Navajo Nation bets on coal
A tribe digs into a dying industry.
Last year, Duane "Chili" Yazzie nearly got himself thrown out of the Navajo Tribal Council chambers. Yazzie, who lost his right arm after being shot by a white hitchhiker in 1978, has long led the fight against racially motivated violence against Navajos in border towns. Now, as president of the Shiprock Chapter, a Navajo political entity similar to a county, he has a new target for his activism: His tribe's purchase of a coal mine from BHP Billiton, one of the world's largest mining companies.
On Dec. 23, as the tribal council speaker called for a vote on legislation related to the purchase, Yazzie broke in, speaking loudly in Navajo, his long, silvery black hair hanging in tight braids that slapped against his black leather jacket. The speaker demanded order, and Yazzie switched to English: "Mr. Chairman, you are out of order. Your council is out of order. I stand in opposition to this … circus," he said, smiling and ignoring the police officer pulling on his arm. "I call the score five to zero. The company (BHP Billiton) is five. The Navajo Nation is zero."
The mine in question, the Navajo Mine, sits on the northern edge of the reservation between Shiprock and Farmington, N.M. It supplies the Four Corners Power Plant, which has generated electricity for some 1.7 million homes across the Southwest since 1963. The plant was about to cut the amount of coal it bought from the mine by 30 percent, thanks in part to the impending closure of three of its units, and the departure of one of the plant's partial owners, a California utility being forced to ditch coal by the state's strict environmental laws. As a result, BHP Billiton wanted out of the mine.
That opened the door for the Navajo Nation to buy in, and a week after Yazzie's protest, it did. A tribally owned corporation became the new owner – the first time the Navajos have ever owned a significant piece of the energy infrastructure on their reservation. Some say it's a great deal for the tribe, one that will make money, preserve jobs and give the Navajos greater control over their natural resources. Others call it a huge mistake, especially given the coal industry's uncertain future.
The debate over the purchase reflects a larger rift in the tribe between "traditionalists," who say the coal industry is doing irreparable physical and spiritual damage to the environment, and "progressives," who want to buy into the industry and reap more of the profits. "I think for too long we tried to imitate the modern, Western society," says Yazzie, who has become the traditionalists' de facto voice. "But is that who we want to be?"
On clear dark nights, a cluster of lights glows in the desert near the confluence of the San Juan and Chaco Rivers. Great clouds of steam billow from the smokestacks of the Four Corners Power Plant, obscuring the stars that northwestern New Mexico is famous for. The plant is perhaps the starkest symbol of the shift from a traditional to a capitalist economy on the Navajo Nation. For decades, the land was home to several families who grazed sheep. But that changed in the early 1960s, when utilities and mining companies forced the families out, and opened the plant and nearby Navajo Mine, the first of several built on or near the reservation between 1963 and 1974. It was part of a development frenzy on the Colorado Plateau that "eclipsed virtually every other industrial effort on earth," says Charles Wilkinson, a professor and tribal law expert at the University of Colorado Law School.
The beneficiaries of the "Big Buildup," as Wilkinson calls it, were the urban consumers who got cheap power. After all, as the darkness that envelops the reservation at night attests, virtually all of the electricity generated at the plants goes somewhere else – to far-off cities like L.A., Las Vegas, Phoenix and Albuquerque. It was much more convenient for the utilities to build out here, near the coal, where there were few people to complain about pollution and no need to worry about California's emerging anti-smog regulations.
The losers were the Hopi and Navajo people. Beginning in the 1920s, the U.S. government cut deals with coal, oil and gas companies on behalf of the tribal councils, which had initially been created to facilitate the extraction of natural resources from Indian land. But the feds failed in their duty to negotiate aggressively on the tribes' behalf; as a result, they lost out on hundreds of millions in royalties and lease payments.
While the tribes saw only meager profits, they shouldered most of the burden of the industry's pollution. Many people had to move when mining companies took their land, and those who didn't complained that coal dust poisoned their sheep and burned their lungs. The smokestacks spewed sulfur dioxide, particulates, mercury and arsenic. Meanwhile, hundreds of tribal members remained without electricity and running water.
Still, the mines and power plants were one of the tribes' few economic lifelines. Coal revenue accounted for a third or more of tribal budgets and employed hundreds of tribal members, especially Navajos, who lived nearby and also heated their homes with free or cheap coal from the mines.
By the 1970s, the Navajos and other resource-rich tribes had become increasingly frustrated with watching corporations like Peabody and BHP Billiton profit from tribal coal, gas and oil while leaving them to clean up the mess. So, in 1975, Navajo Nation President Peter MacDonald created the Council of Energy Resource Tribes to provide Native Americans with the expertise and power to take control of energy development on their land. He described the group of 25 tribes as a domestic OPEC. A Washington, D.C., bureaucrat told People Magazine in 1979, "I'd rather be a Navajo than the president of Exxon. They're going to get even for the last 200 years."
CERT, however, lost a lot of its heft in the early 1980s, when coal and oil prices dropped suddenly and the uranium industry imploded. And even though the newly empowered Navajo government was able to renegotiate more favorable leases for the mines and power plants, the corporate owners retained control, leaving the tribe in the role of underpaid landlord.
Increasingly fed up, in 1985 the Navajo Nation created the Diné Power Authority to develop its own energy projects. It proposed a high-voltage transmission line from northern New Mexico to Nevada and, in partnership with a German company, the Desert Rock power plant, which would have burned coal from the Navajo Mine. Both projects have since been shelved, unable to secure funding and key environmental permits, in part thanks to legal opposition from Navajo activists. An attempt to build a utility-scale wind farm also foundered.
Outside forces continued to affect the tribe in other ways. The Black Mesa coal mine, on the Arizona portion of the Navajo Reservation, closed in 2006 after the power plant it supplied, the Mohave Generating Station, shut down due to lawsuits and a requirement that it install expensive pollution controls. As a result, the Navajo Nation lost some $15 million annually in royalties and lease payments, or about 15 percent of its budget; 230 employees – most of them Navajo – lost their jobs. The tribe was powerless to stem the economic fallout.
It was no surprise, then, that when tribal officials saw an opportunity to buy into the industry – to evict a corporate giant and take the decision-making, and profits, into their own hands – they jumped on it. "If you are an equity holder, you have input directly into the operation, maintenance and future planning," says Chris Deschene, a Navajo tribal member, former Arizona state representative and attorney who worked on the Desert Rock project. "And for me, being independent that way gives you more autonomy, more options, more strength, and the ability to provide more for your people."
That opportunity, at least in part, arose in 2006, when California passed a law that essentially forbade the state's utilities from investing in coal plants, even in other states. Two years later, the state also required that they get 33 percent of their power from renewable sources by 2020. California utilities have since begun a slow exodus from the Interior West's coal plants. Southern California Edison, one of the state's biggest utilities, owned half of two of Four Corners' five units, and announced in 2010 that it wanted out. Around the same time, the Environmental Protection Agency forced Four Corners – the nation's largest emitter of nitrous oxide – to clean up its act.
To comply, Arizona Public Service, the plant's operator, would buy out Edison's share of its two units, and shut down the remaining three. The resulting cut in coal consumption hit BHP's bottom line, and it wrangled with APS over the price of coal. If the two couldn't agree, both the mine and plant would close in 2016, wiping out some $47 million in annual royalty and lease revenue to the tribe, along with about 900 well-paid jobs, mostly held by Navajos.
But then the third option emerged: The Navajo Nation could buy the mine. And on Dec. 30, the Navajo Transitional Energy Corporation signed a deal for approximately $85 million. In theory, at least, the tribal corporation will make decisions that benefit tribal members rather than distant shareholders or CEOs. "Of course we'd rather have the Navajo Nation control its own resources," says Roger Fragua, former deputy director of CERT and a member of Jemez Pueblo in New Mexico. "Coal is a loaded gun. You want it in the hands of the mature person, and there's nobody more mature, nobody older than an Indian tribe."
Yet the purchase has met with strong resistance, mostly from the same traditionalist groups that fought Desert Rock. They claim the Navajo Nation is getting taken advantage of once again, and that the purchase perpetuates the tribe's reliance on the coal industry and its damaging ways. Yazzie has become one of the most vocal and respected opponents. His hometown of Shiprock is only a 30-minute drive from the Four Corners Power Plant, whose yellow haze smears the town's sky on cold days. The chapter sees few of the industry's benefits: Most workers live in wealthier chapters even closer to the plant and shop in Farmington, just off the reservation.
Yazzie sees the tribe giving up control, not gaining it. He says the council is rife with corruption – Council Speaker Johnny Naize, a big supporter of the mine purchase, was recently charged with bribery and conspiracy for misusing nearly $37,000 in tribal funds – and unlikely to make decisions that benefit its constituents. And the purchase was so rushed that the tribe may have overlooked important details; tribal attorney Craig Moyer says Edison's need to divest from the plant made it set "very aggressive timelines."
There are larger concerns about whether this is a good time to be buying into the coal industry. Coal is currently the country's largest generator of electricity, but natural gas is expected to surpass it by 2040. And impending EPA regulations on carbon dioxide and mercury emissions from existing power plants could impact Four Corners, and thus the Navajo Mine. Like other U.S. coal companies, the tribe is considering exporting coal, but there are transportation barriers and growing opposition to shipping it overseas. "It's a declining industry," Yazzie says, "and here we are, heavily investing in it."
But Steve Gundersen, a financial consultant and chairman of the Navajo Transitional Energy Corp. board of directors, says that the industry's current weakness is what enabled his tribe to buy in. He's confident that, given coal's abundance in the United States and on the reservation, the industry will figure out a way to stay viable. Besides, the tribe has a guaranteed buyer for its coal until 2031. Given APS investments in emissions controls at the Four Corners plant, Moyer says, "It is hard to imagine that this would not be one of the last coal power plants ever to go away."
And the Navajo Mine appears profitable. According to BHP's financial reports, it and the San Juan Mine, which supplies the nearby San Juan Generating Station, brought in a combined total of $588 million in fiscal year 2013. Though the Four Corners plant will be buying less coal now, the new owners have an advantage: Unlike BHP, the tribe probably won't have to pay state or federal taxes. According to Gundersen, the Navajo government will receive about $50 million a year in royalties and taxes from the mine and power plant, and be able to pay off the purchase price within four years.
Tribal officials hope to use 10 percent of the mine's profits to diversify the Navajos' energy portfolio by investing in Navajo-owned renewable and alternative energy projects. As Moyer told the tribal council in April 2013, buying the mine "can be the bridge to the future and the revenues to pay for it."
It's easy to be skeptical, however. It's difficult enough to build any utility-scale renewable energy project, let alone one that is developed by a tribe. Thickets of red tape and taxation issues make such deals incredibly complex, and distrust of outside companies' intentions means that hardly any tribally owned projects make it past the planning stage. Plus, NTEC includes coal gasification and carbon capture on the list of alternative energy sources it might fund with coal mine profits, making the future look a lot like the coal-heavy present.
And, as long as coal is around, there's little incentive to seek alternatives. "If we're not presenting a viable option, then these tribal governments go with the breadwinner. They're going with the certainty," Andy Bessler, who worked on renewable energy and tribal politics for many years in the Southwest with the Sierra Club, said last April. "We don't have a $50 million check in our hands. And (coal companies) have that every year." Perhaps just as important, the coal industry offers good jobs in a poor region, where unemployment generally hovers around 50 percent.
Marie Justice knows what it's like to lose a well-paid job at a coal mine. These days, she drives a truck at Peabody's Kayenta Mine on Black Mesa, which supplies coal to the Navajo Generating Station on the western side of the reservation near Page, Ariz. After I reassured her that I was a journalist, not an environmental activist, she agreed to meet me at the Black Mesa Shopping Center, a convenience store along Highway 160 at the turnoff to the mine.
As I waited in the parking lot, stray dogs sniffed at my rental car, and miners in trucks pulled in after the shift change to gas up before driving home to Kayenta, Tuba City or Page. Justice, a middle-aged Navajo woman with dark shoulder-length hair, arrived in a late model Chevy SUV, wearing a sweatshirt, jeans and silver studs made by a Navajo jeweler.
Justice started working at Black Mesa mine – which is adjacent to the Kayenta Mine – in 1988, driving the massive trucks that make normal vehicles look like Matchbox cars. She spent the summer of 2004 in California, trying to convince regulators not to force Mohave Generating Station and Black Mesa Mine to close, and hoping to show what the impact would be on Navajo people. "I don't think they really understood it," she says. "They're flipping their light switch and they got their electricity, they don't know how it gets there." Justice and hundreds of others lost their jobs anyway.
She found work with the United Mine Workers union until a position opened up at Kayenta Mine two and half years later. Others, she says, were forced to leave the reservation to find work or take early retirements. Lacking higher education and transferable skills, many of the laid-off older workers had trouble finding new jobs. "There have been divorces because of what happened here," she says. "The emotional impact on the family itself, I think, was really hard."
Erny Zah, then-spokesman for Navajo President Ben Shelly, says that the tribe stepped in to save the Navajo Mine primarily to stop a catastrophic repeat, which would ripple far beyond just the laid-off workers and their immediate families. Because of the way Navajo families are structured, one person with a well-paid job "can carry the load for 10 to 15 people," Zah said. "When we talk about one job, we're talking about multiple families."
"I think of this as being such a poignant example of the difficult choices that tribal governments have to make," says CU's Wilkinson. "The Navajo Nation knows about climate change. It knows about health effects on individual people. It knows that buying into the coal economy now is dicey." These factors and more, Wilkinson says, "ought to create a good amount of understanding for the Navajos' decision."
After leaving Justice, I drove down the road and stopped for a late lunch at the Anasazi Inn, a low-slung motel with turquoise trim and a parking lot full of trucks. Miners coming off shift often stop here for roast green chile and mutton on pillowy frybread.
For the past 24 years, Patricia Manygoats, a warm Navajo woman with a ready smile, has managed this roadside motel. One of her brothers works at the San Juan Generating Station just outside of Farmington, the other at Kayenta Mine with Manygoats' husband, a truck driver, who formerly worked at Black Mesa Mine. That's where Manygoats' father used to work, manning the pipeline that sent a mixture of Black Mesa coal and water 273 miles to Mohave Generating Station. She and her husband used to take their kids to visit the plant, and they would point at the smokestacks and say, "Dad used to crush the coal, give it to Grandpa and he'd slurry it down to that big old power plant there."
After that, it was hard not to see coal everywhere. I smelled its acrid tang as I drove through reservation towns, where people burn it in woodstoves. I saw it in the transmission lines that run beside the homes of Navajos who still herd sheep and haul water, as well as in the iPad and smartphone that belong to Hubert Harwood, president of Upper Fruitland Chapter and an employee of the San Juan plant. His fingers black with soot, Harwood texted as we sat in leather desk chairs in the chapter's modern offices. "Everybody, if you actually think about it, deals with the plants and the mines," he said. "If something affects one of these mines out here, one of these plants, it affects everything."
The Grand Canyon Trust, a Flagstaff-based nonprofit, hopes to lessen that dependence – using money from coal. The organization helps administer a $5 million fund donated by the utilities that run the coal-fired Springerville Generating Station in eastern Arizona, as part of a settlement over the plant's expansion. The money funds renewable energy projects and helps local chapters diversify their economies – something that is difficult in the highly centralized Navajo Nation, where all business development decisions must pass through Window Rock, the seat of the Navajo tribal government. The goal is to foster social entrepreneurship as an alternative to resource extraction, says the Trust's Tony Skrelunas, former director of the Navajo Nation Economic Development Division, and it begins by encouraging bright young people to return to the reservation after college to start businesses.
Brett Isaac, a talkative, barrel-chested 29-year-old, is one of those young people. He likes to lift weights and race his BMW X6 around the reservation, although sometimes he first has to clear the tumbleweeds out of his long, unpaved driveway.
Isaac grew up in Kayenta, son of a schoolteacher and a heavy-equipment operator. He pursued American Indian studies at Arizona State, but always knew he wanted to return to the reservation, bucking the brain drain. "When most people see despair, there's potential," he says. After he was hired by a tribally owned economic development corporation, he convinced its board of directors to get into the solar business. Now he's the CEO of Shonto Energy LLC, a community-owned business, where he builds off-grid solar systems for Navajos living without electricity, using money from the Springerville settlement.
Identifying and encouraging people like Isaac and projects like Shonto may enable the Navajos to take control of their own resources more effectively than buying a mine. After all, no matter who owns the Navajo Mine, it's still subject to the same macroeconomic forces –– opposition to coal export terminals, EPA regulations, the price of natural gas, state policies –– that affect BHP Billiton, Peabody or anyone else in the coal industry. Ultimately, true control of coal resources may be an illusion.
By using some of the Navajo Mine's profits for small-scale projects like Isaac's, the tribal government can perhaps appease both the progressives and the traditionalists –– supporting businesses that give Navajos electricity while allowing them to continue living the way they always have. Plus, an industry that fulfills an obvious need (18,000 homes on the Navajo Nation lack electricity) and doesn't rely as much on the whims of faraway customers and politicians may offer the Navajos a truer form of economic independence.
Coal companies "imprisoned our intelligence because they made us think that without that job there's nothing out here, we wouldn't survive," Isaac says. But that could change "if we created the competency out here, the confidence.
"Then," he adds, "we wouldn't feel so threatened."