Firm May Pay $2 Million for Cleanup of Site Feds Say Costs $23 Million

Energy Future Holdings, Texas' largest power company, would pay the federal government up to $2 million to help clean up long-abandoned uranium mines in northwest New Mexico, under a settlement filed late Tuesday.

And under the agreement, the U.S. Department of Justice would drop its objection to the company’s plan to emerge from one of the biggest bankruptcies in American history.

Energy Future would pay far less than the $23 million the justice department originally sought on behalf of the Environmental Protection Agency for cleaning up the toxic legacy of four uranium mines in New Mexico’s McKinley County. The sites, active during the 1970s and 1980s, left local land and water highly radioactive, according to court filings.

Two companies that no longer exist produced thousands of tons of uranium ore at the mines: Texas Utilities Fuel Company (later named TXU Fuel Company) and Chaco Energy Company, TXU's New Mexico subsidiary. Both companies were Energy Future properties when they dissolved last decade, shifting their liabilities to the conglomerate, according to the justice department’s initial objection to the company’s reorganization plan.    

Energy Future agreed to pay federal regulators $2 million if a Delaware bankruptcy judge approves its latest reorganization plan. It would pay just $1 million if the judge signs off on an alternative plan to resolve the bankruptcy. 

The company initially asked the court to dismiss the EPA's claim, arguing that it does not own the land in New Mexico, which became polluted long before its Chapter 11 bankruptcy began. 

The company is admitting no liability under the settlement, which, if approved in court, would also be subject to public comment. The agreement would not prevent the EPA from going after any other party it deems responsible for the pollution. 

Tom "Smitty" Smith, director of the liberal watchdog group Public Citizen, called the proposed settlement figures too low and a "slap in the face." 

"It’s likely to be another unfunded liability of the federal government to clean up,” he said. 

Energy Future spokesman Allan Koenig said the company had no comment beyond the filing.

Wyn Hornbuckle, a spokesman for the Department of Justice, also declined to comment.  

Environmental regulators have documented scattered waste piles at the sites and high readings of radioactivity. Water samples at nearby livestock wells showed uranium levels as high as four times the federal limit, according to court filings.

Those familiar with uranium mines say even the original federal estimate of $23 million for cleanup costs appeared surprisingly low.

Some homes are within 3 miles of the four sites, which represent a fraction of the hundreds of discarded uranium mines across New Mexico, Arizona and Utah that have poisoned thousands of people in Navajo communities for years, leading to abnormally high rates of cancer and birth defects.

So much uranium waste still litters the region, experts say, because mining companies have so often changed hands — or simply shut down — after unearthing tons of the metal, requiring intense corporate forensic work to hold anyone accountable.

Energy Future kicked off hearings on its latest reorganization plan in November, in what could be the final leg of proceedings that have stretched more than 19 months. 

Disclosure: Energy Future Holdings was a corporate sponsor of the Tribune in 2012. A complete list of Texas Tribune donors and sponsors can be viewed here.