Troubled oil, gas waste facility asks court for bankruptcy protection
Black Mountain Recycling is seeking federal bankruptcy protection, casting deeper into doubt the future of the De Beque-area oil and gas waste-disposal business, which is caught in a tug of war between its former and current owners.
Denver-based attorney Guy Humphries filed for Chapter 11 bankruptcy on behalf of the business last month, the first step in a process that could take months or years to resolve. Businesses usually file for Chapter 11 when they need to restructure the debts they have and reorganize their finances so they can remain open.
Papers filed in U.S. Bankruptcy Court in Denver list Black Mountain Recycling assets of a little more than $615,000 against more than $2.4 million in liabilities. The majority of the liabilities relate to debts owed to the prior owners of the business when it was operated as Black Mountain Disposal.
The company filed for bankruptcy about two weeks after Mesa County District Judge David Bottger granted receivership to John Watt Jr., a consultant to the facility’s former owners, Elaine Wells and Jeff Pratt. Black Mountain Disposal sued Black Mountain Recycling, alleging owner Jeff Been failed to pay nearly $1.5 million in promissory notes.
Black Mountain Recycling’s entrance into bankruptcy court, however, at least temporarily throws a wrench into Wells’ and Pratt’s efforts to reacquire the business. Federal bankruptcy laws provide for an automatic stay on any action against a debtor upon the filing of a bankruptcy petition.
In a report to Bottger, Watt alleged that Been has “severely interfered” with the operation of the receivership.
“The bankruptcy filing is just another action taken by the Defendant to severely interfere with the Receiver’s discharge of his duties,” Watt wrote.
Watt added he has placed the receivership in a “stand-down” position and asked for guidance from the judge. Bottger has yet to reply.
In the midst of the bankruptcy filing and the legal battle with its former owners, Black Mountain Recycling filed an application with Mesa County seeking to amend its conditional-use permit. It’s allowed to use only one of five evaporation ponds and wants to line the other four evaporation ponds and add a sixth pond. That hearing is tentatively scheduled for Dec. 20, according to county spokeswoman Jessica Peterson.
The facility that is used for disposal of wastewater from oil and gas companies has been under state and county scrutiny for years.
County commissioners suspended its conditional-use permit and certificate of designation and closed the 45-acre site south of De Beque in 2008 after Black Mountain Disposal failed to report and clean up a 2001 spill and accepted more waste than its permit allowed. Been bought the business from Pratt and Wells in 2009.
Commissioners Craig Meis and Janet Rowland last year agreed to allow Black Mountain Recycling to reopen on a limited basis, a decision that contradicted a recommendation from the Colorado Attorney General’s Office that the facility remain closed. State officials had argued the business was in violation of a state solid-waste-compliance order and questioned whether Been had the financial resources to account for and clean up the 2001 spill.
A state lawsuit against both Black Mountain Disposal and Black Mountain Recycling was settled earlier this year, with Black Mountain Recycling paying a $53,000 penalty.
Watt inspected the facility in August and alleged in a report that Black Mountain Recycling inappropriately was spraying production water onto neighboring private property. He also claimed production water was leaking from air-quality-monitoring equipment and percolating into the groundwater.
Been denied there was any new contamination at the business.