Navajo Nation President Ben Shelly: “The coal mine purchase secures our economic future."

Navajo Nation Is Coal Country as Mine Sale Finalized

Anne Minard

The Navajo Nation is the new owner of the Navajo Mine, a decades-old coal operation south of Farmington, New Mexico. But not all tribal members are celebrating.

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The Navajo Council voted 17-5 on December 27 to approve Resolution No. CD-60-13 authorizing the purchase, and Navajo Nation President Ben Shelly signed it that same day. The $85 million deal, between the Navajo Transitional Energy Company, LLC (NTEC) and the mine’s former owner, BHP Billiton, allows production to continue at the mine beyond 2016, when BHP Billiton’s current lease expires.  The international company wouldn’t have pursued an extension because it could no longer operate the Navajo Mine profitably. The Navajo Nation’s sovereign status affords it a lower tax burden, among other benefits, allowing it to accept lower prices for its coal. The Navajo Mine produces around 8 million tons of coal each year, and brings in $41 million annually for the Navajo Nation, at the lowest estimate – about a third of the Nation’s general fund. The mine purchase is expected to pay for itself within four years.

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“We have secured a vital revenue stream for the Nation with this purchase,” President Shelly said in a statement released on Thursday. “The coal mine purchase secures our economic future, strengthens our Navajo Nation Energy Policy and the portfolio of the Nation.”

NTEC Chairman Steve Gundersen added that the move preserves 800 jobs, most of them for tribal members, and guarantees 10 percent of the mine’s profits for investments in cleaner energy.

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The tribe’s approval fell into place within days of another major piece of the deal: an ownership shift at the nearby Four Corners Power Plant, which is the sole purchaser of the Navajo Mine’s coal. On December 30, plant owner and operator Arizona Public Service Company (APS) finalized a deal to buy out Southern California Edison Company’s interests in the plant, pursuant to California’s thrust to extract itself from coal and invest in renewables. APS’s estimated final purchase price was $182 million, which buys out Southern California Edison’s interest in the fourth and fifth units at the plant. Units 1, 2 and 3 will be shut down in the coming years as part of a deal with the EPA to reduce the plant’s air emissions.

Also on December 30, NTEC and Four Corners Power Plant executed a coal supply agreement from July 2016 through 2031.

The deal didn’t come easily for the Navajo Nation Council. Controversy greeted an originally scheduled vote on December 23, with the grassroots group Diné CARE opposing a waiver of liability for BHP Billiton against past, present and future damages from mining. The matter was tabled until the December 27 after Duane Yazzie, the Shiprock Chapter president, accused Council members of being “out of order” for deciding on such weighty matters when investigations are pending into allegedly fraudulent financial dealings.

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“The mine purchase is a critical item for a number of reasons,” Yazzie said later. “One reason is their decision to waive our sovereignty by saying that any arbitration as a result of NTEC’s management of the mine would go to state-based arbitration process rather than staying with the Navajo judicial process. That’s a very serious and flagrant violation of our sovereign rights and we vehemently object to that.”

In order for the Navajo Nation to obtain the performance and reclamation bonds required for the Navajo Mine, the Zurich American Insurance Co. and Arch Insurance Co. had asked the Navajo Nation to agree to a limited waiver of sovereign immunity, including the arbitration clause. The clause assigns jurisdiction to New Mexico Judicial District 1, based in Santa Fe, even though there are two New Mexico judicial districts closer to the Navajo Nation and the mine.

Yazzie plans to hold a meeting at his chapter house, west of Farmington, New Mexico, on Monday, January 6 to gauge public support for continued opposition to the mine purchase. And Lori Goodman, a grassroots activist with Diné CARE, says she’s not opposed to pursuing the matter in court.

“A people’s lawsuit is clearly called for right now,” she said. “That’s where this is going. We feel like we’ve exhausted all avenues. There needs to be a redress. We’re telling our lawyers that something needs to be done.”

Goodman and Yazzie both believe the sale still must be approved by the Interior Secretary; Goodman says the Navajo Nation government’s statement that the sale is complete is a way to keep tribal members from acting in opposition before it is too late. But Gundersen has said the Interior Secretary need not approve the deal. And Damon Gross, an APS spokesman, said his own company’s deal couldn’t have gone forward unless the mine sale was final.

“For us to have competed the purchase of Southern California Edison’s interest in the plant, there needed to be a coal contract in place past 2016, and that’s with NTEC,” he said.

The Interior Secretary will need to approve a lease extension beyond 2016 for both the plant and the mine, after an ongoing environmental review is completed by the Office of Surface Mining. The draft review is due out in late spring of this year.

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