In 1980, the Brafford family of Edgemont learned their house, or the land around it, was probably giving them cancer.
That’s what they claimed in a lawsuit against Susquehanna Corporation, the Chicago company that ran Edgemont’s uranium industry.
Before the Braffords moved in, someone used sand-like radioactive tailings from the mill owned by Susquehanna’s subsidiary, Mines Development, as fill material around the home’s foundation. The tailings gave off potentially cancer-causing radiation far in excess of regulatory limits.
Susquehanna tried to get the Braffords’ lawsuit tossed out. When that didn’t work, the giant holding company paid the family to drop it.
That was 1984. The same year, the author of a Life magazine story on Edgemont claimed the amount of the settlement was “believed to be in excess of a quarter of a million dollars.”
Andrew Reid, who was a member of the Braffords’ legal team and was quoted in the Life story, remembers the reaction of the Susquehanna lawyers.
“They were yelling bloody murder on that one,” said Reid, of Colorado, in a recent interview with the Journal. “They were afraid everybody in Edgemont was going to sue them.”
So, two months after the Life article was published, Susquehanna Corp. dragged the parties back before a judge who granted a petition to put a confidential seal on the settlement agreement.
The flood of additional litigation feared by the company never materialized. By the time another Edgemont family, the Bollwerks, sued Susquehanna in the early 1990s, claiming the company concealed information about the health risks associated with working in the mill, the corporation had divested itself of the subsidiaries that owned the mill and associated mines. Thus, a judge ruled, Susquehanna could not be held liable and the lawsuit was thrown out.
Few other legal challenges to Susquehanna were ever mounted, which meant the Brafford settlement was perhaps the only time that the holding company was held accountable for the radioactive waste, abandoned mines and human health risks it dumped on Edgemont after nearly 20 years of dominating the town’s uranium industry, and taking big profits from the minerals in the land and the people who dug them up.
“They stole from the town and the people, in my mind,” Reid said.
The boom peaks
Susquehanna, then based in Chicago, entered the uranium business with its construction of the Edgemont mill in 1956. Business was apparently good, because the holding company and its subsidiaries quickly expanded their mining interests to include other uranium holdings in the West.
By 1961, the corporation reported total annual revenues of $26.1 million, which would be $210 million today after adjustments for inflation.
That same year, as the people of Edgemont organized a Uranium Day celebration to mark the mill’s fifth anniversary, the facility was operating seven days a week with 76 employees and an annual payroll of $338,000. The mill had purchased and processed 650,000 tons of ore in those first five years.
But as early as 1957, just one year after the Edgemont mill was constructed, there were signs that the uranium boom would be short-lived.
Twenty-one uranium mills had sprung up throughout the West, including in Edgemont, as entrepreneurs scrambled to take advantage of guaranteed government prices. The nation was stockpiling material for its Cold War nuclear arsenal, and uranium was a basic ingredient.
Those 21 mills were annually producing an estimated 14,000 tons of yellowcake — the powdery end-product of uranium milling — by the end of 1958. That was enough to supply the U.S. Atomic Energy Commission with all the uranium it needed for 10 years, the agency reported.
With so much yellowcake streaming in, the Atomic Energy Commission in 1958 ended its guarantee to buy all the uranium produced in the United States, but said it would honor existing contracts through 1966.
J. Patrick Lannan, the wealthy financier and chairman of Susquehanna Corp., had made his fortune by knowing when to move in and out of companies and stocks. In 1962, with the uranium industry’s future on shaky ground, he was apparently plotting his profitable exit from Susquehanna.
In November that year, Lannan announced a shakeup in Susquehanna’s corporate leadership. Reports in the Chicago Tribune briefly mentioned that Allen Gray, the young former college instructor who’d brought the Edgemont mill deal to Lannan six years earlier, “resigned."
In 1965, an up-and-coming tycoon named Herbert Korholz offered to pay three key Susquehanna board members, including Lannan, $3.25 per share more than their stock was worth in exchange for their resignation from the board and their replacement by Korholz and his handpicked board members. The Susquehanna men took the deal.
In all, 430,000 shares changed hands at a total price of $6.45 million, which was about $1.45 million more than the shares were actually worth.
That and other moves by Korholz and Lannan enraged some of Susquehanna’s shareholders and incited years of infighting and litigation.
Meanwhile, “Lannan, the old manipulator, exited from Susquehanna laughing,” wrote James Boyd, author of a chapter on Korholz for the 1972 book “In the Name of Profit.”
The PASCO Fiasco
According to Boyd, Korholz’s acquisition of Susquehanna was one of a dizzying array of ever-bigger deals he made following his release from a federal prison camp in 1960. He’d been sent there after unlawfully giving money to a Teamster chief during an earlier business venture.
After the Susquehanna deal, Korholz went on a merger-and-acquisition spree and shifted Susquehanna’s corporate headquarters from Chicago to Alexandria, Va. His formula: acquire companies with big losses; merge them into bigger companies that could use the losses to cut their tax liabilities; then repeat the cycle while extracting personal profits along the way.
Korholz’s upward spiral of deals eventually grew “clumsy by megalomania.” That was the description by Boyd, whose chapter on Korholz for “In the Name of Profit” climaxed with Korholz’s 1968 mergers of both Pan American Sulfur and American Smelting and Refining into Susquehanna — a $2 billion deal that was believed to be one of the largest corporate transactions in history.
It also turned out to be one of the worst deals of all time, immortalized as the “PASCO Fiasco” for the acronym of Pan American Sulfur Co.
By early 1971, 18 months after the deal, PASCO’s stock had plummeted by $60 million in value and was threatening to bankrupt its new parent, Susquehanna Corp., the once-great behemoth built largely on the construction of the Edgemont uranium mill. At the same time, the U.S. Securities and Exchange Commission was investigating Susquehanna for securities violations committed during the PASCO deal.
To raise cash and pay the PASCO debt, Korholz began selling off Susquehanna subsidiaries. One of those subsidiaries, Mines Development Inc., closed its Edgemont mill in 1972.
In 1974, Mines Development sold the mill and associated mineral rights for $6 million to the Tennessee Valley Authority, which needed uranium for its planned expansion of nuclear generating capacity.
In 1975, Susquehanna Corp. sold its subsidiary Susquehanna-Western, which had operated uranium mines near Edgemont, to Solution Engineering Inc. for $9.76 million. Both Susquehanna-Western and Mines Development were legally dissolved by 1978.
Edgemont residents were left to gaze at the vacant mill campus and the 50-foot-tall pile of sand-like radioactive mill tailings that sat beside it.
Susquehanna Corp., meanwhile, limped through numerous changes to its leadership and holdings and grew successful again by the 1980s. It was eventually absorbed by a French company that legally dissolved it in 1994.
None of those developments fazed J. Patrick Lannan, the Chicago tycoon who jumped into the uranium business by funding the Edgemont mill’s construction and then got out six years later. He died in 1983 and left a $100 million estate. Some of the money went to his foundation, which in 1986 began injecting $5 million annually into the contemporary art scene in Los Angeles.
That same year, more than 1,200 miles away from the glitz and glamour of L.A., and with none of Lannan’s money, a massive project was undertaken in Edgemont to bury the 4 million tons of radioactive waste produced by the mill Lannan financed back in 1956.
Environmental storm gathers
Even if Susquehanna Corp. had never fallen on hard times, another development might have doomed the Edgemont mill. That was the environmental movement of the 1960s and 1970s and its accompanying concern for the effects of uranium mining and milling.
In late 1970, then-President Richard Nixon signed an executive order establishing the Environmental Protection Agency.
In 1971, the U.S. Atomic Energy Commission ended its uranium-buying program. With the nuclear power industry still in its infancy, uranium ore millers who'd grown rich on government contracts were left with few outlets for their yellowcake.
In 1978, Congress passed and then-President Jimmy Carter signed the Uranium Mill Tailings Radiation Control Act, which directed the U.S. Department of Energy to stabilize, dispose of and control uranium mill tailings and other contaminated material at uranium mill sites. Later that year, the U.S. Nuclear Regulatory Commission ordered the Tennessee Valley Authority to plan the decommissioning of the long-dormant Edgemont uranium mill.
Then came the symbolic death knell for the uranium and nuclear-power industries: the March 28, 1979, partial meltdown at a nuclear reactor on Three Mile Island in Pennsylvania. It was the worst accident in U.S. commercial nuclear power plant history, and although Susquehanna Corp. shared its name with the Susquehanna River in which Three Mile Island is located, the corporation had no involvement in the disaster.
Clarence Anderson worked in the Edgemont mill for many years and managed its decommissioning for TVA in the mid-1980s. After the Three Mile Island disaster, he recalls, “the scare went out.”
“Nuclear is just something that scares the hell out of us now,” he said.
The great hope of a nuclear-powered future that sprang from the optimism of the 1950s was dead, and a big part of Edgemont died with it. The TVA, which had purchased the Edgemont mill and mining rights, never reopened the Edgemont plant or conducted any mining in the Edgemont area. Today, Edgemont has an estimated 742 residents, a roughly 60 percent decline from the uranium-fueled glory days of 1960.
A dam for radioactive waste
In 1978, the federal government ordered the TVA, a federally owned corporation, to plan for decommissioning of the dormant mill. It would be an enormous job.
Four million tons of yellowish, ultra-fine, sand-like radioactive “tailings” — a waste product of the milling process — were still on the ground beside the mill where they’d been piling up alongside Cottonwood Creek since 1956. The hulking pile was some 40 or 50 feet high.
The tailings were ignored for many years, but in the 1970s and 1980s, concern grew about their emission of radioactive, cancer-causing radon gas and the possible human ingestion of windblown tailings. A 1976 study by the South Dakota Department of Health found an increase in cancer deaths in Fall River County, which includes Edgemont, and also found cancer rates were higher in Fall River County than the rest of the state.
The decommissioning of the Edgemont mill commenced and finished during the 1980s. All of the mill buildings, equipment and sand tailings were hauled a couple of miles south of town where they were dumped in a sprawling, clay-compacted dry basin and covered with nine feet of fill, clay and soil.
Clarence Anderson, the Edgemont man who oversaw the decommissioning, said the basin resembled the Pactola Reservoir in the Black Hills, right down to the dam-like impoundment designed to prevent a leak of the radioactive material.
Around the same time, some Edgemont homes were condemned and others underwent excavations around their perimeters after it was determined that radioactive mill tailings were used as fill at 60 locations around town. Apparently, locals had skimmed the tailings off the mill’s huge pile and used them like fill dirt.
The federal government funded the effort to remove the tailings from around Edgemont. A U.S. General Accounting Office report to Congress said the effort cost $13.4 million in figures adjusted to 1995 dollars, which was the year the report was issued.
The TVA paid for the decommissioning and burying of all the Edgemont mill buildings, equipment and 4 million tons of radioactive waste. The Journal could find no accounting of the cost of that effort, and multiple inquiries to the TVA produced no response. Clarence Anderson, the Edgemont man who managed the decommissioning for TVA, said he recalls a cost of about $40 million.
Since then, a U.S. Department of Energy program created to reimburse uranium-processing licensees for massive cleanups had paid $15.41 million to the TVA by 2010, according to a report issued that year.
No costs associated with the cleanup were paid by Susquehanna Corp. or its subsidiary Mines Development, which operated the mill for 16 years, sold 6 million pounds of yellowcake to the federal government for an estimated $54 million, and produced every ounce of the 4 million tons of radioactive tailings that eventually had to be buried by others.
And the story doesn’t end there. The Edgemont area to this day is afflicted with abandoned open-pit mines, including at least one formerly owned by a Susquehanna subsidiary, which the Environmental Protection Agency is testing for potential pollution of local waterways. After all its profits, and after deciding to get out of Edgemont before the uranium market tanked, Susquehanna Corp. left the entire responsibility and cost for cleaning up to the federal government, and American taxpayers.
Coming tomorrow on Page A1, Part 4: “Scars upon the Land,” as the story leaps to the present, the EPA collides with Edgemont-area ranchers over attempts to study the environmental fallout of abandoned open-pit uranium mines.