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A sandstorm of Wisconsin lawsuits (08/27/2014)
By Chris Rogers
Frac sand companies and local governments in Trempealeau County, Wis., are mustering their lawyers. There has been a growing trend of cities annexing rural frac sand mines in the county. With a September court date for a $20 million legal challenge approaching, representatives for Iowa-based AllEnergy gave the Trempealeau County Board a final ultimatum on Monday: approve our mine-to-rail site or see us in court. The board declined to take action on AllEnergy's settlement offer and is not scheduled to meet again until after the September 5 deadline for the settlement expires. The board could still call a special meeting to accept the offer, but Supervisor Jon Schultz whose district includes the proposed site said the vote in closed session to table the offer can be understood as tacit denial.

After AllEnergy's proposal to construct a frac sand mining, processing, and rail loading facility in Arcadia Township was rejected by the Trempealeau County Environmental & Land Use Committee in 2013, AllEnergy filed a lawsuit against the county, arguing that the county's rationale for denying the project was baseless. Meanwhile, the firm began courting the city of Arcadia with an annexation proposal that would extend city limits and city zoning authority to approve the facility to the proposed site.

AllEnergy's suit claims over $20 million in damages for lost business because of the denial, but the company will drop the suit and pay the county, local schools, and other organizations up to $700,000 in annual royalties if Trempealeau County approves the project, according to company officials. "If they will issue our permit and a variance that's needed with the permit for the silos, we'll drop all our future claims. Otherwise we're set to go to a hearing," said AllEnergy CEO Dean Sukowatey. Sukowatey said if Trempealeau County spurns the offer, but the city of Arcadia approves the annexation deal, he will not drop the suit against the county. He added, "We're trying to be good stewards of the community; unfortunately I'm afraid that Trempealeau County taxpayers haven't been informed."

"The county insurance [attorney] tells us that they have absolutely no basis [for the suit]; it's really just a threat, a bluff, a pretext," said Supervisor Tim Zeglin in an interview.

"I think it's a bully tactic," agreed Supervisor Douglas Winters. Taxpayers need not fear, he said. A $20 million suit sounds scary, but citizens should read between the lines, he added.

Former Supervisor Tom Bice, who was part of a minority of land use committee members who supported the AllEnergy proposal, said the county was mistaken to deny the project in the first place. "This was the best mining application that Trempealeau County has ever had," he said. He added, "It was denied because the committee was taken over by people who just don't like sand mining."

Bice, who has been a vocal supporter of sand mining, was defeated by Schultz, who has opposed the AllEnergy project, in the spring 2014 election.

Meanwhile, Sukowatey is hopeful that the Arcadia City Council will take formal action on the annexation proposal by the end of the month. AllEnergy gave a presentation on the project to city leaders and citizens in April but, according to AllEnergy and City Council President Joe Feltes, the firm has had difficulty in receiving mayoral approval to come before the City Council to make a formal petition for annexation. Feltes said that some aldermen intend to force the issue of whether or not to add the AllEnergy proposal to a future agenda at the council's next meeting.

AllEnergy is also offering up to $1 million in annual contributions to the city and to local organizations. The firm dropped an earlier offer to construct a senior living center, citing public opposition. Some citizens questioned whether AllEnergy could successfully operate a nursing home where past facilities have failed.

Townships push back after Independence annexation

Last Tuesday, the Independence City Council voted 4-2 to annex the Guza mine, an existing frac sand mine that Texas-based Superior Silica Sands proposed expanding. Now two townships affected by the annexation the towns of Lincoln and Burnside are challenging the city's move, turning to state officials for an official opinion on whether the annexation, which extends across three townships, is legal. Seeking an opinion is a prerequisite for suing the city to stop the annexation.

"My hope is that we'll get a strong review and that we'll litigate it and we'll prevail, because I'm not really happy with all this annexation," explained Lincoln Town Board Chair Jack Speerstra. The Superior Silica Sands annexation comes shortly after annexations by Whitehall and Independence to accommodate the Hi Crush mine.

Speerstra noted the trend of Trempealeau County cities to extend the city limits with narrow strips of new city land extending far into the township, then encircling a large mine site, what some are calling "string and balloon" annexation. He said that cities are throwing cooperative growth agreements out the window, and that city officials are approving mines far from the city proper. Meanwhile, township residents have to live next door to the mine, he continued. "They're mining out here in the townships, so [the cities] are imposing their ordinance and what [the cities] are willing to give the mining people in the ordinance, and we feel that's wrong; that's not a representative form of government," Speerstra stated.

Independence Mayor Robert Baecker was not immediately available for comment.

"The reason these companies are going for annexation is because the county has so many rules and regulations," Bice commented. It would be better for the county if it were more accommodating of frac sand companies because when land is annexed, the counties do not have any say in how the land is used, he stated.

Schultz noted that the county has approved many mines.

The Trempealeau County Board also ended a one-year moratorium on new frac sand sites. New county mine permits may be considered September 1. "When the moratorium is lifted, I think we're going to see permits come through the county again," Schultz said. "It's going to get interesting again." 


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