Energy & Industry Navajo Nation’s purchase of a New Mexico coalmine is a mixed bag

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The Navajo Nation got coal for Christmas this year – literally. On December 30, a Navajo tribal corporation finally completed its drawn-out purchase of the Navajo Mine, the sole supplier of coal to New Mexico’s Four Corners Power Plant. Depending on whom you ask, this is either a historic milestone for tribal energy independence, or a soon-to-be millstone hanging around the tribe’s neck.

Let’s consider the naysayers first.

Diné CARE, a Navajo environmentalist group, has opposed the purchase from the get-go, arguing that previous mine owner BHP Billiton was trying to dump an unprofitable asset on the Navajo people. Indeed, the reason the mine is for sale at all is because BHP couldn’t agree on a coal price with Four Corners Power Plant’s operator, Arizona Public Service. And now that Four Corners has shuttered its three oldest coal-burning units to comply with the Environmental Protection Agency’s haze regulations, the plant will buy 30 percent less coal from the mine than it used to. That means less profit for whomever operates the mine.

The Office of Surface Mining Reclamation and Enforcement is also reviewing the potential environmental impacts of extending the life of the power plant to 2041 and expanding the mine, which the tribal corporation plans to do. Initial findings aren’t expected until later this year, which worries Lori Goodman of Diné CARE. BHP Billiton is “trying to jump ship” before the environmental impact statement is finished, she says. “Why don’t we wait until after the EIS is done (to buy the mine)?”

Other Navajos have protested a liability waiver that the tribal energy company signed, absolving BHP Billiton of all future responsibility for any “known or unknown” damages, liabilities, or costs associated with operating the Navajo Mine. And still others say the timeline of the deal itself was rushed by one of the West’s largest utilities, Southern California Edison. Edison needed to sell its shares in Four Corners to meet California’s renewable portfolio standard, which requires utilities to get 33 percent of their energy from renewables by 2020, and to comply with a California law that prevents utilities from continuing to invest in coal plants. “The timing of this (deal) comes from others, not from us,” Craig Moyer, an attorney consulting on the purchase, told Navajo council delegates last April.

Finally, many opponents say it’s simply a bad time to be buying into the coal industry. Coal-fired power has historically been the largest source of electricity in the country, but that’s changing as natural gas increases in popularity and EPA regulations clamp down on air pollution from coal plants. According to the Energy Information Administration, coal, which made up 37 percent of electricity generation nationwide in 2012, is expected to drop to 32 percent by 2040. “The coal industry is on the decline and that’s what the Navajo Nation needs to realize,” says Jihan Gearon, the president of the Navajo environmentalist group Black Mesa Water Coalition.



Now let’s turn to the other side. If the Navajos didn’t buy the mine, Four Corners wouldn’t have a secure coal supply, and would likely close in 2016. While that would be good news for fighting climate change and for the respiratory health of people living around the plant, it would seriously disrupt the local economy. If the plant closed, the Navajo Mine would close, too, putting more than 800 employees, mostly Navajo, out of work. In addition to preserving hundreds of jobs, keeping Four Corners open means tens of millions every year for the Navajo tribal government.

The mine purchase is also a pretty big deal for tribal sovereignty. The Navajos have sought greater control over their natural resources for a long time, but previous bids to build their own energy projects, like the Desert Rock coal-fired power plant, haven’t worked out. It’s pretty hard to get a tribal-run energy project built: as sovereign nations, tribes aren’t eligible for certain renewable energy tax credits and overlapping bureaucracy means project permitting can take forever. Given these hurdles, any time a tribe has a chance at ownership, they should take it, says Roger Fragua, a tribal energy consultant and member of the Jemez Pueblo.

As owners, the Navajos have much more say in the mine’s future operations – exploring coal gasification or exporting to China, for example – than they have had as leaseholder for the past half-century. And in theory, a tribal corporation should make decisions that benefit tribal members, not distant shareholders or CEOs. “Of course we’d rather have Navajo Nation control its own resources,” says Fragua. “I’d much rather have them than Peabody Coal,” or another large mining company.

Some opponents wonder whether the mine purchase will only deepen the tribe’s dependency on coal, an industry that supplies a third of its annual budget and employs thousands of people. But Chris Deschene, a Navajo attorney involved in the Desert Rock project and former Arizona state representative, doesn’t see it that way. “If you are leasing out your resources and having somebody else develop them and they are generating the lion's share of the profits and paying you cents on the dollar – and you’re accustomed to that – that’s a measure of dependency,” he says.

“What the Nation is doing is saying no. We’re going to own the mine and we’re going to (make more than) cents on the dollar. To me that is not dependency, but rather being independent and exercising a measure of sovereignty for the benefit of your people.”

No one is expecting the 50-year-old coalmine to be a permanent fixture on the Navajo Nation, and indeed, 10 percent of the mine’s profits will be dedicated to developing renewable and alternative energy in order to help wean the tribe off coal. The mine “can be the bridge to the future and the revenues to pay for it,” attorney Craig Moyer told the Navajo Nation council last April. “Over time, coal generation will decline, but this is likely to be one of the last power plants out there.”

Emily Guerin is a correspondent for High Country News. She tweets @guerinemily. Look for her forthcoming feature story on the future of coal on the Navajo Nation.