Updated 8/16/10

More than four decades ago, the Hopi and Navajo tribal councils sold 65,000 acres of coal rights to what was then called Peabody Western Coal. The Black Mesa deal, engineered by a former U.S. attorney who represented the Hopi while working for Peabody on the sly, brought hundreds of jobs to northeastern Arizona. It also forced the relocation of some 10,000 people from land slated for the strip mine. Families and clans were split and relations between the two tribes strained. Starting in 1970, the mine began pumping more than 4,000 acre-feet of groundwater annually to send coal slurry 273 miles via pipeline to the Mohave Generating Station, dropping the Navajo aquifer and drying up local wells. 

Though the Black Mesa Mine closed in 2005, its associated Kayenta Mine still sends coal to the Navajo Generating Station on the reservation near Page, Ariz. In addition to this and the open pit Navajo coal mine, the reservation hosts two of the region's three coal plants. The tribe owns none of these facilities, and though it receives royalties and tax revenue, it has no say in how they do business. 

"Past development in Indian Country was the old formula where companies came in and built projects, but only leased the land and did not include the tribe as equity partners," says David Lester, a member of the Muscogee Creek Tribe and the executive director of the Denver-based Council of Energy Resource Tribes (CERT). "That old paradigm left us with all the social and environmental costs and none of the economic benefits." 

Given this history, it's no wonder the Navajo Nation, like many tribes, has tried to take control of resource development on its own land. The tribe's Desert Rock coal plant was conceived to do just that. In 2003, the Diné Power Authority, created by the tribal council to develop the tribe's energy resources, announced that the 1,500-megawatt facility would be built by the German company Steag Power (acquired the following year by Sithe Global Power) on Navajo land about 25 miles outside of Farmington, N.M. The tribe itself would own up to a half stake, exploit its large coal reserves, and, when the plant was finished as projected in 2005, send electricity off to markets with its own 500 kilovolt transmission line, which has been in the works since the 1990s. 

Navajo Nation President Joe Shirley Jr. hailed the project as an economic victory for the poverty-stricken reservation, where the unemployment rate ranges from 44 to 66 percent. Desert Rock would mean not only jobs -- 200 in BHP Billiton's expanded Navajo Mine as well as 1,000 construction jobs and 400 operation jobs for the plant itself -- but also $50 million in annual revenue. 

At the time it was proposed, the plant seemed to have a solid foundation: The economy was swinging back from a mild recession, real estate was hot and construction was booming, especially in the Southwest and California. To keep pace with a projected doubling in electricity demand, the International Energy Agency called for $1.6 trillion in energy investment through 2030 in Canada and the United States.  Regulatory agencies were generally more permissive, and Congress was nowhere near to passing legislation to rein in carbon emissions, while the Bush White House was refusing to acknowledge climate change. Yet despite the tribe's optimism, a closer look at how it and its partners went about obtaining permits and securing funds shows that Desert Rock always rested upon shaky ground. This March, after seven years of planning and with millions of dollars poured into attorneys, consultants and travel junkets, Sithe Global not only delayed the project once again -- beyond 2015 this time -- but said it is considering changing it extensively. In June, the company gave up the only funding it had secured for construction of the project, when it allowed a $3.2 billion industrial revenue bond and tax break from San Juan County, N.M., to expire. And now, with its champion Shirley stepping down because of term limits this fall, Desert Rock's days are likely numbered.

From the get-go, the Navajo tribal government's approach did little to reassure community members that Desert Rock would be different from past projects involving outside companies. To get the land for the plant, for example, the government paid elderly shepherds to sign over their grazing allotments without telling them what the land would be used for. (The tribe needed their permission because reservation land is held in trust for the Navajo by the United States government.) "They would bring a bag of groceries and tell them they would get a thousand dollars," says Lori Goodman of Diné Citizens Against Ruining Our Environment, or Diné CARE, a Navajo nonprofit formed in the 1980s to fight construction of a toxic waste incinerator and dump. "People told us they were harassed to the point where they got fed up and said, 'We'll sign whatever just to get you out of our face.' "