Forecast murky for Black Mesa Project

By Marley Shebala, Navajo Times
April 18, 2007

WINDOW ROCK – A study to expand strip mining on Black Mesa may stall for lack of money.

Southern California Edison and the Salt River Project, two major stakeholders in the proposed Black Mesa Project, are playing ping-pong over who’s paying for an environmental impact study needed before the expansion can take place.

The study required by federal law, is being done under the auspices of the U.S. Office of Surface Mining, but has been funded by the utilities.

On Mach 30, SCE reported to the California Public Utilities Commission that it would fund the EIS only until the end of April.

California Edison initially financed the environmental review but pulled its funding in March 2006 after giving up efforts to reopen its shuttered Mohave Generating Station, which burned Black Mesa coal.

Then SRP, one of several utilities that own a minority share of Mohave, announced it would fund the study wile putting together a deal to buy out Edison’s share and reopen the plant under new management.

But on Feb. 6, SRP announced it was giving up on Mohave, too.

Two weeks later, however, OSM Southwest Regional Director Richard Holbrook announced that he’d been notified that SCE would resume paying for the environmental study.

“They are still attempting to sell the plant,” Holbrook explained at the time. “If they do sell the plant, the new owners would want the EIS finished.”

Now, California Edison’s latest filing with its regulatory agency shows that it is pulling back again. Holbrook noted earlier that if the California utility decided to discontinue funding, the federal mining agency might pick up the cost.

On Wednesday, Holbrook was unavailable for comment on the latest developments.

SRP stated in a Feb. 6 press release that decided not to continue funding the environmental review because couldn’t reach a purchase agreement with California Edison for the shuttered power plant.

Coal for sale

Salt River’s announcement came three days before OSM closed public comment on the draft environmental statement for the proposed Black Mesa Project, which calls for Peabody Western Coal Co. to increase coal production from its Kayenta and Black Mesa mines, pump more ground water, and send the coal to Mohave.

Mohave was the sole customer for coal from the Black Mesa Mine, and Peabody has not offered a new market for the coal.

The company is seeking to gain permanent control of the coal reserves on Black Mesa through an extension of its lease with the Navajo Nation and the U.S. Department of the Interior.

Peabody, which just announced record profits of $663 million for 2006, is the largest coal company in the world and possesses over twice the coal reserves of its nearest competitor, according to its annual report.

Its decision to close the Black Mesa Mine when Mohave closed at the end of December 2005 threw over 100 mostly Navajo workers out of a job, but was imperceptible on the company’s bottom line.

Coal sales increased 13 percent, income was up 42 percent, and profits were up 28 percent, reaching the highest levels in the company’s 124-year history.

According to investors, Peabody is in such demand that the company announced a two-for-one stock split in February 2006, barely a month after Black Mesa closed.

Despite the absence of an alternative customer for the Black Mesa Mine, both Peabody and President Joe Shirley Jr.’s administration support completion of the Black Mesa EIS.

A positive conclusion by the study would lay the groundwork for Peabody to convert its 30-year lease, which expired at the end of 2005, to an “end-of-mine-life” lease on Black Mesa coal reserves.



Reprinted as an historical reference document under the Fair Use doctrine of international copyright law.