The Santa Fe New Mexican

Tuesday, August 5, 2003

Utility Drops Plans for Coal Mine

By BEN NEARY | The New Mexican

An Arizona utility company on Monday abandoned plans to develop a huge coal strip mine in western New Mexico.

Salt River Project, a utility company that provides power to Phoenix, says its decision to abandon the proposed Fence Lake Mine is the result of securing cheaper, cleaner coal in Wyoming.

But Salt River Project’s decision also comes at a time when its New Mexico mine project — in the works since the 1980s — faces increasing opposition from Indian tribes and environmental groups. Most members of New Mexico’s congressional delegation wrote to federal regulators this summer expressing concern that the mine project not be allowed to harm a salt lake near the mine that is sacred to Zuni Pueblo and other tribes.

Whatever the utility’s reasons for abandoning the mine project, Gov. Bill Richardson sees the decision as a positive development.

“I think it’s important to protect the Native American religious sites,” he said. But others say the utility’s decision to abandon the 18,000-acre mine project is grim economic news for New Mexico.

The announcement is welcome news to the Zuni Pueblo, which has fought the mine for years.

“It’s a tremendous victory for all Indian tribes concerned with sacred sites issues,” Zuni Councilman Dan Simplicio said Monday. “It’s been a tremendous and costly battle, and I’m glad it’s over.”

Gov. Bill Richardson said Monday that he sees Salt River Project’s decision to abandon the project as a positive development. “I think it’s important to protect the Native American religious sites,” he said.

But others say the utility’s decision to abandon the 18,000-acre mine project is grim economic news for New Mexico. The project had promised to employ 175 miners — with an annual payroll of about $13 million — and pay hundreds of millions of dollars to the state in royalties and other payments, the company says.

Pat Lyons, New Mexico commissioner of public lands, on Monday said the utility’s decision will hurt rural New Mexico. His office administers the state permanent fund that holds royalty payments from mining projects on public lands and disburses money for education and other programs.

“It’s a big blow,” Lyons said. “The economic impact on this over 30 years would bring in over one-half billion dollars, and it includes payroll and severance tax. It’s just a shame something like this can happen.”

In a news release, Salt River Project said the company’s board of directors voted Monday to negotiate the purchase of coal from the Powder River Basin in Wyoming for its coal-fired generating station in St. John’s, Ariz. The company had planned to develop a rail line to carry coal from the New Mexico mine to the plant, just across the state line.

Current coal prices make conditions favorable to the utility to purchase coal from Wyoming rather than operate its own mine, the company said.

“The coal market is very competitive at this time,” said David Areghini, the company’s associate general manager of power, construction and engineering. “We believe SRP’s customers will not only save money but that environmental and operations benefits will be realized by entering into a new coal contract now instead of opening Fence Lake.”

In a telephone interview Monday, Bob Barnard, Fence Lake Project manager for the utility in Phoenix, said Wyoming coal is cleaner than the coal from the New Mexico site. That will make it easier for the company to meet federal air-quality standards, he said.

Barnard said he couldn’t identify the entity with which the utility is negotiating for the Wyoming coal.

Over the 40-year production life of Fence Lake Mine, Barnard said, royalties to the state of New Mexico were estimated to be roughly $100 million, and taxes and other costs paid to the state would amount to another $100 million.

Asked how the decision to abandon the mine project would affect New Mexico, Barnard said, “That’s outside my ability to predict. The effect on New Mexico will be that they won’t have those jobs, that coal won’t be developed and they won’t have those revenues. What the effect will be will be best determined by the New Mexico legislators and governmental entities that deal with those things.”

Salt River Project primarily based its decision to abandon the mine project on cost and coal quality, Barnard said, but the recent letter from New Mexico’s congressional delegation “didn’t help to keep the mine open.”

Opposition from Zuni Pueblo and other tribes didn’t help the project either.

“Throughout this project, SRP has been very concerned with, and has made every effort to be sensitive to and accommodate the concerns of the tribes,” Barnard said. “We’ve gone much further than others have. Their resistance didn’t help to keep the mine open. But again, it was not the primary factor.”

The utility company intends to surrender its leases and permits back to state and federal regulators, Barnard said. The company intends to develop a plan for wrapping up its New Mexico operations, he said.

Though Barnard said he had no precise figure for how much the company has invested in the Fence Lake Project, he said it’s been several million dollars.

David Cunningham, a Santa Fe lawyer, represented Zuni Pueblo in challenging Salt River Project’s applications for state and federal mining permits.

“This is a great victory for Zuni and the other tribes and pueblos who supported Zuni,” Cunningham said Monday. “It is also a tribute to the teamwork of the various Zuni tribal councils and the numerous individuals at Zuni and the various individuals and lawyers who worked very hard to make this happen. It is a fair and just result.”

Lawyer Paul Bloom also represented Zuni Pueblo, concentrating on water issues, which presented the mining company with perhaps its greatest obstacles.

When the federal government granted the company a mine permit last year, it specified that the company couldn’t use any water from one aquifer in the region and specified that before using any water from the other major aquifer, the Atarque, it would have to show that pumping wouldn’t hurt the salt lake.

“It’s gratifying to learn that the company has given up the attempt,” Bloom said Monday. “Zuni has been absolutely convinced that pumping the Atarque Aquifer for the Fence Lake Mine would be a deadly threat to the Zuni Salt Lake.”

Simplicio, the Zuni Pueblo councilman, said the pueblo’s efforts to stop the mine have raised cultural awareness of the Zuni people and surrounding tribes.

“The awakening we had for the past two years was really strong,” he said. “It awakened our powers of spiritual belief.”