PNM, BHP Billiton settle San Juan coal dispute with Sierra Club

Public Service Co. of New Mexico and its coal supplier for the San Juan power plant, BHP Billiton, have settled a 2010 lawsuit brought against them by the Sierra Club over pollution at BHP Billiton’s San Juan coal mining operations.

A consent decree settling the case was filed March 28 at the U.S. District Court for the District of New Mexico. The Sierra Club had filed the lawsuit against BHP Billiton subsidiary San Juan Coal, BHP Billiton itself, Public Service Co. of New Mexico and utility parent PNM Resources (NYSE:PNM).

The Sierra Club claimed the defendants are violating the requirements of the 1977 federal Surface Mining Control and Reclamation Act, the New Mexico state mining regulatory program and the federal Resource Conservation and Recovery Act at both the San Juan power plant and the San Juan mining operation.

The Sierra Club charged that activities and operations at the facilities have caused releases of water which have resulted in concentrations of arsenic, barium, boron, cadmium, chloride, chromium, fluoride, lead, nitrates, selenium, sodium, sulfates, total dissolved solids and uranium in surface water and alluvial and other groundwater to exceed applicable state and federal standards.

The parties agreed in August 2010, to stay ongoing proceedings in the lawsuit pending discussions aimed at resolving Sierra Club’s claims through a mutually-agreeable settlement. The consent decree said the defendants continue to deny and dispute that any violations or non-compliance as alleged by Sierra Club have occurred or are occurring, and also maintain that they are in compliance with all applicable laws and are not liable for civil penalties or injunctive relief.

The consent decree said that within 60 days of entry of this decree by the court, PNM will do various things to support installation of a “Recovery System” at the site to treat polluted water. If PNM has not completed its site acquisition and secured the necessary governmental approvals to conduct the site characterization within 90 days after entry of this decree, PNM will report to the Sierra Club in writing on the status of its site acquisition and government approval efforts on a monthly basis.

Within one year following the commencement of the operation of the Recovery System, the companies need to undertake a 10-year biomonitoring program in the Shumway and Westwater Arroyos downstream of the Recovery System to measure progress in cleaning up the water running off the site.

The companies estimate that the Recovery System cost should be no more than $5.3m but may be as much as $6m. The companies won’t pay any monetary penalties under the decree, but will have to pay the Sierra Club’s hefty legal costs.

Said the parties in a cover letter to the court that accompanied the decree: “The parties to this action respectfully move the court to approve, sign and enter as a final judgment the attached consent decree. The consent decree resolves all claims in this case. The consent decree is a product of extensive, arms-length negotiations. Because the consent decree represents a fair, reasonable, and equitable resolution of this matter that is in the public interest, the parties respectfully move for its entry without delay.”

The San Juan plant consists of four units operated by PNM on behalf of itself and other unit co-owners. Units 1, 2, 3, and 4 have net rated capacities of 340 MW, 340 MW, 498 MW and 523 MW.

PNM Resources said in its Feb. 29 annual Form 10-K report that in December 2009 it received a notice of intent to sue under RCRA from the Sierra Club. The RCRA notice was also sent to all San Juan power plant owners and the coal company. In April 2010, the Sierra Club filed suit. The Sierra Club filed an amended complaint in July 2010 correcting technical deficiencies in the original complaint. In the amended complaint, Sierra Club alleged that activities at the power plant and mining operation are causing imminent and substantial harm to the environment, including ground and surface water in the region, and that placement of coal combustion byproducts at the San Juan mine constitutes “open dumping” in violation of RCRA.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.