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MacDonald joins call to derail Black Mesa plan

November 26, 2008 by  
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By Bill Donovan
Special to the Times

WINDOW ROCK, Nov. 26, 2008

T he time has come for Peabody Coal Co. to leave Navajo land and let other companies mine and market the coal reserves it has controlled for close to 50 years, a former tribal leader said Tuesday.

“The best thing that the Navajo Nation could do is to get rid of Peabody,” said former Chairman Peter MacDonald Sr.

He made the comment when asked for his opinion on an environmental impact statement concerning Peabody’s plans for Black Mesa, where it has over 65,000 acres under lease.

The U.S. Office of Surface Mining is in the process of finalizing the study, and is proposing to endorse the plan that Peabody wants.

Last week Hopi Tribal Chairman Ben Nuvamsa said the plan OSM is poised to approve would shut out the Hopis from decisions governing their share of Black Mesa coal reserves for years to come.

President Joe Shirley Jr.’s office referred a request for comment on the Black Mesa plan to the tribe’s minerals department, where officials said there is nothing that can be done about Peabody’s leases.

The proposal under consideration would allow Peabody to combine the unmined acreage of its Black Mesa Mine, closed since December 2005, with its active lease, the Kayenta Mine. That would allow Peabody to maintain control of millions of dollars worth of Navajo coal despite having no plan to mine it, no way to get the coal off the mesa, and no customer to buy it.

The Kayenta Mine lease is good until 2026, but Peabody has been seeking to convert the lease term to an undefined “life of mine” – meaning until all the recoverable coal is removed – and to add the Black Mesa acreage to it.

The Black Mesa Mine has been idle since the Mohave Generating Station, its sole customer, closed with no plans to reopen. Peabody had banked heavily on Mohave eventually prevailing over concerns about its pollution, and had no alternative buyer for the Black Mesa Mine output when Mohave’s owners finally called it quits.

The Kayenta Mine supplies the Navajo Generating Station near Page, and provides 100 percent of the coal needed there.

Mineral leases on federal lands, on which the Black Mesa leases are modeled, can be extended indefinitely but in order to do so, the company must demonstrate continued development and production is taking place. Otherwise, the leases lapse, as Peabody itself noted in a 2003 filing with the federal Securities & Exchange Commission.

Peabody’s position is that the Black Mesa Mine is still an active lease.

John Stucker, an engineer for the tribe’s Minerals Department, said that while Peabody has no immediate plans to reopen the Black Mesa Mine, it has not given up the hope of finding a buyer and is still trying to find one.

But MacDonald contends that it is not in the best interest of the Navajo Nation to approve anything that would further Peabody’s interests on the reservation.

Referring to Peabody as the “BIA of mining companies,” MacDonald said Peabody has taken advantage of the tribe time and time again and was able to get away with it because the original lease agreement, signed in the 1960s, was negotiated by the BIA.

The lease came under heavy criticism during the early years of the MacDonald administration for the low royalty rates accepted by the BIA, which MacDonald famously compared to the price of a can of Coke for each ton of Navajo coal that Peabody removed.

MacDonald and his general counsel at that time, George Vlassis, were able to get a better rate – 12.5 percent of the sales price – under a lease provision that allowed royalties to be renegotiated every 10 years.

But years later the tribe learned that even then Peabody took unfair advantage, exerting influence with then Interior Secretary Donald Hodel to suppress information that supported an even higher royalty rate.

The tribe eventually sued the U.S. Interior Department and the company, claiming that Peabody owes an extra $600 million in lost royalties and the feds betrayed their trust obligation to represent the tribe’s interests.

Those cases have been up and down in the federal court system for years. This fall the U.S. Supreme Court said it will review a recent appellate court ruling that the tribe’s claim against Interior should be heard, which had revived the Navajos’ hopes for reclaiming lost royalties.

OSM plans to issue its record of decision by Dec. 8, but MacDonald contends that the Navajo Nation should take the position that the lands leased by Peabody should be returned to the tribe so the tribe would have the option of developing the coal reserves itself or assigning them to another coal operator.

“There are several companies that would be interested in those lands,” MacDonald said.

Allowing the Black Mesa acreage to be folded into the other mine’s permit is not a good idea, he said, and only allows Peabody to continue victimizing the tribe.

He pointed to this as a case for the need to change and to stop expecting that doing the same things the same way will produce different results.

“Getting rid of Peabody will be a change for the better for the Navajo people,” MacDonald said.

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