Settlement documentation reflecting the $US10.2 million agreement was filed last week in the US District Court in Albuquerque.

The Associated Press reported that about $8 million of the settlement funds would be used for remediation projects such as a “slurry wall”, structures that would keep contamination out of the San Juan River and the remaining $2 million would go towards the attorney and expert fees incurred by the Sierra Club.

“This settlement will help clean up northern New Mexico’s water after years of exposure to pollution from the San Juan generating station and coal mine,” Sierra Club spokesperson Nellis Kennedy-Howard said.

“While these mandatory measures will keep toxic pollution out of the San Juan River basin, coal continues to pollute New Mexico as it’s mined and burned.”

While BHP did not make a public statement on the decision, San Juan coal mine president Jac Fourie told the AP that settlement talks were focused on finding solutions to the group’s concerns.

“The Sierra Club’s scientist was onsite day by day during the testing and surveying,” he said.

“We believe that our cooperation and transparency was a critical factor in answering the Sierra Club’s legitimate questions about how we safely manage these materials every day.”

PNM Resources president and chief executive Pat Vincent-Collawn told the news service it disagreed with the allegations but the settlement would allow for additional environmental benefits and avoid more litigation.

Vincent-Collawn noted that the settlement didn’t require adjustments to the operation’s mining or methods or coal ash management and disposal.

PNM is New Mexico’s largest utility and the Sierra Club said it currently didn’t meet the state’s minimum requirements for clean energy investment.

The utility owns 46% of the San Juan generating station.  

Sierra Club initially filed its lawsuit in April 2010 in the Federal District Court for the District of New Mexico, alleging illegal surface and groundwater pollution according to the federal Surface Mining Control and Reclamation Act and Resource Conservation and Recovery Act.