Navajo Nation will not back energy company’s mines in Powder River Basin

November 13, 2019

In yet another twist to the saga of the three former Cloud Peak Energy coal mines in the Powder River Basin, the Navajo Nation said it will not financially back bonds needed by the Navajo Transitional Energy Company (NTEC) to complete the acquisition of the mines.

The Associated Press reported that tribal president Jonathan Nez said he canceled agreements the energy company might have relied on to seek the Navajo Nation's financial backing for the bonds.

NTEC recently bought Montana’s largest coal mine and two mines in Wyoming at auction after Cloud Peak Energy declared bankruptcy. The mines, Wyoming’s Antelope and Cordero Rojo mines and Montana’s Spring Creek Mine, can keep operating for now because more than $370 million in reclamation bonds posted by Cloud Peak remain in place, state officials said.

However, it is unlikely state regulators would release the Cloud Peak bonds until the mines' new operator can come up with bonds on its own. That means taxpayers in Montana and Wyoming will not be left on the hook for future reclamation or cleanup costs.

This comes on the heels of a succession of coal company bankruptcies that have impacted the state in recent months as demand for coal has continued to decline. Hundreds of people in the region were put out of work for months after another bankrupt company, Blackjewel, drastically scaled back operations at two of the biggest coal mines in the U.S.

In his statement, Nez said that the Navajo Tribe was trying to distance itself from coal and that NTEC was not forthcoming about information related to acquiring and operating the mines. He said he wants to protect the tribe's finances as revenues decline from the loss of a coal plant and mine on the reservation. Tribal lawmakers had been considering legislation to do the same thing.

“The Navajo Nation's financial portfolio as well as our resources would be placed in a state of uncertainty if we allowed NTEC to proceed with finalizing the bonds needed to operate these three mines using the (Navajo) Nation's consent ...” Nez wrote in a statement.

Hundreds of people in the region were put out of work for months after another bankrupt company, Blackjewel, drastically scaled back operations at two of the biggest coal mines in the U.S.

The NTEC was created in 2013 to buy a coal mine in New Mexico on the reservation. It also owns a 7 percent stake in the nearby Four Corners Power Plant. While it was organized under the tribal government, it operates somewhat independently.

Nez said the legal documents creating the company gave the tribe's executive branch unilateral authority to administer what are known as general indemnity agreements. He said the bonds in place for the Navajo Mine and the Four Corners power plant won't be affected by his decision.

The energy company has said terminating the indemnity agreements could have serious impacts on the company's operations and increase the costs to secure reclamation and other bonds. It urged tribal lawmakers last week to seek other solutions to support bonds for the Cloud Peak purchases.

“NTEC has always considered these acquisitions to be highly advantageous and profitable,” company spokesman Erny Zah wrote in response to questions from The Associated Press. “While we understand the president's decision with regard to the indemnity agreements, we continue to see very successful operations and prospects ahead.”

 

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