Navajo Nation leader outlines EPA threat to coal production, tribal economy

Federal policy has already cost the Navajo Nation in the southwest U.S. some of its coal production and the economic benefits that go with it, with other federal actions threatening to reduce coal production by even more, said Lorenzo Bates, Speaker of the 23rd Navajo Nation Council.

The U.S. Senate Committee on Indian Affairs held an April 8 field hearing in Montana called “Empowering Indian Country: Coal, Jobs, and Self-Determination.” Bates, who represents a tribe covering a vast area in Arizona and New Mexico, was one of those testifying.

Bates noted that the tribe recently collaborated with the W.P. Carey School of Business at Arizona State University to study the economic impact of one of the two coal mines on tribal land on the Navajo Nation economy. What it found was that Peabody Energy’s (NYSE: BTU) coal mine in Arizona, together with the Navajo Generating Station, will boost the Navajo Nation economy by over $13 billion over the next 25 years. That is just the economic benefits to Navajo and does not include the economic benefits enjoyed by the surrounding communities.

The mines on Navajo Nation property produce approximately 8 to 10 million tons of coal each year, down from 13 million to 16 million tons before the U.S. EPA regulations began to take their toll, Bates added. The tribe’s reliance on these resources has led it to invest in the purchase of the Navajo coal mine from BHP Billiton this past year to gain greater control of its resources and insure the continuation of vital funds for future generations. This purchase was made through the Navajo Transitional Energy Co., which, as its name suggests is mandated to transition the Navajo Nation into its energy future by investing no less than 10% of its profits into alternative and renewable energy development.

Bates wrote: “The consequences of the latest rounds of EPA regulations resulted in the shutdown of three of the five power generating units at the Four Corners Power Plant and the forced investment of a billion dollars in [best available retrofit technology] retrofits on the remaining two units. This in turn reduced the coal mined at our Navajo Mine while simultaneously increasing the cost of power generation. With the economies of scale lost to circumstance, the Four Corners Power Plant and the Navajo Mine were poised to discontinue operation this year if it were not for our purchase of Navajo Mine. While we are now in a position to maintain our jobs and revenues and possibly increase them from this mine, we are being threatened by additional EPA regulations and an unstable energy future.

“Across the United States, coal economies are feeling the pinch, but not near to the extent as the Navajo Nation. What other economy in the United States stands to lose as much? Some may call this a war on coal, but from the Navajo Nation’s perspective, this is a war on the Navajo economy and our ability to act as a sovereign Nation. It is difficult enough working to meet the needs of the Navajo Nation with our current resources; I do not dare imagine the difficulty that would come with a 50% reduction in general revenues due to our coal mines shutting down! With our current budget heavily subsidized by federal funds, this scenario only increases that dependence.

“Many coal critics have argued that we can simply convert our power generation to natural gas and renewable energy while maintaining our jobs and revenues. Similar arguments were made when the Mohave Generating Station in Nevada shut down in 2005 cutting our coal supply through our Black Mesa Pipeline and we have yet to see any replacement jobs or revenue ten years later. The challenges of economically producing power through gas at the high elevations common on Navajo are enough to discourage the investment. Navajo is open to solar generation although it takes 10 acres per Megawatt to produce commercial power and has yet to sufficiently meet market demand. Even if these resources were possible, we would still see major economic cuts.”

That reference to the Black Mesa Pipeline is to a pipeline that had shipped coal slurry from Peabody’s now-shut Black Mesa mine on tribal property in Arizona to Southern California Edison‘s now-shut Mohave power plant in the southern tip of Nevada. The power plant was shut due to regional haze-compliance issues.

Bates added: “The challenges are daunting when we look to the future of our Navajo people, our hope lies in the understanding and collaboration of the US Government to insure that the transition of our Nation’s energy resources happens in an economically responsible way, considerate of the lives that are impacted by policies written by individuals who have yet to visit our Nation. We continue to request for government to government consultation that is on equal ground, cognizant of our needs and not merely a box to be checked off on yet another government form. Our hope lies in the development of alternative clean coal technologies that would effectively bridge the gap between the utilization of our coal resources and the environmental concerns of the day. We implore the US Government to work with us to develop the financial incentives necessary for investors to bring these clean coal technologies to our reservations where the need is so great, where we have a ready workforce, abundant coal resources and the infrastructure to get gasified coal products and captured carbon into the market.

“The Navajo Nation wants to be a part of the solution that brings the United States closer to energy independence while meeting our needs at home. We ask that the US Government respect the decisions we make with our State, tribal and regional partners in response to meeting the ever changing environmental regulations while maintaining our regional and tribal economies. When we are able to work together in a meaningful way we can find some middle ground when it comes to our financial stability as a Nation.”

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.