Neither the Bureau of Reclamation nor any other federal agency has authority over how water from the Colorado River system is used. But the bureau did have two concerns about the project—that endangered fish in the Green River be protected and that the water rights of Utah's residents would supersede the water rights of the nuclear facility. Both those concerns have been satisfied, and the bureau hasn't taken an official position on the project.

However, Wayne Pullan, a deputy manager for the bureau's Utah office, said new demands on the water must be carefully considered.

"Regardless of what the public thinks about the generating facility, the public needs to think about the water footprint of this plant," Pullan said. "Whether the public is in favor of this plant or not, the public must ask if the use of water for this purpose is the most beneficial use of the water."

Among those monitoring the project is Brad Udall, director of the National Oceanic and Atmospheric Administration Western Water Assessment Earth Research laboratory at the University of Colorado in Boulder.

In the scheme of things, Udall says withdrawing another 53,000 acre feet of water from the Colorado may not seem like a big deal. But he said every new use must be carefully considered because the river is taxed almost to its limit. Climate change is taking a toll, too. Research done by Udall’s laboratory shows it could cut the river's flow by 20 percent in the next 40 years.

"This is a very fragile balance," Udall said. "If there isn't a shift in priorities for the river, the demands on the river will become far greater than the available supply."

Water Rights: Counties to Reap Windfall

The 1,700-acre site for the Blue Castle facility is five miles northwest of Green River city. Almost 4.4 million acre-feet of water flow by the town every year, but to tap into it Blue Castle had to secure the appropriate water rights, a commodity hoarded like gold in the West.

The company found two local water districts, one in San Juan County and the other in Kane County, which had water rights to the Colorado River system but weren't using their full allotment. Both districts say they won't need the water for decades and will reap a financial windfall—$800,00 for San Juan County and $1 million for Kane County annually—by selling the water instead of letting it flow down the river.

The executive director of the Kane County district was Mike Noel, who served with Tilton in the Utah legislature. When Tilton was vice-chair of the legislature's Public Utilities and Technology Committee, Noel was the chair.

Once the water rights were secure, Blue Castle turned to Jones, the state engineer, for permission to use the water for the nuclear plant.

Under Utah law, applications for water rights must be approved if the applicant can demonstrate that a number of requirements have been met, including securing a water source and demonstrating that existing water rights won't be impaired and that the project is financially feasible.

After Jones approved Blue Castle's application in January, the project's opponents filed an appeal. Jones rejected the appeal in March.

"That amount of water is not a lot on the Green River," Jones said in a prepared statement released at the time of his decision. But he also acknowledged that the Blue Castle water is "a significant portion of the water Utah has left to develop on the Colorado River and a significant new diversion from the Green River."

The project's opponents filed a lawsuit in Utah district court on March 27, asking that Jones's decision be overturned. They are attacking the project on a number of fronts, including its financial stability, its harmful impact on the river, the detrimental effect on current water users and the river’s diminishing capacity.

"The state engineer had an obligation take a close look at the withdrawal of so much water for such a risky plan," said Sarah Fields with Moab-based Uranium Watch, one of the plaintiffs. "He didn't do it."

Tilton is confident the lawsuit will fail. He said his critics "are simply wrong and have no credibility."

Project Stuck in a Financial Mire

Money, not water, may be Blue Castle's Achilles' heel.

In June 2010, the company issued a news release announcing that LeadDog Capital, a New York-based hedge fund, was a major financial backer and had pledged up to $30 million toward the project in exchange for stock options.

But five months later, the Securities and Exchange Commission charged LeadDog with scamming investors, and Blue Castle distanced itself from the hedge fund.

Blue Castle now maintains it never received any backing or funding from LeadDog and says the company had merely expressed an interest in the nuclear project, like a number of other potential investors. Tilton wouldn't release the names of its current roster of investors but said they are all viable financial partners.

But Matt Pacenza, policy director for HEAL Utah, a group that opposes nuclear power and favors clean energy and is one of the plaintiffs in the lawsuit, doesn't think Blue Castle has the financial wherewithal to pull it off.

A review of the NRC's website shows that the pending requests for plant construction come from billion-dollar utilities, including the Tennessee Valley Authority, Detroit Edison Company and Duke Energy.