Coming to blows

Long ago, the Navajos called Gray Mountain the "Mountain of Hope" for the healing powers of its herbs. Now this long ridge of bleak rock, just west of the tiny community of Cameron, Ariz., offers the tribe hope of a different sort. With its 17-mph-average winds and open transmission space on nearby power lines, it's considered one of the best sites on the Navajo Nation for a large wind farm.

In March 2008, the Navajo central government in Window Rock, Ariz., announced it was working with Joseph Kennedy II and his Boston-based nonprofit, Citizens Energy, to build a 250-to-500-megawatt wind farm on Gray Mountain. Citizens Energy would grant a 20 percent ownership share to the tribe's Dine Power Authority, and the project could produce up to $10 million a year in taxes and royalties for the Navajo Nation.

But the announcement came as a shock to the tribe's Cameron Chapter, which for two years had been working with Texas-based International Piping Products and Sempra Energy of California to build a $1 billion, 500-megawatt wind farm in the same spot. IPP and Sempra had already placed anemometers to measure the wind and opened a project office under a conditional-use permit from Window Rock. And Cameron, where the average annual per capita income hovers around $6,000, could use the money from the project.

Now both projects are in limbo while the tribal council's Resources Committee decides which company can build. That won't happen soon, says Mitch Dmohowski of Sempra. His company originally hoped to have its wind farm in operation by 2011, but now it's been delayed at least a year.

The situation is unfortunate but far from unknown in Indian Country, where political disputes and other obstacles can hamper renewable-energy development. "A lot of tribes have been studying and evaluating and trying to get organized, but we do not have a big portfolio of successful examples yet," says Roger Taylor, tribal energy program manager with the National Renewable Energy Laboratory.

A number of tribes have outstanding renewable resources -- sun in Arizona, wind in the Dakotas and biomass in Washington and Oregon, says Taylor. But developing them is difficult for several reasons.

Certain renewable projects are eligible for either a per-kilowatt-hour federal tax credit for production or an investment tax credit for capital investment. Coupled with the accelerated depreciation allowed for renewables, this can cover up to 60 percent of the cost of these capital-intensive projects, Taylor says. But because sovereign Indian nations have no tax liability, they can't take advantage of these benefits without establishing complicated joint ventures with private companies. And that can be sticky: A long history has made many Indians wary of white exploitation of their lands and resources.

That's not all. Often there's not enough transmission capacity available nearby, and buying room on existing lines is expensive for cash-strapped tribes. And the Energy Department's tribal program, which offers financial and technical assistance for feasibility studies and other efforts, averages just $5 million a year in funding for 565 tribes nationwide.

Project approval on reservations can also be complex. On the Navajo Reservation, at least seven offices are involved -- federal agencies, plus the Navajo Environmental Protection Agency, the president's office, tribal council and the local chapter. Meanwhile, changes in tribal administrations can mean dramatic shifts in attitude. That's unsettling for developers, says Taylor: "Energy is a long-term project. You can't do energy in an unstable environment."

It took eight years to build the 750-kilowatt wind turbine that now powers a casino on South Dakota's Rosebud Sioux Reservation. A follow-up 30-megawatt project is yet to be launched after five years of negotiations between the tribe and the developer. 

Wrangling between the Navajo government and the Cameron Chapter has had a similarly chilling effect on plans for Gray Mountain. And if delays continue, someone else may snap up the open transmission space.

Last December, hoping to smooth things over, Kennedy flew out to meet and share mutton stew with Cameron residents. But the former congressman got into an argument with the chapter's council delegate and received a tongue-lashing from an elderly woman who admonished him to show more respect for their leaders and ideas.

Bitter about what they see as Kennedy's exploitation of his family name, and convinced that his deal with the central government will mean fewer direct benefits for the chapter, the pro-Sempra faction bought ads in regional papers calling for him to pull out.

Chapter members voted March 22 to authorize IPP and Sempra to proceed with necessary studies and land-lease negotiations. Still, some 200 Navajos from around Cameron have signed a petition supporting Citizens Energy, says the company's spokesman Brian O'Connor. 

"He divided the people," says Larry Ahasteen, IPP's renewable-energy specialist. "It was political sabotage." But O'Connor says his organization "followed at every step of the way the spirit and the letter of Navajo law."
"There's a lot of confusion" because tribal law is unclear about whether developers should approach the chapter or the central government first, says Chapter President Ed Singer, an IPP/Sempra backer.

No deadline has been set for resolving the issue. The Resources Committee wants to develop a consistent alternative energy policy before picking a company, says council spokesman Christian Bigwater. 

Navajo President Joe Shirley Jr. wants renewable projects to succeed, says his spokesman, George Hardeen. But Singer believes the current dispute could deter other projects. "It's fairly well-known that it's very hard to do energy development on the Navajo Nation already. It's hard to even open a business," he says. "All this doesn't help."   

• Energy & Industry