What's $80,000 to a frac sand mine?

For some people, it's a house. For others, it's a car... or two. Or maybe student loan debt. For some frac sand mines, it's a few hours, if that.

Last month Alpine Sand, operating near Arcadia, in Trempealeau County, was fined $80,000 for violating storm water regulations. Their facility was originally cited by the DNR in October 2012 for mismanaging storm water. Then sand and sediment washed into a tributary of Newcomb Valley Creek on multiple occasions in 2013.

What does $80,000 mean to a frac sand mine?

According to the Wall Street Journal, in April the going rate for frac sand was $56 per ton (not including transportation or handling costs). We know that Alpine Sand is permitted to haul 180 loads a day from this particular mine. If we assume that one truckload typically carries about 20 tons (a figure I have heard for other operations), then we might estimate that Alpine Sand moves about 3,600 tons per day.

That means they move about $201,600 worth of sand, daily. If they operate every day, that's $1,411,200 per week. Eighty grand doesn't seem to represent a very big dent in their revenue stream.

What does such a modest fine mean for frac sand mining in general? Well, the Wall Street Journal recently boasted about a Texas-based investment firm striking it rich with Wisconsin frac sand, scoring gains of $1.4 billion on a $91 million investment. Read that again. $1.4 billion. Billion.

I wonder if an $80,000 fine will really encourage these out-of-state billionaires to take environmental standards seriously?

How frac sand gains local political support: Notes from Trempealeau County

Since the early days of the frac sand boom, many observers have been troubled by the close connections that the industry sometimes cultivates with local town and county officials. These connections underscore how the mining industry relies on both economic and political influence to achieve its goals. In some cases, the relationship between a public official and a private industry would appear to represent a conflict of interest, such as when a town supervisor or a supervisor's family members get into the frac sand business by leasing their land. In other cases, the connections are subtle and indirect, but still effective, such as when deeply rooted allegiances between old friends or distant family member are activated in support of a specific proposal. Whether overt or subtle, the entanglement of political and economic interests creates a decision-making climate that facilitates growth of the frac-sand industry. How does the mining industry secure the support of local elected officials and public employees? How do they cultivate a decision-making climate in which local officials sometimes feel they have no choice but to accommodate the interests of a controversial industry?

Questions in Trempealeau County, WI

Trempealeau County recently passed a one year moratorium on the permitting of new sand mining operations in order to study the industry's health impacts. Over the past few years, the county has permitted at least 26 frac sand operations, including mines, processing plants, and rail transload facilities, representing the largest concentration of permitted frac sand operations in Wisconsin.

Several factors account for the rapid growth of the industry in Trempealeau County, including regional geology and access to coveted transportation infrastructure such as rail lines. But another key factor appears to be a local political environment that accommodates and advances the interests of frac sand mining. Frac sand interests have been able to influence local politics through at least three channels: outspoken industry advocates on key committees, elected officials who enjoy financial ties to mining, and hiring local experts away from government positions.

Does annexation subvert local controls over frac sand mining?

As community involvement in the expansion of frac sand mining has become more organized and influential, it appears that industry has embraced annexation as a tactic to advance controversial frac sand projects.

Annexation law in Wisconsin allows cities and villages to increase their size through acquisition of contiguous land, a process often initiated at the request of landowners. Cities and villages sometimes view annexation as an economic development strategy that creates an increased tax base. Once a city or village annexes land, it is required to extend public services to its newly expanded jurisdiction.

Some frac sand operations have recently benefited from annexation, pursued to achieve a "friendlier" regulatory environment or to circumvent local opposition to controversial projects. Whether by intention or not, this tactic appears to subvert local democratic control over the decision-making process involving a contentious and rapidly-expanding industry.

Use of Annexation to Force Industry-friendly Regulations

In Trempealeau County, the frac sand industry has used annexation to secure a more lenient regulatory environment. As Tony Kennedy reports, for example, Trempealeau County issued an operating permit in 2011 for a mine in Preston Township opened by Winn Bay Sands LP of Saskatchewan. The permit limited hours of operation to weekdays, required air monitoring, and mandated periodic inspections of nearby homes. But in January 2012 the mine was sold for $200 million to Pennsylvania-based Preferred Sands. Founded by Michael O'Neill, a former Philadelphia banker and real estate executive, Preferred Sands then sought to have the property annexed to the City of Blair, a small municipality surrounded by Preston Township.

New forms of wealth and division

As part of their periodic series called "Frac Sand Fever," the Star Tribune recently reported about community divisions stemming from frac sand development in western Wisconsin.

In a piece titled "Sand Mining Creates Wealth and Friction" (Dec. 2, 2012), reporter Curt Brown tells the story of Lou Ellen and Jim Frei, a couple in their late 60s who have lived in Blair, WI, in Trempealeau County, for 40 years, and who sold their dairy farm to a frac sand company in 2010 for half a million dollars. Here are some of the financial figures cited in the story:

• Winn Bay Sand Co. paid the couple, along with three neighbors, $3850 per acre (for their 143 acres). They retained 10 years of rights to continue farming, logging, and hunting. 
• Preferred Sands bought an 80 acre parcel in 2010 for $250,000 (or $3,125 an acre).
• Brown reports on rumors of people receiving $10,000 an acre; he writes that the Texas oil and gas company Windsor Permian "has offered more than $15,000 an acre for a possible mining site near Red Wing."

From my perspective, it's interesting to examine how people try to make sense of the rapid social and economic changes associated with frac sand mining. Using a popular culture reference, one neighbor described the influx of frac sand wealth as a rural "rags to riches" story, and subtly frames the hills of rural Wisconsin as a nuisance: 

• "It's like the Beverly Hillbillies: Who would have thought these hills we've been tipping our tractors over on all these years would become such a hot commodity?" - Lorna Tenneson