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Tribe struggles to digest loss of revenue

December 22, 2005 by  
Filed under Archives

12.22.05 By Bill Donovan, Special to the Times
WINDOW ROCK – The closing the Black Mesa Mine could cost the Navajo
government as much as $13 million in lost royalties and taxes, equal to 10 percent of
the tribe’s annual revenue.

Mark Graham, head of the Navajo Nation’s tax office, said about $5 million
will be lost in taxes every year.

While the tribe taxes the Black Mesa Mine, it doesn’t tax the nearby Kayenta
Mine, also operated by the Peabody Western Coal Co., because it is on Hopi

To make up for the loss in taxes, Grant is recommending that $5.5 million be
diverted from fuel excise tax revenues into the general fund. Normally the
tax revenues pay for road maintenance, which makes the measure controversial
among council delegates.

The tribe stands to lose even more from coal royalties, which generate the
bulk of the nearly $40 million that Peabody says is paid to the tribe by the
Black Mesa Mine each year.

Dominic Beyal, head of the tribe’s Office of Management and Budget, said
tribal programs would be hurt by even an $8 million cut in the budget.
One proposal now under consideration is to increase money to general
operating expenses by reducing money allocated to set-asides. These include the
Permanent Trust Fund, land acquisitions, local governance, capital outlay, water
rights and higher education.

Reducing these would free millions of dollars for general operating expenses
and allow the government to continue funding programs at or near the present

Beyal said his office plans to develop this approach further starting in

(When the government sorts this problem out, tribal officials will almost
certainly have to revisit the problem again in a couple of years because of
plans by the Pittsburg-Midway Co. to close down its mines east of Window Rock,
thus creating another layoff of Navajo miners and millions in cutbacks to
tribal income.)

Peabody has been a decent corporate citizen in complying with Navajo Nation
laws and its permit terms, if you can get past the epic battles over its low
royalty rates.

Graham said Peabody has been a good taxpayer, paying on time.
“We have had some minor disputes,” Graham said, adding that these were
settled amicably.

Peabody has also been good about making royalty payments on time, or at
least there have been no reports of late payments to the accounting office.
But the tribe and company have tangled over the amount of those royalties,
leading to several major lawsuits over the years.

In fact, there have been only a few years in the past 35 since the mine
opened when the tribe did not have a pending lawsuit or two dealing with Peabody.
The Black Mesa Mine also has a reasonably clean record of compliance with
environmental provisions of its permit, and Peabody proudly cites multiple
awards it has won in connection with reclamation work on mined acreage.

The company just won five awards for community and environmental
stewardship, given yearly by the U.S. Interior Department. Two were for its Arizona
mines. It swept the Good Neighbor category, winning a silver medal for its
managed grazing initiative on Black Mesa.

This involves several thousand acres of reclaimed land on which native
grasses have been reestablished. The acreage is made available to Navajo families
who have customary use rights there, and they graze cattle under the company’
s watchful eye.

Peabody spokesperson Beth Sutton said the reclaimed acreage is 20 times more
productive than it was before mining, which may reflect the severity of
overgrazing on the reservation as much as it does the company’s reclamation

Peabody’s Lee Ranch Mine near Grants, N.M., has similar terrain and
elevation. Reclaimed acreage there is twice as productive as when it was a ranch,
according to the company.


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