Council still mulling Peabody royalty agreement

The Navajo Nation Council will meet today, April 1, at 10 a.m. to discuss amendments to the leasing agreement between the tribe and Peabody Western Coal Co. for the Black Mesa mine complex.

The amendments provide for a reopener to negotiate increases in the coal royalty rates and the royalty tax caps for each successive 10-year period.

The coal royalty rates are 12.5 percent - the minimum established by Congress in 1977 under the Mineral Leasing Act - and 6.25 percent during the term of the leasing agreement, according to the resolution.

The royalty tax caps are 20.4 percent and 14.25 percent during the term of the agreement.

Under the agreement, Peabody will make a one-time bonus payment of $1.55 million for both leases within 30 days of approval of the agreement by the U.S. Interior secretary. Peabody will also pay the Navajo Nation $3.5 million each calendar year until 2017 in which the Navajo Generating Station in Page purchases coal extracted from Black Mesa.

Delegates George Arthur (Nenahnezad/San Juan/T'iistsoh Sikaad) and Phil Harrison Jr. (Cove/Red Valley) are sponsoring the legislation.

The council tabled the resolution twice, during special sessions Nov. 12 and Dec. 22, pending further review.

At the Nov. 12 special session, Delegate David Shondee (Chilchinbeto/Kayenta) sponsored the tabling motion based on issues surrounding the agreement and concerns raised by residents of Navajo Mountain and Black Mesa. Delegate Jonathan Nez (Shonto) made the tabling motion at the Dec. 22 meeting, citing issues brought up by area residents and alleged racial discrimination at the mine.

The council is tentatively set to make a decision on the lease agreement during its spring session later this month.

Also on the work session agenda is a presentation by the Northern Arizona Food Bank. Today's work session is part of a two-day session that started Wednesday.

In other coal-related news, the U.S. Environmental Protection Agency has extended the public comment period for Peabody's water discharge permit on Black Mesa. The new deadline is April 30.

The extension was requested by people who have already submitted comments, said Dave Smith, water permits manager in the EPA's San Francisco office.

In December, the EPA withdrew Peabody's permit pending further review and public comment. The agency reached its decision after environmental and tribal groups filed an appeal against the permit, which was issued in the final days of the Bush administration.

The permit will establish pollution limits based on national guidelines to ensure that water quality standards for both the Navajo Nation and the Hopi Tribe are met, according to the EPA.

In addition, the permit will incorporate new regulatory requirements for reclaimed mine areas and will require the implementation of plans to control sediment and seepage from storm water ponds. Under the federal Clean Water Act, all industrial wastewater discharges require a permit to show they won't degrade the environment.

Meanwhile, Peabody continues to operate at Black Mesa under its current discharge permit.

Public hearings on the new permit, which would govern discharges from the combined Kayenta and Black Mesa coal leases, were held in February at the Kayenta Chapter House and at the Veterans Memorial Center in Kykotsmovi, Ariz.

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