Independence nixes sand mining permit

A sand mining company lost its city of Independence permit to reopen the Guza Mine after it failed to meet a council payment deadline and made an offer to the city the mayor called an insult.

By a three-to-two vote, the council last Tuesday voted to allow a conditional use permit for Parsons Energy Group to lapse this week for the company’s failure to meet the terms of the permit. By a unanimous vote, the council then agreed to immediately revoke the permit for the company’s non-payment of $103,000 in road, legal and engineering work related to the mine project.

Parsons is the third company whose plans for the Guza Mine on River Valley Road never got off the ground. In action that eventually ended in court, the city annexed 1,570 acres in 2014 to accommodate the first prospective mining company, Superior Silica Sand. Superior bowed out during a sand market slump. Cameron Rail then took up the project in 2017 before handing it off to Parsons in 2020.

Cameron Rail recently helped the Guza Mine’s owners retore the mine property, according to Independence city attorney LaVerne Michalak.

Council member Randy Symicek and Jason Ekern voted to extend the permit for the 90 days sought by Parsons. 

“By extending it,” Symicek said, “we extend our chance to get the money.”

Member Deb Masolek responded that the council had given Parson’s a deadline, the date of the Tuesday meeting, and had received nothing.

“I’m reminded of the emperor’s new clothes,” Marsolek said of Parsons’ communications. “They think we’re a bunch of hicks.”

Michalak said Parsons seems to be operating on “a lot of hope and wishful thinking that some day his ship will come in.” 

In correspondence with the city, Parsons initially said he was unaware of the financial arrangement in the permit and subsequently offered an escrow account to cover the $103,000. Escrow accounts are typically used to tie payments to achievement of phases in a project and are not suitable for what’s owed Independence, Michalak said. 

“Setting up an escrow account is offensive,” said Mayor Robert Baecker.

“All along our intentions were to save a project that Cameron Rail was in the process of withdrawing from and create revenue for all stakeholders,” Parsons’ president Rick Parsons wrote to the city just prior to last week’s meeting. “Why we choose to take this on in the declining frac sand market, declining oil and gas prices and the assault on fossil fuels is now being questioned by our team.  PEG truly believes the project still has merit and can be successful as demonstrated by the data submitted to you and council.”

Michalak noted that Parsons is still seeking up to $60 million in investments to develop the sand mine and relying on a contract with a northern Plains tribe as a customer. In response to a question from Ekern about the consequences of revoking the permit, Michalak said the city, as Parsons noted in his email, could have received $775,000 a year in royalties. Parsons could also reapply for a permit, Michalak said.

Marsolek called the annexed land “an albatross” around the city, but Michalak said Independence is getting state road aid about equal to what it’s paying the town of Arcadia for road maintenance and property taxes from the annexed property.

He argued that trying to detach the acreage “is difficult” and pursuing money from Parsons in court would be too costly.

In other action, the council apologized for an assessment mistake for the home of Barb Peterlin. They handed the woman a $2,043 check for a portion of her paid property taxes during the meeting.

 Tuesday session was also the reorganization meeting during which the council approved committee memberships and other official appointments.