On April 25, 2018, Arizona’s Republican Gov. Doug Ducey signed a bill passed by the state’s Republican controlled legislature to exempt coal purchases from the state sales tax. It would lower the price of coal produced at the state’s only active coal mine, Peabody Energy’s Kayenta Mine on Black Mesa. The objective of the bill is to help attract a buyer for the mine’s only customer, the coal-fired Navajo Generating Station power plant near Page. The bill was pushed by Peabody Energy’s lobbyist Tom Dorn.
All but one of the Navajo Generating Station’s owners have decided to shut it down in 2019 because they can buy cheaper and cleaner electricity on the open market. And its other owner, the U.S. Bureau of Reclamation, cannot afford to operate the plant by itself, so if it shuts down, so will the Peabody coal mine.
“This bill is essential to the economic success of the Navajo Nation, the Hopi Tribe, and surrounding communities,” Ducey said when he signed it. The two tribes would, indeed, be severely impacted by a shutdown because the power plant and mine are located on their reservations. Both tribes hold leases for the mine, and the Navajos hold one for the power plant. If the plant and mine close, it’s estimated the annual revenue of the Navajo Nation’s government would shrink by about $40 million, or about 23%, while the smaller Hopi Tribe’s revenue could decline by about $12 million, or about 67%. In addition, the power plant and mine employee about 750 workers, nearly all of them Native Americans. (Some people would still be needed to maintain and dismantle the plant and mine if they were closed.)
But considering the history of Peabody’s coal mining operations on Black Mesa, it’s difficult to believe the Republican effort to save the power plant and the mine is solely motivated by a desire to help the Navajo and Hopi people. Peabody’s mineral lease with the Hopis, for example, has been controversial since it was signed. The tribe’s traditional village leaders, the Kikmongwi, had long been opposed to coal mining on their reservation, and most of the tribe agreed with them. They feared a mine would desecrate sacred sites and lower the water table that fed their springs. For at least a 1,000 years the Kikmongwi had been the tribe’s undisputed leaders, but the Indian Reorganization Act of 1934 required the tribe to adopt a constitution. The resultant Hopi Tribe Constitution of 1936 was unique in that it maintained some important roles for the Kikmongwi. For example, the Tribal Council created by the constitution consisted of 17 members from 12 villages, but these representatives had to be certified by each village’s Kikmongwi. This concession to Hopi traditions, however, failed to impress most tribal members, and the election that approved the constitution barely achieved the minimum 30% voter participation rate required by the Bureau of Indian Affairs (BIA) to make it official.
Subsequently, many Kikmongwi refused to certify any representatives to the Hopi Tribal Council and it struggled for years to achieve and maintain legitimacy. In 1943 the BIA officially dissolved the council due to lack of participation. But an unofficial tribal council was formed and they hired attorney John Sterling Boyden in 1950. In 1955 he succeeded in getting the BIA to officially recognize the unofficial council, despite the fact that some of its members hadn’t been approved by the Kikmongwi.
Boyden wanted to take advantage of his situation and make some money negotiating commercial leases for the council. But according to the tribe’s constitution, one of the primary responsibilities of the Hopi Tribal Council was, “To prevent the sale, disposition, lease or encumbrance of tribal lands, or other tribal property.” This was interpreted to mean that commercial leases must be approved by tribal member votes. Boyden knew that most tribal members would vote against commercial leases, so in 1961 he convinced newly appointed Interior Secretary Stewart Udall to instruct the Bureau of Indian Affairs (BIA) to give his Tribal Council the ability to approve them without tribal votes.
In 1966 Boyden finally succeeded in negotiating a mineral lease for the Hopis with Peabody for coal on Black Mesa. The deal was very favorable for the large mining company. Boyden was supposed to be representing the tribe, but they didn’t know he had betrayed their trust and was secretly working for Peabody too. On May 16, 1966, Boyden convinced the Hopi Tribal Council to approve the Peabody lease even though he hadn’t provided them with any substantial details about it. The BIA subsequently signed off on the lease. Interior Secretary Udall later claimed he had no idea what Boyden had done.
Peabody had also signed a lease with the Navajo Nation for coal on Black Mesa in 1964, as both tribes owned land there. These leases allowed Peabody to open two coal mines in the area, including the Kayenta mine, which started up in 1973. The nearby Black Mesa Mine had begun operating in 1970, and its coal was used to produce electricity at the Mohave Generating Station near Laughlin, NV.
In 1998 some things happened that made Arizona’s state government finally get involved with Peabody’s coal mining operations. In April of that year Peabody, then called Peabody Western Coal Company, agreed to a more generous lease with the Hopis. The tribe would receive about $85,000 more a month, and get an immediate $1 million signing bonus. But that same month Peabody also laid off 35 local employees. It became apparent these actions were part of a strategy to improve the company’s attractiveness to investors when Peabody was bought by an investment firm in in mid-May. In late May Arizona’s Republican-controlled government weighed in on Peabody’s side by enacting SB1320, which created an income tax credit for power companies that used coal for the generation of electrical power. It’s still in effect today.
The recent bill signed in April by Gov. Ducey to exempt coal purchases from the state sales tax means that if the Navajo Generating Station is sold before it is shut down, the new owner will receive a sales tax exemption along with the existing income tax credit for the coal it purchases. The obvious goal of this double subsidy is to protect Peabody’s coal mine.
On May 1 things got more complicated when Peabody announced they had filed a lawsuit, along with the Hopi tribal government and the United Mine Workers, to try and keep the power plant operating. They claimed the laws which authorized the construction of the Central Arizona Project (CAP) canal require the Central Arizona Water Conservation District (CAWCD), which manages the canal, to continue buying power from the Navajo Generating Station. The CAWCD uses electricity from the plant to pump water from the Colorado River to its customers in Phoenix and Tucson. CAP officials have said they are planning for the plant’s shutdown and can buy cheaper and cleaner electricity on the open market. If the lawsuit succeeds, and the plant stays open, it means the Peabody coal mine could receive a third subsidy in the form of higher bills for water customers in Phoenix and Tucson. The lawsuit was filed after the financial advisory firm Lazard, which was hired by Peabody to find a buyer for the power plant, brokered a meeting in April between a potential purchaser and CAP.
The other Peabody coal mine on Black Mesa shut down back in 2005 after its only customer, the coal-fired Mohave Generating Station, was closed because its owners decided it was too dirty and expensive to operate. Many Hopi and Navajos were happy about the mine’s closure, despite the economic impact, because Peabody was constantly pumping thousands of gallons of water out of their aquifer to make a slurry that pumped the coal from the mine through a 273 mile pipeline to Laughlin. Tribal members had complained that the pumping had dried up springs on their reservations.
Navajo environmental groups have also complained about the air pollution spewed onto their reservation by the Navajo Generating Station. In 2009 a coalition of environmental groups, including two Navajo groups, joined in a petition to ask that the National Park Service declare the air pollution from the Navajo Generating Station to be impairing views at the nearby Grand Canyon National Park. This eventually forced the Environmental Protection Agency (EPA) to issue stricter new emission rules for the plant in August of 2014. Navajos living near the plant, however, claimed that the new rules weren’t strict enough to protect their health, and the health of their livestock and the local vegetation. The tribal environmental groups Tó Nizhóní Ání, Black Mesa Water Coalition, and Diné Citizens Against Ruining Our Environment (Diné C.A.R.E.) filed a federal lawsuit in 2015 alleging that the EPA had rigged the rule making process by excluding them from the technical working group that drafted the new rules. The political pressure that’s been applied by these local tribal groups was another reason the plant’s current owners decided to close it down.
Republicans often argue that the government shouldn’t pick economic winners and losers, that the free market should decide which businesses survive. Their efforts to protect Peabody’s Kayenta coal mine, however, show that its just another talking point they use to achieve their political goals. If Arizona Republicans are really concerned about the economic success of the Hopi and Navajo tribes, then why don’t they help them transition from the production of coal-fired energy?
On May 15, 2018, Arizona’s Republican Rep. Paul Gosar announced he had drafted a bill in Congress to keep the Navajo Generating Station running by exempting it from air pollution regulations. Tó Nizhóni Ání spokesperson Nicole Horseherder denounced the bill and said the Navajo people should enjoy the same environmental safeguards as other Americans.
On June 1, 2018, Republican President Donald Trump announced he had instructed U.S. Energy Secretary Rick Perry to “prepare immediate steps” to keep unprofitable coal-fired and nuclear energy plants from closing. A broad coalition of environmental and business groups responded that it was illegal and would force consumers to pay more for electricity.
On June 7, 2018, the board of directors of the Central Arizona Water Conservation District (CAWCD), which manages the Central Arizona Project (CAP) canal, voted to approve a plan to begin buying cheaper power elsewhere to replace what they expect to lose when the Navajo Generating Station closes in 2019.
On September 11, 2018, Navajos protested in New York City outside the offices of Avenue Capital Group to ask them not to invest in keeping the Navajo Generating Station in operation.
On September 20, 2018, two potential buyers of the Navajo Generating Station said “they could not overcome the challenges” and abandoned their plans to buy the plant.
On November 2, 2018, the Navajo Nation’s government said it wanted to take over the coal-fired Navajo Generating Station power plant in order to keep it and Peabody’s Kayenta coal mine operating.
On January 3, 2019, Navajos protested outside the Navajo Nation Council Chamber in Window Rock, AZ, in opposition to the tribe’s plan to buy the Navajo Generating Station.
On January 7, 2019, the Navajo Nation’s government said it also wanted to take over operation of the Kayenta coal mine, which serves the Navajo Generating Station.
On February 25, 2019, the Navajo Nation’s energy company sent a letter to the owners of the Navajo Generating Station stating they were unwilling to buy the power plant because the Salt River Project (SRP), one of the current owners, wanted to be given a complete release from any future cleanup liability caused by the plant.
On August 26, 2019, the last train of coal from the Kayenta mine arrived at the Navajo Generating Station.
On September 12, 2019, U.S. Rep. Tom O’Halleran, D-AZ, introduced a bill in Congress titled the Providing Recovery Opportunities & Mitigating Industry’s Shifting Economics Act, or PROMISE Act, to help the Navajo and Hopi communities affected by the closures to transition to new industries.
On November 7, 2019, Peabody Energy filed a $53 million claim against SRP for the “premature” closing of the Navajo Generating Station power plant.
On November 12, 2019, the Navajo Nation’s government terminated its general indemnity agreement with the Navajo Transitional Energy Company (NTEC), in order to ensure that the tribe would not be liable for any costs related to NTEC’s recent unexpected purchases of three coal mines in Montana and Wyoming.
On November 21, 2019, SRP announced it had reached a deal with Peabody Energy to pay them $21 million for the “premature” closure of the Navajo Generating Station power plant.
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