer-protection] law changed or gutted, and they make attempts via the Legislature to change or weaken or gut the law in its entirety."

But he testified that he did not feel pressured by then-DEQ director Ed Fox or Phelps Dodge to hasten the permitting process.

The mining company simply did not know what to do with Ed Pond.
Internally, Phelps Dodge weighed the idea of using Governor Fife Symington to pressure Fox to "expedite" the permits.

The plan may have been aborted. Symington's office did not return repeated phone calls, but Ed Fox does not recall Symington ever bringing up the project.

Fox recalls that Dave Kimball, a Phelps Dodge attorney, once approached him about the matter. This, recalls Fox, was not unusual. Kimball, a registered lobbyist, kept a presence at DEQ.

Kimball later wrote the director, expressing appreciation for Fox's "willingness to personally look into" the Clarkdale permits, which had to be processed in a "timely" fashion.

Phelps Dodge also considered meeting with Fox, his staff and an unnamed "state official." However, an internal document says, under such a scheme, DEQ staffers working on the permit might "react negatively because of director's involvement prior to normal review."

Fox says he never intervened in the Verde Valley Ranch permitting because he trusted that Pond was doing a good job.

Phelps Dodge seemed to sense it would be foolish to further press Fox to hurry up the permitting. To do so might cause "political sabotage and embarrassment," because the application, as Pond had pointed out, was incomplete. An internal Phelps Dodge memo itself says the application was "deficient and not defensible due to lack of pertinent hydrological and geological information."

On the advice of his DEQ attorney, Pond would not comment.
But he testified at the hearing that he felt "indirect political pressure" not from Fox, or the governor, but from Senator John McCain, who took an unusual interest in the Verde Valley Ranch project. What Pond didn't know was that a Phelps Dodge employee political action committee had contributed generously to McCain's campaign fund.

McCain did not respond to phone calls seeking comment for this article.

Ed Pond did take his time.
He did not approve the permits until September 1995, some four years after he had taken over the case.

One permit, authorizing the new sewage-treatment facility, went to Clarkdale. The second permit, jointly issued to Clarkdale and Phelps Dodge, dealt with "closure" of the tailings, essentially approving Verde Valley Ranch.

The permits call for what amounts to hydrologic tweaking to "contain" the tailings and the polluted groundwater that is seeping into the Verde River.

They essentially write off the uppermost, polluted aquifer, sealing it into the bathtub, the Verde Formation, right along with the tailings.

The theory is that a deeper aquifer, which supplies residents with drinking water, is "hydrologically isolated" from the upper polluted aquifer and the tailings above it.

To keep the shallow, dirty aquifer from seeping into the Verde River, DEQ will require Phelps Dodge to "de-water" or pump the shallow aquifer near the river.

It will also demand that an impermeable slurry wall be built between Peck's Lake, which has also been polluted by the tailings, and the river.

The tailings pile itself will be capped by giant plastic sheets. Drains will be constructed atop the plastic. Three feet of soil will cover the drains. The golf course and natural vegetation will be planted on the soil.

The greens for the golf course, according to the permits, will be watered by Clarkdale's sewage effluent.

Any water that reaches the bottom of the soil is to be collected by the drains and transported to a plastic-lined pond on Verde Valley Ranch. That pond also will contain Clarkdale's effluent and the water that's been pumped from the uppermost aquifer.

All of this will go back on the golf course.
Water from the river and the deeper drinking-water aquifer are to be carefully monitored to see if further pollution occurs.

It's a technically creative solution.
But environmentalists raised important questions about that solution at the hearing.

They contend that five years of study still have not sufficiently defined the "bathtub" that is supposed to separate the tailings and the polluted aquifer from the rest of the environment.

For instance, a monitoring well drilled by Phelps Dodge two years ago into the lower, drinking-water aquifer was recently found tocontain the same contaminants as the tailings.

This means one of two things, environmentalists say.
Either the lower drinking-water aquifer has become polluted, or DEQ and Phelps Dodge for two years misunderstood the geology of the "bathtub" in this particular area.

There is another possibility. The well's casings could have been poorly constructed, permitting dirty water to leak through the well into the lower groundwater reserve.

Pond, however, is convinced the golf-course plan is sound. He testified that the Verde Valley Ranch permits were based on solid technical data.

That was what he concentrated on, he said. Technology.
But Pond admitted that he made one mistake.
A big mistake.

He issued the permit that would make Verde Valley Ranch possible to the wrong company.

He granted the permit to Phelps Dodge Corporation, instead of to the original applicant, Phelps Dodge Development Corporation. He said he did this because "it's preferable to have the parent company on the hook" should compliance or financial issues arise.

But by having its subsidiary as the original applicant, Phelps Dodge avoided disclosing a complete five-year history of environmental-enforcement actions taken against the company. The law is unclear as to whether the actions would pertain to sites across the country or across the world.

Because Phelps Dodge never applied for a permit, it skirted these potentially embarrassing disclosures.

"Is there anywhere in either of those applications where Phelps Dodge's history of state-federal enforcement actions on environmental laws is set forth?" attorney Jeff Bouma asked Pond at the hearing.

"No," Pond answered.
Is that required in the rules? Bouma asked.
"Yes," Pond replied.

"Did you get all of the information required by statute out of these people?" Bouma asked again.

"Apparently, I did not," Pond answered.
Later, Bouma asked Pond if the rules allowed him to "issue a permit to a corporation that has not filed [for] one."

"I am not aware of any rule," Pond answered.
"So you admit that you don't have any jurisdiction to [grant a permit] to a company that hasn't filed for one?"

"I don't know," Pond answered.
Bouma, who is not charging the environmentalists for his time, could barely conceal his pleasure at the answers.

"The undisputed evidence," he told the hearing officer, is that Phelps Dodge never filed for the permit it received.

Bouma says he figures the environmentalists have only "about a 5percent chance" of winning their case at the Water Quality Appeals Board hearing.

The real test, Bouma says, will come when he takes the case to Superior Court.

If he loses that battle, he says, the environmentalists will fight in federal court over federal environmental issues.

None of this, he insists, is simple obstructionism. Or a move to force the site onto the state or federal Superfund list, which may well happen if Verde Valley Ranch isn't built.

"In the short term, yeah, this might work," says Bouma. "For the first ten, or 15, or 20 years it might work really well. But our concern is that by the time it starts to fail, it is going to have a subdivision around it.

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Terry Greene