How a Coal Mine in Montana Could Screw the Navajo Nation

Illustration for article titled How a Coal Mine in Montana Could Screw the Navajo Nation
Photo: Byron C. Shorty (AP)

The overwhelming economic consensus is that coal is out, renewables are in. Yet one company, associated with the Navajo Nation, doesn’t seem to have gotten the message—and may be weighing the tribe down with more coal baggage as the rest of the country moves on.

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A judge last week blocked the expansion of the Spring Creek Mine in Montana, ruling that the federal government needs to issue an updated environmental review to more closely examine the impacts of mining more coal in the region. The ruling marked the latest development in a years-long struggle over Spring Creek, the largest mine in the state.

Last week’s ruling was welcome, but not exactly unexpected. The conflict over the mine has dragged on for years, as green groups have repeatedly challenged expansion plans in court. A magistrate–one step below the federal judge–actually ruled against the latest iteration of the expansion in early 2019. The case stalled when the mine’s original owner, Cloud Peak Energy, filed for bankruptcy later that same year.

“Usually what happens in bankruptcy is everything stops–you’ve got to figure out who owes what,” Derf Johnson, a staff attorney at the Montana Environment Center, one of the groups involved in the lawsuit, said.

“There’s been over 50 bankruptcies in the coal industry over the past 10 years,” Johnson explained. “Cloud Peak is just part of that story.”

Surprisingly, the Spring Creek mine changed hands while its expansion hung in the balance. It’s a bizarre dice roll for any company to make: Why invest in an asset in a failing industry, especially one tied up in litigation? Last May, the U.S. used more renewables than coal for the first time, and coal is increasingly ranked as the most expensive fuel to use. The pandemic has hit coal use particularly hard, according to a new study out Monday, and the outlook isn’t getting any better any time soon.

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Despite overwhelming signals coal is cooked, the Navajo Transitional Energy Company, or NTEC, felt like it buying the mine was worth it. The company purchased Spring Creek and two other mines from Cloud Peak in the fall of 2019, making NTEC the third-largest coal producer in the U.S. And the Navajo Nation—the company’s namesake—said they felt blindsided by the move.

“It’s an organization I feel that’s just taken advantage of Navajo,” Carol Davis, the director of Diné C.A.R.E., a Navajo-based environmental group, said.

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The “T” part of NTEC’s acronym—transitional—is a key descriptor of why the company was originally founded. The Navajo Nation created the company as an limited liability company in 2013 for the sole purpose of buying the Navajo Mine. The move was an effort to preserve the 900 jobs on the mine, most of which were filled by Navajo and Hopi workers, and safeguard the millions of dollars in royalties, taxes, and leases the mine and the coal power plant it fed provided the Navajo Nation. NTEC was also designed to provide dividends and taxes from its profits to the Navajo Nation.

The Navajo Nation has a long and complex history with coal, and NTEC itself was founded partially in hopes of moving the tribe away from its poisonous alliance. A cached version of the NTEC site from 2015 states that its mission is “To be a reliable, safe producer of coal, while diversifying the Nations energy resources to create economic and environmental sustainability for the Navajo people.”

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But in 2019, NTEC surprised the tribe by purchasing three mines, including Spring Creek, during a bankruptcy sale for Cloud Peak. Instead of helping the tribe wean off coal, it seemed to many, NTEC was digging its heels into the industry that was threatening to drag the tribe down.

“If you look at the [leadership] of NTEC, it’s a bunch of failed coal executives,” Johnson said. “It’s like, what is going on here?”

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Davis agreed, noting that most of the company’s leadership, almost all new hires since 2015, are not actually members of the Navajo Nation and that the company has “[seemed] to become more friendly with industry” over the past few years. NTEC’s CEO Clark Moseley, for example, has worked exclusively in coal since 1977, according to his LinkedIn work history. Earther has reached out to the company for comment about its role in ensuring it has an eye toward the clean energy future, and we’ll update this piece if we hear back.

The region where the Cloud Peak mines are located, the Powder River Basin, is facing a grim long-term outlook as demand for its coal has fallen sharply. The Powder River Basin is also located off Navajo land, making NTEC’s purchase even more puzzling. The Office of the President and Vice President for the Navajo Nation noted that they only learned about the purchase of the three mines after NTEC issued a press release following the purchase.

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“The tide was moving toward renewables,’’ Navajo Vice President Myron Lizer told Forbes last year. But after NTEC’s decision, “now we own four coal mines.” Following NTEC’s decision, the tribe announced it would cut financial support to the company for the three mines, saying that the tribe’s finances could be “placed in a state of uncertainty” from the purchase.

It’s not just the Navajo Nation impacted by NTEC’s bad decisions. The company owes around $10 million in back taxes for its Powder River Basin mines, an important source of funding for state and county coffers in Montana and Wyoming. When we spoke last week, Johnson had just come back from a Montana Senate hearing on a bill that would create a payment plan for paying back taxes for NTEC and other beleaguered coal companies.

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NTEC’s failure to pay up, Johnson said, “is putting the county [where Spring Creek Mine is located] in a really precarious position,” he said. “What happens if [the county doesn’t] collect the taxes and NTEC declares bankruptcy?”

Even if a federal court eventually approves the Spring Creek expansion following a new environmental analysis—which is looking increasingly unlikely under a Biden administration—the financial outlook for NTEC isn’t pretty. Last year, the power plant that is the Navajo Mine’s sole customer announced it would close by 2031, and a utility with a large stake in the plant is transferring its shares to NTEC as it tries to go completely coal-free in the next three years. Other energy companies in the Southwest have announced plans in recent years to purchase renewable energy and retire coal plants.

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The Navajo Nation is in the midst of testing real-time what a just transition away from coal could look like, especially following the shuttering of the Navajo Generating Station in late 2019. The closure of the power plant, which was once the largest coal plant in the West, took away a crucial source of jobs for the Navajo and Hopi tribes as well as $40 million revenue for the Navajo Nation.

But Los Angeles, which used much of the coal-fired power from the station, said last year it would explore partnering with the Navajo to turn the power plant into a renewable energy hub. The Biden administration’s appointment of several Indigenous people to administrative spots—including Wahleah Johns, the founder of a Navajo renewable energy company, to a position at the Department of Energy, and Deb Haaland, a member of the Laguna Pueblo, nominated to run the Department of the Interior—gives Davis and others “hope” that helping the Navajo with a just transition will be high on the government’s priority list.

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It’s not clear to Navajo like Davis what exactly would happen to the tribe financially if NTEC goes bankrupt because the financial relationship between the tribe and the company is pretty murky. But the company’s repeated bad investments, she said, are getting the Navajo deeper into coal power while the rest of the country moves on.

“Who is going to buy that [energy]?” Davis said. “They don’t need us. Nobody needs our energy.”

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Writing about climate change, renewable energy, and Big Oil/Big Gas/Big Everything for Earther. Formerly of the Center for Public Integrity & Nexus Media News. I'm very tall & have a very short dog.

DISCUSSION

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I almost wonder if the CEOs were expecting a second Trump administration, so they purchased the mines under the assumption that the deregulations put out by the administration would benefit them. A very poor gamble, indeed.