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Envirocare facing cutbacks

President's memo blames newly approved state tax

Envirocare is facing employment cutbacks because of a new state tax on low-level radioactive waste, the company's president says in an internal memo.

In the March 1 memo obtained by the Deseret News, Envirocare President Charles Judd says the tax, the result of a negotiated compromise between his firm and legislators, will slash his company's profits and cut yet-to-be filled jobs at the company.

When contacted by telephone Saturday, Judd said he doesn't expect any current employees to lose their jobs, although he said the company will re-evaluate the situation in the future.

Judd also thanked the many Envirocare employees who doggedly lobbied against House Bill 370 — a factor that he said saved the company from massive layoffs.

The Legislature approved the tax on Wednesday, the last day of the 2001 session. The measure is awaiting Gov. Mike Leavitt's signature.

The bill levies a tax of 5 percent to 12 percent on disposal contracts, depending on the type of low-level radioactive waste the Tooele County-based dump accepts. It also affects International Uranium Corp., which has a uranium-processing mill in San Juan County.

In the wake of the new tax, and because of its possible implications, Tooele County Commissioner Dennis Rockwell is furious

with state lawmakers. "They have turned their backs on Tooele County and are trying to rub us off the face of Utah," he told the Deseret News.

As a direct result of the new tax, Judd wrote in the memo, "we will now need to cut back on our numbers here at Envirocare. As of today, there are 266 positions at Envirocare with 28 open positions. For the time being, we will take our cutbacks in the open positions and not in laying off current employees."

Neither Judd nor lawmakers knew exactly how much revenue would be generated by the tax, since it only affects new contracts and not those already held by Envirocare.

However, the bill's sponsor, Rep. Jeff Alexander, R-Orem, has said the tax was primarily intended to make a statement, not to make money for the state.

"What we are really trying to do is send a message: If people want to dump their waste in Utah, they should pay a fee," Alexander said in a previous interview.

Envirocare executives hammered out an agreement with Alexander and other legislators in the last week of the session. Alexander's original bill, which called for a set tax per cubic foot and per curie, the standard measure of radioactivity, would have netted $34 million in state taxes. Early estimates suggest that the amended bill may generate as much as $3 million for the general fund. The bill also calls for a $200,000 flat annual fee. The state would use that money to manage the facility should Envirocare fold.

The memo credited the bill's changes to lobbying by Envirocare employees.

"We would like to say to you that your involvement directly influenced the decision made on this bill and that we were able to receive a more reasonable tax rate because of your efforts," Judd wrote.

While he is glad the tax is not higher, Rockwell is still angry because of the impacts any cutbacks could have on Tooele County. Envirocare pays the county between $3.5 million and $4 million in mitigation fees, which goes to support county police, road construction and other necessities.

The county commissioner said the tax would make it hard for Envirocare to compete with other radioactive-waste dumps, which will bring down profits and lower the mitigation fees.

"And if they have layoffs or close down it will devastate Tooele," Rockwell said.

Envirocare contracts with Broken Arrow Construction, which has a work force of 200, for its equipment needs. Rockwell worries that if Envirocare folds, Broken Arrow and even some county jobs will go with it.

"The Legislature is trying to take Envirocare out of business and possibly run it themselves," he said.

House Majority Leader Kevin Garn, R-Layton, disagrees and says the tax is overdue.

He said Envirocare handles 97 percent of the nation's low-level nuclear waste, and lawmakers set a tax that is lower than that placed on Envirocare's competitors. Garn doubts the tax hurts Envirocare's profitability and would force it to lay off employees.

"I think the tax we imposed is fair. The fact of the matter is the state should have imposed this tax a long time ago," he said. "I am convinced that we did not impose an excessive tax."

Leavitt has not decided whether he will sign HB370, according to his spokeswoman Vickie Varela.

"We have not had any detailed discussions about it," she said.

Whether Leavitt signs the bill or not, Envirocare promises to continue lobbying the Legislature, not only to lower the tax, but also to allow the company to accept higher levels of radioactive waste.

Envirocare now stores low-level Class A waste, which is mostly contaminated soil. Company executives want to accept Class B and C wastes that are thousands of times more radioactive. The new set of taxes only apply to Class A storage.


Contributing: Brady Snyder