Lawsuits, questions, accusations embroil biomass plant | VailDaily.com

Lawsuits, questions, accusations embroil biomass plant

The Gypsum biomass plant, seen here on Sunday, has been closed since a fire started on an exterior conveyor belt on Dec. 13, 2014. Eagle Valley Clean Energy, the facility’s owner and operator, is now facing accusations and a lawsuit and has filed a countersuit against the company that built the plant.
Townsend Bessent | Townsend@vaildaily.com |

GYPSUM — It was 4:20 a.m. Saturday, Dec. 13, 2014, and David Graham was adjusting the water flow to the cooling towers at the biomass plant in Gypsum. He thought he saw flames reflected in the windshield of a silver Dodge Ram pickup truck. When he turned, he saw he was right.

The conveyor belt that delivers huge piles of wood chips that the plant burns to generate electricity had caught fire. As Graham and Ron Evans were calling 911, they scrambled as fast as they could to shut everything down.

Gypsum Fire Chief Justin Kirkland sent an “all hands on deck” message, and firefighters from all over the region rushed to the scene.

They arrived to find that the fire hydrants, owned by biomass plant owner and operator Eagle Valley Clean Energy, were delivering only 15 percent of the water they were supposed to — 350 gallons per minute instead of the 2,250 gallons per minute the 12-inch pipes were designed to carry.

The hydrant’s valves had been deliberately closed to a trickle, an investigation found.

It was almost midday Saturday before firefighters had the fire completely out. Crews had to run water lines from the American Gypsum wallboard manufacturing plant next door to get enough water.

Between tanker trucks and the lines from the factory next door, fire crews managed to contain the blaze to that exterior conveyor belt, keeping it away from the massive piles of wood chips the plant burns.

Operating without a certificate of occupancy

The biomass plant had been operating for less than a year without a certificate of occupancy from Gypsum or a temporary certificate of occupancy. Eagle Valley Clean Energy was testing the plant, but the tests somehow morphed into full-time operation, said Gypsum town officials.

That ended when the conveyor belt caught fire, causing about $200,000 in damage, according to the incident reports.

The $56 million plant has been idle since that fire, 11 months ago. The rubber conveyor belt is being replaced with a metal configuration.

Eagle Valley Clean Energy attorney Sarah Baker says it’s expected to reopen by the end of the year.

However, the town of Gypsum does not necessarily share that opinion, especially since the plant still doesn’t have a certificate of occupancy. In letters to Eagle Valley Clean Energy, the town’s lawyers say the company has not yet met all the terms of its agreement with Gypsum.

“Should the situation arise, we will have to analyze all the facts surrounding what has been done and what is left and make a determination at that time with advice from legal counsel,” Jeff Shroll, Gypsum town manager, said in a written statement.

Lawsuits and loans

The United States Department of Agriculture’s Rural Utilities Service awarded Eagle Valley Clean Energy a $40 million Electric Program federal loan guarantee to fund a woody biomass project. The loan was approved on Sept. 27, 2012, as part of the American Recovery and Reinvestment Act, said Jay Fletcher, communications manager for the USDA’s Rural Development Service.

Wellons Inc., an Oregon company, built the plant.

Wellons is accusing insiders with Provo, Utah-based Eagle Valley Clean Energy of pocketing $18.5 million in federal tax credit subsidies, calling it “fraudulent transfers” and “civil conspiracy.” In its lawsuit, Wellons said the $18.5 million went to “insider” parties and alleges that Eagle Valley Clean Energy was trying to hide the money.

Baker said the $18 million grant and the construction dispute are not connected.

“Eagle Valley Clean Energy has exercised its contractual rights to withhold a portion of the $40-plus million contract price until the plant is fixed right,” she said.

Eagle Valley Clean Energy returned fire with a $19.3 million countersuit, claiming Wellons’ construction work was so shoddy that it caused the conveyor belt fire.

Baker said it’s a construction contract dispute and that her client is withholding the last of the $40 million construction budget until Wellons lives up to its end of the deal.

Wellons filed mechanics liens against the biomass plant, citing non-payment.

Both sides say they want a jury trial.

Categorically denied

“Eagle Valley Clean Energy categorically denies all of the claims and looks forward to defending itself in court,” Baker said in a written statement. “This is a simple contract dispute. Wellons was fully responsible for designing and constructing the plant, and Eagle Valley Clean Energy has exercised its contractual rights to withhold payment until the plant is fixed right, including the design defects that it believes led to the fire in December last year.”

Wellons’ attorney, Stephen Leatham, based in Vancouver, Washington, has not returned repeated phone calls and emails asking for comment. Leatham said he does “not have authority from Wellons to provide any comment.”

Ken Kinsley, of Wellons, has also not returned repeated requests for comment.

Hydrant questions

Gypsum town officials say they want some answers, as well.

A few days after that conveyor belt fire, inspectors from the town of Gypsum found that the biomass plant’s fire hydrants valves had been closed down to 15 percent of their capacity. The town’s investigation also found that gravel had collected in the nozzles.

“This means the system was never flushed correctly, contrary to the documentation provided,” the investigation said.

By the time firefighters arrived, the fire had traveled up the conveyor belt toward the top of the silo, said Kirkland.

When crews arrived at 4:25 a.m., that day — four minutes after they got the call — flames were 100 feet in the air, with fire also at the base of the conveyor belt, the incident report said.

It took until 2:28 p.m. to put the fire out completely.

“When we have enough resources and equipment, things go well. When we don’t, it never does,” Kirkland said. “Common sense would tell you that there would have been less damage, but it’s impossible to qualify how much less.”

$56 million

Construction of the $56 million plant wound down in December 2013.

When it’s operating, the Gypsum biomass plant burns wood chips from beetle-kill trees harvested from the White River National Forest. It’s supposed to generate 11.5 megawatts of power per hour — enough to power 10,000 homes. Holy Cross Energy buys some of that power, as part of the utility’s goal to generate 30 percent of its electric power from renewable sources by 2030.

West Range Reclamation won the bid to supply wood chips to the biomass plant.

Cody Neff and his Hotchkiss-based company agreed to pay the U.S. Forest Service $8.66 million to pull beetle-killed trees and other hazardous fuel out of 1,000 acres per year for 10 years. West Range trucked the material to the biomass plant in Gypsum.

The company, which was founded in 2001 by Neff, went bankrupt this summer and was liquidated on Aug. 24.

Staff Writer Randy Wyrick can be reached at 970-748-2935 or rwyrick@vaildaily.com.




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