Interim Watch: Uranium Industry Makes Big Pitch to Resume NM Mining Operations

By Charlotte Chinana

As state officials look for ways to stimulate New Mexico’s economy and create more jobs, supporters of efforts to restart uranium mining operations in the state were handed a stage to make their pitch to legislators at this week’s meeting of the Economic and Rural Development Interim Committee in Grants.

And according to a panel devoted to the subject, prospects for the industry couldn’t be rosier as their key following talking points did attest:

  • New Mexico’s uranium reserves are among the richest in the nation – 2nd only to Wyoming;
  • The nuclear energy industry’s safety record is the “Best of any industry in the history of the world;” and
  • “The future is fairly optimistic for uranium (mining) in New Mexico”

New Mexico’s uranium rich reserves

According to the industry speakers, New Mexico has one of the richest uranium deposits in the United States, which “creates a lucrative opportunity to resume mining operations,” projected to “create thousands of jobs.”

“The world demand for uranium would double if the proposed nuclear reactors are built,” said Barbara Brazil, Deputy Secretary of the state’s Economic Development Department. According to estimates from the International Atomic Energy Agency, there are currently 440 operational reactors in the world – 104 of which are located across the United States.

“The U.S. consumes 20% of the world’s energy,” added John Bemis, Secretary-designee of the Energy, Minerals, and Natural Resources Department. “This is the world as we know it today…everybody needs to remember that we need uranium to fuel those nuclear plants.”

Not addressed in any detail were a couple of none too rosy “economic opportunity caveats”:

  • Industry estimates that the state’s uranium reserves will be worth approximately $31 billion dollars are based on economic assumptions that the price per pound of uranium would hold steady at $90 to $100 per pound over a 30 year period. However, a more likely scenario is that the price will fluctuate.  The laws of supply and demand can be a pesky critters. For example, in 2000 the price per pound of uranium was $6 – and as of July 25 of this year, the uranium price per pound was $51.50.
  • Metal mining in the state doesn’t have the best track record in terms of economic stability. According to a 2008 report prepared for the New Mexico Environmental Law Center, the state has been through many copper mining boom and bust cycles, as well as one previous uranium boom and bust cycle (circa 1948 – early 1980s).

Also, another hardly insignificant issue touched on with regard to NM’s uranium reserves was the potential jurisdictional issues that can arise. Some of “the state’s” uranium deposits are located on Indigenous lands.

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The Water Authority’s Debt Question

By Walker Boyd

Ticky-Tacky by sarahgoldsmith on Flickr

In early 2009, the authoritative ratings agency Moody’s assigned an ‘Aa2’ rating to the Albuquerque Bernalillo County Water Authority (ABCWUA). This is good news for the Authority: the high rating ensures low interest rates on any bonds they might issue.

And they have been issued: If the ABCWUA is a house, then it is mortgaged to the hilt: the Authority has about $2000 in debt for each one of its customers.

It is strange to read about the Water Authority from the perspective of national or international bond investors. Instead of water availability, Colorado River flows above El Vado, or average customer use, Moody’s analysts were more concerned about “customer growth” and the effect that slowing construction of new residences might have on the Authority’s short-term growth.

This dovetails with another favorite past-time of financial analysts, real estate speculation. Because tax increases are so unpalatable to Americans, city governments are often hamstrung by their own success. Low taxes attract businesses (for example Intel), but higher taxes to pay for deferred costs like water use and street improvements are politically unpalatable. Speculators can thus count on friendly city managers, willing to do anything to attract business to their own city in order to attract “jobs”. But how does a city with a complete inability to raise taxes or utility rates continue to provide essential services?

Until recently, the solution has been Gross receipts: So long as Albuquerque continues to grow at a healthy pace, property sales and construction give the state a steady flow of income.

Any city manager is thus faced with a unique problem: how do you keep up with increased demands for government services (like better water treatment) without raising taxes? Until now, the solution has been to grow, and when growth has been anemic, issue bonds. Hence the concern with growth that the Moody’s analysts linked above express. Anything less than 2% growth means that Albuquerque becomes a debt basket case in record time.

There is nothing inherently wrong with bonds; the ability to efficiently distribute wealth has been a hallmark of Western society’s growth since the 16th century. Conservative historians argue that the Italian invention of double-entry book keeping and other European innovations in finance and accounting are responsible for the Western world’s higher quality of life. When growth is desirable, bonds can help a city or a country build necessary infrastructure, which they pay for later with a larger, more productive population.

But in a city like Albuquerque which has already seen its fair share of development, bond issues can take on a pernicious role, encouraging growth for its own sake rather than Albuquerque’s general well-being.

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a fiefdom west of Edith

By Walker Boyd

MRGCD Sign by teofilo on Flickr.

In high school (and, I suppose, today) I always had a certain contrarian streak: I enjoyed being the devil’s advocate, both because it garnered bemused attention from the cute girls who, because of smarts or neuroses, still paid attention in ‘modern European history’, even after we’d all gotten into colleges or been hired by electricians (this being the final semester of our senior year). One day, I remember staking out the position that only people who paid taxes should be allowed to vote in America. This gave rise to a lot of bemused arguments in the class; many were horrified that the idea would even come up; no one seemed to have an adequate retort.

But if a system of voting where only taxpayers or property owners were allowed to vote sounds feudal, almost medieval, that’s because it is. But you don’t have to consult your old history coursebooks in order to find such systems and discover how they operated. Albuquerqueans (or ‘Burqueños’ if you will) already have just such a system in their own backyard: the Middle Rio Grande Conservancy District. Responsible the distribution of surface water for agriculture and recreation between Cochiti reservoir and Socorro, the district is more powerful than you might think. It assesses property owners within the boundaries of its flood control constructions for its own operation.

Only people who own property on the ‘flood plains’ of the Rio Grande are assessed, and at first glance it seems rightfully so that they should be the only ones who are allowed to vote in its elections.

But only those who own property in the conservation district are actually allowed to vote. Last week, elections for the MRGCD’s board took place, with a grand total of 3,842 ballots cast. It’s difficult to estimate the total population of people living within the district’s lines, but one would think that an area encompassing the entirety of the Rio Grande from the Cochiti Dam to the San Acacia Diversion near Socorro (4 counties with a total population of 888,560) would have slightly higher voter turnout.

But okay, if this is really just about farmers getting their pre-existing water rights and urban populations having nice, pleasant ditches to run next to before they head downtown for work, then the issue wouldn’t be so important.

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company towns in good company

By Walker Boyd

Rio Rancho real estate map

Rio Rancho, New Mexico’s third-largest city has been an easy target for environmentalists and critics of development-oriented growth. It relies completely upon the aquifer for its water supply; its municipal government is small (it didn’t incorporate until 1981) and arguably beholden to the interests of corporations like HP and Intel who have moved to Rio Rancho to take advantage of property tax abatement and other government-provided incentives.

But if ahistorical (and unchecked) growth is Rio Rancho’s signature, then  it is really a reflection of the same growth that Albuquerque has undergone. The City of Albuquerque’s population in 1980 was only 3/5 of what it is today.

Rio Rancho and Albuquerque’s stupendous growth underlies many problems they face going into the 21st century.

The other day I was poking around Zimmerman library’s scant collection of books and theses about Rio Rancho. A 1998 thesis by Patricia Pollock argued that “AMREP [American Real Estate and Petroleum, Rio Rancho’s developer]’s sole motive in purchasing land in New Mexico was to tap into the profit potential of land speculation.

Likewise, the growing residential market enhanced the investment potential for individual owners.” Another 1994 article talks about how Rio Rancho is a new template  for 21st-century company towns; in this light Rio Rancho is McDonald, Ohio, and Intel is this century’s Carnegie Steel.

But these arguments cast Rio Rancho as anomalous; despite isolated fears about groundwater and air pollution in Corrales, Intel’s presence has been generally well-received. Despite some frustrations about lost tax revenue, it’s hard to imagine anyone in Albuquerque or Rio Rancho city halls complaining about Intel and the overall boast it has supplied to the regional economy.

And when compared to SunCal, Eclipse Aviation, and any number of other failed developments, Intel comes across as both a model and an exemplar of successful development.

As Clearly New Mexico pointed out, the most recent SunCal bid for TIDD tax-breaks didn’t fail because of organized opposition to the development of the West Mesa, but because their proposal was transparently untenable; politicians know that tax breaks are only worth it so long as gross receipts tax from the actual construction of houses makes up for their losses.

We weren’t so lucky with Eclipse Aviation, but like other failed developments, Eclipse failed not because it was a bad idea but because it was in the wrong place at the wrong time: demand for private jets fell because of the recession, and beleaguered Albuquerque tax payers were no longer willing to subsidize their construction for non-existent customers.

Questions about water and the environment take the back seat to development and growth in cities like Albuquerque. But what if development is permanently stalled, and subsistence, let alone sustainability, becomes a priority?

Here, critics of growth for growth’s sake have more ground to stand on. A critical view of Intel and Rio Rancho yields a different insight on growth. The United States has enshrined freedom of trade in its Constitution, and as long as the status quo prevents New Mexico from assuming a more regional, self-sustaining outlook, national and international trends will determine the arc of development.

But critical uneasiness is well-founded. So long as our economy grew at a rapid pace, projects like the Hoover and Imperial Dams made sense to satisfy a growing population. But as population growth stagnates and housing prices fall, the wisdom of planning for more growth appears more circumspect.

India and China, two economies that are still rapidly growing, can afford audacious projects to mitigate the effects of drought. But the wisdom of such autocratic, growth-at-all-costs government, authoritarian by nature and with annual growth rates as the only clause in the social contract doesn’t fit New Mexico very well.

a drought for the record books, or a drought for the ages?

By Walker Boyd

The Santa Fe New Mexican reported today that

Albuquerque and Roswell are on pace for their driest years on record, mirroring conditions across New Mexico that have bolstered large wildfires, hurt crops and forced ranchers to sell livestock they can’t afford to feed.

Rain has been scarce throughout most of New Mexico, and weather records from Albuquerque and Roswell offer this stark example: The cities have not been this dry during the first five months of a year since 1892, when the state began keeping track.

With wildfires raging all over New Mexico (Emanuele, the mayordomo from last week’s post, sent me an e-mail saying that a fire just over the hill from his house is threatening the valley), it seems all the more important to New Mexicans that we find out whether we are in for a brutal and prolonged drought or whether this is something merely temporary and cyclical. Well, the answer (as with most things), really depends on your perspective. According to the New Mexican article, an University of Arizona study that concludes droughts like this are part of 50-year cycles.

But what if we look on the long run? Clearly friend Elaine Hebard sent along the following graph, which is based on tree-ring analysis conducted by Henri Grissino-Mayer:

The Law of the Ditch

What are the politics of water? It is an element that fundamentally defines New Mexican notions of ‘the common good’. How does the law, political debate, the economy, and the historical elements of New Mexico’s diverse population influence the debate and its outcomes? This is the second part of an ongoing investigation into politics of water in New Mexico.

Llano de la Yegua lies just northeast of Peñasco in Taos county. Emanuele Corso has the distinction of being the only non-Hispanic Mayordomo in the Llano. “My predecessor was letting one guy take more water than he deserved; the guy slipped him a six pack or whatever every so often as a bribe. People got frustrated enough with the situation they decided to take radical action. When the guy found that the neighbors had appointed me, he was aghast. ‘You appointed a gabacho?’, he asked everyone. ‘He’s not a gabacho, they said. He’s a Sicilian. And that’s why we elected him!'” Emanuele breaks into an easy laugh. His walk is a little unsteady, but he still hops over the little acequia running across his five-acre plot with the energy of experience.

Water was the first law in New Mexico.

The first code of laws recognized by the United States in the new territory of New Mexico, known as the ‘Kearny Code’, left the existing Mexican and Spanish regulations in place: “The laws heretofore in force concerning water courses…shall continue in force except so much of said laws as require the ayuntamientos of the different villages to regulate these subjects, which duties and powers are transferred to and enjoined upon alcaldes and prefects of the several counties.”

Emanuele takes me up to the top of the valley, where the Santa Barbera river spills through into the meadows below. The acequia madre that feeds from the Santa Barbera is divided into three venas. “The uppermost vena which diverts water to my land is called mano Rocindo”, he says, after the Mayordomo who made it about 120 years ago. “Since we’re the highest up on the river, we have to make sure we’re responsible with our use.” He shows me a large, welded gate that diverted water towards his property. “It goes over two miles, and they picked a spot in the river that’s just the perfect amount higher than the upper-most farm. I wish I knew how they did it.” Emanuele looks concerned over the debris. “We really need to call the mayordomo and get him to clean up this stuff, it’s his job…” He seems undecided whether or not to throw his walking stick on the bank and wade in himself to pick out the branches and leaves that have become caught in the gate.

the main head-gate for the acequia madre


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At the river’s bend: water and the future of urban New Mexico

By Walker Boyd

What are the politics of water? It is an element that fundamentally defines New Mexican notions of ‘the common good’. How does the law, political debate, the economy, and the historical elements of New Mexico’s diverse population influence the debate and its outcomes? This is the first part of an ongoing investigation into politics of water in New Mexico.

I lived on a farm for 6 months in Jaipur, a city in Rajasthan, just off India’s famous Thar desert. The family that owned the farm had built a clothing mill on their property in the 1960’s. Their mill used water drawn from wells beneath the farm to wash dye off the clothing during the manufacturing process. When I arrived, Only two of the farm’s nine wells were drawing water, and with the summer yet to come, the choice was clear: either the mill stops running, or the plants are no longer watered.

Across the road, a government official had an estate. If you walked to the northern edge of the farm, you could peer into his yard. There was a fountain, and some of the peacocks from the farm had already made their way on to the man’s estate. Sprinklers watered an expansive lawn and polo ground.

In 1919, the San Mateo Land Company purchased most of the old Alameda land grant for 19 cents an acre after a court ordered its sale to pay for taxes the community owed the state. In 1948, SMLC sold the 55,000 acres (fully half the size of modern-day Albuquerque) to the land-speculation company Brownfield & Koontz. The same acreage was sold again in 1959 for $10 million to AMREP, otherwise known as Rio Rancho Estates. AMREP sold half- and one-acre tracts of land to retirees and small-time investors, ultimately collecting about $200 million dollars from the sale of nearly 77,000 lots while retaining ownership of 25% of the land for future development.

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