Crow tribe leader says U.S. policy hurting tribal coal development efforts

The chairman of the Crow Nation in Montana told a U.S. Senate committee on April 8 that the federal government needs to get out of the way of the tribe’s development of its vast coal reserves, which are only partially being worked by Westmoreland Coal‘s existing Absaloka strip mine.

The U.S. Senate Committee on Indian Affairs held a field hearing in Montana on April 8 called “Empowering Indian Country: Coal, Jobs, and Self-Determination.”

Said Crow Nation Chairman Darrin Old Coyote in prepared testimony: “The Crow Nation has very substantial undeveloped coal resources. In fact, today, the Crow Indian Reservation contains 2 million acres in subsurface mineral rights, including an estimated 9 billion tons of coal. The Crow Nation has developed a limited amount of its resource, by leasing a portion of its coal reserves for 40 continuous years to Westmoreland Resources, Inc. (‘WRI’). WRI owns and operates the Absaloka Mine (‘Mine’), a 15,000-acre single pit surface coal mine complex near Hardin, Montana, on the northern border of the Crow Reservation. The Absaloka Mine was developed to supply Powder River Basin coal to Midwestern utilities and it has produced over 180 million tons of coal since 1974. From the Mine’s 5-7 million tons per year of coal production, it provides production taxes and royalties to the Crow Nation – exceeding $20 million in 2010 when the Mine was operating at full capacity.

“The revenue generated from the Mine represents as much as two-thirds of the Crow Nation’s nonfederal budget. Furthermore, WRI employs a 70% tribal workforce, with an average annual salary of over $66,000, and a total employment expense of approximately $18.6 million dollars. The Absaloka Mine is the largest private employer within the Crow Reservation.

“The importance of the Mine to the economy of the Crow Reservation cannot be overstated. Without question, it is a critical source of jobs, financial support and domestically-produced energy. WRI has been the Crow Nation’s most significant private partner over the past 40 years. A recent example demonstrates the importance of the Absaloka Mine to the Crow people. A major unplanned outage at the Mine’s largest power plant customer during 2011-2013 resulted in a 50% reduction in tribal coal revenue and numerous employment layoffs. This recent outage reinforced the need for the Crow Nation to pursue multiple coal projects to diversify our revenue base.”

He was referring to an extended outage at Sherburne County Unit 3 in Minnesota, which is operated by Northern States Power.

“My Administration’s Vision on Energy Development: Potential Benefits Given our vast mineral resources, the Crow Nation can, and should, be self-sufficient. My goal is clear. My administration desires to develop our mineral resources in an economically sound, environmentally responsible manner that is consistent with Crow culture and beliefs. More than anything, I desire to improve the Crow people’s quality of life, create a future with good-paying jobs and employment benefits within the Crow Reservation, and provide hope and prosperity for the next seven generations of Crow citizens. My larger vision is to become America’s energy partner and help reduce America’s dependence on foreign oil.

“Over the next 40 years, the World Energy Council predicts that the world will need to double today’s level of energy supply to meet increased demand. Primary energy sources, such as coal, oil and gas, have a finite life and therefore we must have an all-of-the-above energy development strategy to meet America’s needs as well as global demand. My administration stands ready to meet the global energy challenge, but the future both near and long term, must have coal in its equation.

“With President Obama’s recent speech on climate change, we are mindful of the increased efforts, policy and otherwise, to restrict coal as a domestic fossil fuel source to generate electricity (with domestic coal produced electricity being reduced from approximately 50% to 40% in less than a decade). Our coal partners and our coal economist consistently remind us of the difficult environment for domestic coal production. Despite the challenging environment, the Crow Nation has intensified its efforts to develop its coal resources to diversify its revenue streams. With respect to the Absaloka Mine, the Crow Tribal Legislature approved and I executed an agreement with WRI in March 2013 to expand its mining operations with a lease of an estimated 145 million tons of Rosebud-McKay seam coal resources located adjacent to the Mine. This new lease will provide the Crow Nation with long-term revenues and employment and sustain the operations of the Mine past 2020.”

Tribe working on exploration of coal mine project with Cloud Peak Energy

“Similarly, in June 2013, the [Bureau of Indian Affairs] approved another tribally-approved agreement with Cloud Peak Energy (‘CPE]) to explore, with options to lease and develop an estimated 1.4 billion tons of Crow coal in the southeastern corner of the Crow Reservation. This long-term agreement will also provide much needed revenue to the Crow Nation, increase employment opportunities for Crow and Montana citizens, and diversify Tribal revenue sources. However, the CPE project – named Big Metal (www.bigmetalcoal.com), is largely dependent on coal exports through the Northwest. As such, I have directed my administration to investigate and pursue coal exports, given the increased coal demand in the Pacific Rim. Since 2013, I have sent three Crow delegations to the Northwest to meet and work with other tribal nations, investigate proposed coal export projects, and then to analyze and follow-up on these recent diplomatic discussions and fact-finding trips about possible relationships involving Crow coal, transportation, and export terminal partners. During the last two trips, which I attended, I invited present and potential project partners, as well as tribal leaders from Northwest tribal nations, to visit my homeland to see first-hand Crow coal development and listen to their concerns.

“Finally, with a substantial Crow coal resource, I would like to continue to build the first coal-to-liquids (‘CTL’) plant in North America with carbon capture and utilization. In fact, in 2008, the Crow Nation and our partner signed a project agreement to develop Many Stars, a planned coal-to-liquids project that sought to produce up to 50,000 barrels or more per day of ultra-clean jet and diesel fuel. Crow sought to contract with the U.S. Air Force and other local industries to supply clean diesel fuel that would meaningfully reduce carbon emissions throughout the world, reduce America’s dependence on foreign oil, and provide a safe and secure domestic fuel supply to our national defense. Unfortunately, the economic recession hit and an uncertain national energy policy made it difficult for the proposed project to proceed. We remain hopeful that the Administration can and will support clean coal, that technology advancements can create a smaller scale project, and that clean coal legislation (discussion draft entitled, ‘Native American Clean Coal Economic Development Act of 2015’) to provide for bonding authority with incentives to industry partners will be introduced and passed in this Congress. I am pursuing an all-of-the-above energy development strategy (hydropower, wind, coal export and CTL) but I will need some help in order to effectuate my energy vision.”

He said that the Crow Nation and the Montana Attorney General sent joint comments to the EPA in December 2014 to express grave concern about the substantial negative impact that the EPA’s proposed Clean Power Plan, which calls for CO2 reductions from existing power plants, will have on the Crow Nation, its citizens and resources, and their collective future. Both the main Clean Power Plan proposed last June, and variant Clean Power Plan Rule unveiled last November for Indian country, simply ignore the Crow Nation’s concerns, he added.

“The lack of meaningful government-to-government consultation, as required by Executive Order 13175, in developing the aforementioned Proposed Rules is telling,” the tribal leader wrote. “Despite minimal tribal outreach (and no direct contact with elected Crow Nation officials before the rule was proposed), significant substantive policy prescriptions are likely to cause serious setbacks to the Crow Nation, potentially over multiple generations. The longstanding trust responsibility between the federal government and the Crow Nation may be violated unless an exception and/or mitigation of the rule is provided to us.”

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.