Coal-fired furor: A power plant wins a lease extension amid a haze of controversy

After eight hours of debate, Navajo lawmakers approved a replacement lease permitting the controversial Navajo Generating Station near Page, Ariz., to continue operating until December 2019.

In February, the Salt River Project, which operates the coal-fired power plant, and the other owners – the U.S. Bureau of Reclamation, Arizona Public Service Co., Tucson Electric Power Co., and NV Energy – notified the Navajo government that they would close the plant in December of this year if a lease extension with the nation was not negotiated and reached by July 1.


Navajo Nation Council Delegate Leonard Tsosie, right, questions a provision in the replacement lease for the Navajo Generating Station during a heated special meeting on June 26. The council ultimately voted to approve the lease. (Screen shot.)

The 18-4 vote on June 26 extended the lease for two more years, along with employment for 800 people at the plant and the Kayenta Coal Mine on Black Mesa, owned by Peabody Western Coal. Employees at the plant and the mine are mostly Navajo and Hopi workers living in communities sprinkled throughout the high-desert northwestern corner of the Navajo Nation and on Black Mesa, where estimates of unemployment can vary between 50 and 70 percent.

The replacement lease sets guidelines for retirement procedures at NGS, scheduled to begin after 2019 unless a new owner/operator can be found to run the plant for the duration of the 35-year replacement lease and continue the revenue stream many families depend upon.

Salt River Project deputy general manager Mike Hummel said in a company statement that the agreement provides meaningful benefits for everyone involved while creating a path forward during the challenging transition period after December 2019.

“Importantly to us, the replacement lease paves the way for SRP employees at the plant to remain on the job for an additional two-plus years and allows us to fulfill our commitment to redeploying all regular NGS employees to other SRP facilities after 2019 should they so choose.”

NGS is the largest coal-fired plant in the western U.S. and the seventh-highest carbon-dioxide emitter. According to the U.S. Environmental Protection Agency, it also releases the second-highest amount of visual pollution in the country.

In 2012, the EPA gave NGS until 2030 to reduce the haze from nitrogen oxide emissions affecting visibility and health on many nearby public lands, which include Grand Canyon National Park, Grand Staircase-Escalante National Monument and the new Bears Ears National Monument.

Sovereignty vs. jobs

But the Navajo council debate over the NGS lease extension did not focus on the haze over public land, environmental or health issues during the special session held in St. Michaels, Ariz. Instead, the legislature scrutinized legal options and the question of jurisdiction, authority and sovereignty.

One question that arose was: If laws are broken by the company while operating the plant before it closes or during the various decommission and remediation stages, where would claims by the Navajo Nation be decided?

Council delegates grilled Navajo Attorney General Ethel Branch, who attended the meeting with a team of Navajo Department of Justice lawyers. They represented the Navajo Nation in negotiations with the SRP and the other participants in the NGS lease agreement.

Delegate Amber Kanazbah Crotty, representing six chapters south and west of Shiprock, N.M., introduced an amendment to the lease calling for Navajo law to be applied in conjunction with federal and state law. The amendment, which ultimately failed, unleashed a firestorm of discourse around waiving the right to apply Navajo law and court jurisdiction, and therefore the nation’s sovereignty, to business conducted by outside corporations on Navajo land.

Crotty asked the DOJ for clarification on the litigation process relating to any challenge or dispute brought by the nation “after the surrender [of sovereignty] in the lease, meaning for 35 additional years.” What body of environmental law will apply? she asked.

Branch explained that federal law applies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as the Superfund, and Surface Mining Control and Reclamation Act. Any claim alleging a breach of federal environmental law would be heard in federal court, according to language negotiated in the proposed lease extension under discussion.

If federal law is not applicable, then the case defaults to state law, and state court – in this case, Arizona’s, she said. “The lease includes a covenant not to regulate. The Navajo Nation cannot impose its own law, and federal and state [authorities] will not enforce Navajo law.”

Council Delegate Walter Phelps, representing six chapters in the western agency, asked the attorney general if the Treaty of 1868, especially where it references rights-of-way for infrastructure, would apply. Branch said the treaty reserves certain rights to the Navajo Nation on a case-by-case basis. As an example, the nation can reserve the right to settle provisions that apply to state law in order to do business.

Treaty rights are what the Navajo Nation has, said Branch. “It’s up to us to waive those rights on occasion and we waive rights when it’s necessary to make the other party comfortable in negotiations, in order to build a relationship.”

Branch explained that the Navajo EPA is working on Navajo environmental policy regulations, but does not have any at this time. “This is important to the cleanup at NGS. We pushed for Navajo law with respect to settlements. [The waiver of Navajo law] was not given away lightly in negotiations. In exchange we got a deal we hope council can live with.”

Branch explained that the corporations are submitting to a five-year re-opener clause, meaning every five years throughout the life of the lease it can be revisited and renegotiated. “It will strengthen our position,” she said. “There is a certain amount of distrust on both sides. We need to encourage comfort” in how the law is enforced.

But Delegate Leonard Tsosie, representing chapters in the eastern side of the reservation, said, “I am troubled by how we are being advised,” pointing out to the lawyers that the lease language says the Navajo Nation agrees to not regulate construction on the plant site, maintenance or decommissioning of the plant if and when it shuts down. “Navajo law does not apply?”

Tsosie said that the nation has been in a relationship with the corporations now for well over 50 years. “I never understand why they [the outside businesses] are afraid of us. In the original 1969 lease it says ‘NGS, you will restore!’,” referring to restoration of the site if the business closes. “Now what part of that don’t we understand? In this lease it doesn’t say that. . .We don’t need tons of new laws to interpret that the Navajo Nation was not part of this lease extension. We were bullied into it. The owners said, ‘Take it or leave it.’”

Later, Crotty explained on her Facebook page that after her amendment failed, another amendment passed waiving the right to sue for contamination involving materials such as ash and solid waste. She could not support it.

“The Navajo Nation should be able to retain all rights to sue under any environmental law for future, current or past violations.”

Coal vs. renewables

Peabody Western Coal, owner of the Kayenta Coal Mine on Black Mesa, supplies coal to NGS and employs just over 300 local native workers. The company has hired a research firm to find a buyer for the plant. They hope a new owner/ operator can keep the plant and mine operating and profitable for the full 35- year lease replacement approved by the council.

But the price of natural gas is driving coal out of the market today and many people say chances are slim that a buyer will be found.

When news of the impending shutdown reached Navajo Nation President Russell Begaye last February, he reached out to President Trump’s administration, asking for federal assistance.

U.S. Interior Secretary Ryan Zinke weighed in after the late-night vote, issuing a statement the following morning saying the lease is a top priority for Interior and a “first step” to work out a way for the mine and plant to continue operations after 2019.

But the pressure is on. SRP wants the nation to make a decision on the new plant owner by Oct. 1.

For now, the replacement lease assures the Navajo government $110 million in lease payments and $39 million in fuelpurchase revenues in 2018 and 2019. It provides for long-term monitoring after 2019 and allows ongoing operation of transmission lines from the NGS to sites off the reservation.

The lines are a valuable asset to renewable-energy groups hoping to adapt the plant to projects that shift Navajo economic dependency on fossil fuels to solar, wind and other renewableenergy production.

“The rest of the world is moving emphatically toward a clean-energy economy,” said Nadine Narindrankura of Tó Nizhóní Ání, a Navajo community organization located on Black Mesa.

“The utilities are running away from NGS and coal as fast as they can because coal can no longer compete economically against cleaner sources of energy. It’s ludicrous for our leaders to cling to coal. Tying our people to a sinking ship will only bankrupt us and put off the inevitable for two short years.”

The Navajo Nation has a vast potential for solar and wind power. Diné CARE, a grassroots Navajo environmental group, has joined Tó Nizhóní Ání in urging tribal leaders to work toward an economy that allows the Navajo Nation to provide for its people for generations to come, not just for a couple of years, their joint statement says.

“From here, the nation as a whole needs to make a commitment to transitioning our economy, energy production and leadership,” said Jessica Keetso of TNA. “With the 2018 elections coming up, we need to elect leaders who know what climate change means and the importance of developing sustainable businesses and infrastructure.

“The Navajo Nation needs to put solar and wind energy on or near the NGS site, so we can utilize the transmission lines and receive revenue back to our nation. It’s the only thing that makes sense and it will be one of the only good things to come from this senseless replacement lease.”

Despite disappointment over other areas of the lease agreement, both Tó Nizhóní Ání and Diné CARE are relieved that language from the original 1969 NGS lease that was relevant to water rights was included as an amendment, as they suggested to delegates during the council hearings.

The amended language on water is not a binding agreement, they say, but will build a solid foundation for the Navajo to regain full rights to the 50,000 acrefeet of Upper Colorado River Basin water that they believe rightfully needs to be returned to the Navajo Nation.

NGS owners also agreed that the Navajo Nation could retain additional NGSassociated assets, including commercial buildings, the 70-mile railroad from Black Mesa to the plant, and the lake pump system, explained Hummel.

The savings for not decommissioning these assets and the transmission lines has been shared with the nation and amounts to more than $18 million, he said.

Much remains to be decided by the Navajo legislative and executive branches. One of the passing amendments established five options for SRP payments to the nation. Although the total, $110 million, looks like a lot of money, the reality is that the money has a human face, argued councilman Seth Damon.

Six chapters, 800 jobs, and up to 10,000 people are directly impacted by the decision to keep the plant open for two more years and possibly longer. And the nation’s general budget (and therefore every chapter in the nation) is also dependent on royalties from the coal mine and lease payments from plant operations.

Damon asked who would make the decision about how that money is paid to the nation. “The money is specifically for the people who will not have jobs in 2019,” he said. “It’s to help the community members out there in the Western Navajo Agency.

“Who’s going to make that decision – up-front one-time payment, installments, or amortize? The council must decide by December. We don’t have the best possible lease but we do have the best possible way to support our people.”

Tsosie voted against the replacement lease, along with Crotty, Nelson S. Be- Gaye and Jonathon Perry.

“Why aren’t we negotiating from a position of strength?” Tsosie asked. “Instead, we have locked in our future leaders. Serious environmental damage could happen and we cannot sue. . . We take the oath of office to defend the laws of the Navajo Nation – how can we do away with them and suggest the federal courts be the arbiter?.”

He reminded the delegates that they warned in 2012 that NGS would not go on forever. “Even if you are a NGS employee, you have to think of your Navajo Nation, not just your paycheck. In the end, who’s going to stay and who’s going to leave in two years? Buying a little bit of time puts shackles on our nation for 35 years.”

From July 2017. Read similar stories about , .