Peabody clears profits of $60 million to $70 million a year from its Indian coal-mine leaseholds, according to Hopi chairman Ferrell Secakuku. A Peabody spokeswoman calls that estimate "overstated."
It is charitable to say that Peabody got a great deal on its initial coal leases with the Hopi and Navajo tribes, paying each tribe a 3.3 percent royalty, about half the royalty rate elsewhere at the time. Peabody also dodged an assortment of taxes.
Then there's the groundwater, which Peabody got at incredibly low rates. The Navajo initially were paid $5 per acre-foot of water while the Hopi received a mere $1.67 per acre-foot for the groundwater that continues to be pumped from 2,000 feet below the surface at an astounding rate of 2,000 to 4,500 gallons per minute. The rates were renegotiated in 1987 to reflect the market value of the water--Peabody says it now pays an average of $3.2 million per year for 3,800 acre-feet of water, for an average of $840 per acre-foot.
Peabody operates two adjacent mines on Black Mesa under leases with the Hopi tribe.
The Black Mesa Mine supplies coal fuel for the 1,580-megawatt Mohave Generating Station, operated by Southern California Edison. Once it is separated from the coal, the Hopi water is used as a coolant in the power plant. Other owners of the power plant include the Los Angeles Department of Water and Power, Nevada Power Company and Arizona's Salt River Project.
The second mine, called Kayenta, is dedicated to the Navajo Generating Station located near Page, Arizona. Peabody ships about seven million tons of coal each year to that 2,310-megawatt plant via a 78-mile-long electric railway.
The Navajo power plant was built primarily to provide power to operate the $5 billion Central Arizona Project, a series of canals that pumps water more than 300 miles from the Colorado River near Lake Havasu to the Phoenix and Tucson metropolitan areas and surrounding farms, industries and Indian tribes. CAP is designed to deliver more than two million acre-feet of water per year to central Arizona towns, an amount sufficient to provide for eight million people.
Like the Mohave plant, the Navajo power station provides electricity to powerful utility companies, including the Salt River Project (the facility's operator), Arizona Public Service Company, Nevada Power Company, Los Angeles Department of Water and Power and Tucson Electric Power Company.
Peabody not only fuels a massive power and water grid that drives economic development in the Southwest; the mining conglomerate has also become the economic backbone of the Navajo and Hopi tribes.
Revised leases in 1987 greatly increased royalties to both tribes. In recent years the Hopi tribe has received about $10 million of its $17 million annual budget from Peabody. The Navajo Nation, 160,000 strong, is collecting about $35 million a year in coal royalties and water payments from Peabody. (The Navajo are receiving more royalties because the mines are located primarily on Navajo land.)
Peabody's mines also employ about 700 Navajo workers and a handful of Hopi employees at wages and benefits averaging more than $55,000 annually. A fringe benefit for the Native Americans: all the free coal they can cart off.
Facing so much economic power, it's not surprising that Hopi concerns about groundwater remain unknown to the public--let alone attract serious attention from Congress or the Clinton administration.
And the Hopi are alone in their fight to get Peabody off groundwater. The Navajo government is not concerned about Peabody's groundwater use.
Stanley Pollack, water-rights attorney for the Navajo, claims there is no evidence that Peabody's groundwater withdrawals are damaging the aquifer. Pollack says diminished flow from Hopi springs and washes is because of improper placement of Hopi municipal wells rather than Peabody's industrial wells.
Peabody, Pollack says, draws all the attention because it is withdrawing vast amounts from the aquifer. But Peabody's wells are many miles away from Hopi villages and have only a minor effect on groundwater levels on the Hopi reservation, Pollack claims.
"Peabody," Pollack says, "is an easy target."
Since his term as Hopi tribal chairman expired in 1993, Vernon Masayesva has devoted much of his time to finding a way to stop Peabody from using groundwater for its mining operations.
While the numerous groundwater studies conducted by both private and federal agencies are inconclusive, Masayesva is more convinced than ever that Peabody is having a serious impact on Hopi water supplies.
"The more we look into the impact on the aquifer, the more we find serious damage occurring," Masayesva says.
Tribal elders report numerous instances of diminished or drying springs that hydrogeologists have linked directly to the Navajo sandstone aquifer.
Masayesva also points to an April 1996 draft report prepared by the U.S. Geological Survey that shows a sharply reduced groundwater-recharge rate in the area of the aquifer shared by Peabody and Hopi villages.