Federal officials are asking a U.S. District Court judge to shut down the Magnesium Corporation of America's mineral extraction operations at Knolls, Tooele County.
In a civil complaint filed Tuesday, the Bureau of Land Management accused MagCorp of misrepresenting its activities at the Knolls site to avoid making royalty payments to the federal government.Glenn Carpenter, the BLM's Salt Lake field manager, said Mag
Corp's predecessor company, AMAX Magnesium, was issued a federal right-of-way in 1987 to construct and operate a system of evaporative ponds on 54,000 acres of federal mud flats between the Great Salt Lake and the Bonneville Salt Flats.
The company said at the time that the Knolls facility would be used to extract certain state-controlled minerals (brines) as the state pumped water out of the Great Salt Lake to an overflow area during the flood era. The operation was needed to replace the company's pond network that was flooded in 1986.
After the pumping stopped and the west ponds dried up in 1989, the company told the government that there were no brines available at the Knolls site, the suit said.
However, in 1996, a BLM employee discovered that the Knolls facility was still harvesting brines, the suit added.
"The corporation knowingly made the false statements to conceal, avoid or decrease an obligation to pay or transmit money to the United States," the suit said.
According to the suit, MagCorp paid the state $750,000 in mineral royalties that should have been paid to the federal government under an appropriate mineral lease. Such a lease could only be issued through a competitive bid process, Carpenter said.
The court actions seeks $5,000 to $10,000 per false statement made by MagCorp regarding the Knolls operations; treble the lost lease payments, $2.25 million; any money the company received from the sale of federal minerals; and punitive damages.
The government is also asking Judge Tena Campbell to issue an order barring MagCorp from the federal right-of-way. Federal officials said they believe fewer than a dozen MagCorp employees work at the Knolls site.
Carpenter said, "Obviously, a right-of-way granted for water storage is entirely different from a mineral lease used to permit the extraction of publicly owned minerals. They entail different types of authorization and different types and amounts of fees used to compensate the public for the use of its resources."
MagCorp spokesman Lee Brown said the company's lawyers are looking at the lawsuit and will make a decision regarding the defense against the accusations.