The Spring Creek Mine complex near Decker, Montana. Photo courtesy WildEarth Guardians

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Navajo Nation withdraws bond backing for Spring Creek Mine

Monday, November 18, 2019

By Johnathan Hettinger

Montana Free Press

LIVINGSTON — The Navajo Nation announced last Tuesday that it will not provide financial bond backing for a tribal-owned company’s recent purchase of Montana’s Spring Creek coal mine and two other mines in Wyoming.

The Navajo Transitional Energy Company, wholly owned by the tribe, purchased the mines through bankruptcy court from Cloud Peak Energy October 23. According to a Nov.ember 12 social media press release by Navajo Nation President Jonathan Nez and Vice President Myron Lizer, NTEC’s purchase of the mines put the tribal nation’s financial portfolio “in a state of uncertainty.”

Nez and Lizer exercised termination provisions of the Nation’s general indemnity agreements with NTEC, “rejecting Navajo Transitional Energy Company’s proposal to use the indemnity agreements for bonds financially-backed by the Nation for NTEC’s recent acquisition of three coal mines located in Wyoming and Montana.”

“We will not support initiatives that attempt to circumvent or undermine the laws and policies of our Nation,” the release said.

The action raises questions about whether NTEC will be able to continue to operate Montana’s Spring Creek mine, the largest in the state and eighth-largest in the United States by production, and Wyoming’s Antelope and Cordero Rojo mines, the third- and eleventh-largest in the U.S. In order to operate the mines, NTEC must be able to provide reclamation bonds.

Well that was fast. Leaders of the Navajo Nation are looking to pull the plug on the recent acquisition of coal companies by a tribal corporation. #CoalNoMore https://t.co/X3Sy6HKTVD
— indianz.com (@indianz) November 14, 2019

NTEC finalized its purchase October 23, resulting in a brief cessation of operations at Spring Creek after a permitting dispute with the Montana Department of Environmental Quality. DEQ refused to permit NTEC unless the company agreed to waive its tribal sovereign immunity, which allows tribes and tribal-owned companies to operate without being subject to state laws. NTEC initially agreed to a partial waiver of tribal immunity, but balked at waiving immunity to citizen lawsuits. After a two-day shutdown, a 75-day “interim” limited waiver of tribal sovereign immunity was reached between DEQ and NTEC, allowing Spring Creek’s 283 mine employees to return to work while the terms of a final permit are negotiated.

In Wyoming, NTEC has been operating its mines under Cloud Peak’s permits, pending a formal permit transfer process.

For now, the Nation’s withdrawal of bond backing will not affect operations at the Spring Creek Mine, said Rebecca Harbage, public policy director at the Montana Department of Environmental Quality. The mine’s current bond is held by Spring Creek Coal, LLC, an affiliate of Cloud Peak, and NTEC is serving as a contract operator of the mine. As long as the company continues to make annual payments of 1 percent of the extant $108.9 million reclamation bond, NTEC can continue operating the mine.

“The state is protected,” Harbage said. “The existing bond is in place. There is no reason to think this decision from the Navajo Nation impacts us.”

There is no requirement that NTEC complete a permit transfer by any specific deadline, Harbage said, though the interim agreement reached last month states that NTEC would apply for a permit transfer within 30 days of the October 23 closing of the purchase. That doesn’t mean the permit transfer has to be completed during that time period, Harbage said.

NTEC is now the third largest producer of coal in the United States! We closed on our Cloud Peak acquisition today. #coal #navajo #navajonation pic.twitter.com/HeKyeZXXFt
— NTEC (@NTEnergyCompany) October 24, 2019

NTEC appears to have few financial assets with which to guarantee a more than $100 million bond without the backing of the tribe. The company’s only other mine is the Navajo Mine in New Mexico, which was purchased under the terms of a 2013 agreement approved by the Navajo Nation Council.

NTEC purchased Spring Creek and the Wyoming mines under the same terms of that 2013 agreement, but Nez revoked that agreement, as well as a similar 2015 agreement, on Tuesday. Nez said in the release that NTEC decided to purchase the mines without consulting the Nation. Nez said he learned of the purchase the same way the general public did: through an NTEC press release.

“This action alone is disrespectful of our Nation’s leaders and the interests of the Navajo people,” Nez said in the release.

Calls to NTEC, Cloud Peak Energy, and a public relations firm representing Cloud Peak were not returned as of Wednesday morning.

NTEC told the Navajo Times on Tuesday, “We respect the decision of the Navajo Nation. Regardless, Navajo Transitional Energy Company remains a profitable, viable and successful business entity of the Navajo Nation. As such we will explore our options to best serve our interests as NTEC and the Navajo Nation.”

Posted by Navajo Transitional Energy Company on Tuesday, August 20, 2019

Navajo Transitional Energy Company: Provding jobs for the people

In announcing the decision, Nez noted that many economists have questioned the viability of the investment. Several economists told Montana Free Press last month that NTEC’s purchase of the mines made little economic sense.

The Navajo Nation’s Department of Justice has raised questions about the legality of the purchase and has struggled to obtain information about it, the Navajo Times has reported.

“The Nez-Lizer Administration strongly supports Navajo businesses and enterprises, but business has to be conducted the right way with transparency and integrity. NTEC should focus more resources into transitioning their energy portfolio to acquire and develop renewable energy for the Navajo Nation,” Lizer said in the release.

Lori Goodman, a member of the Navajo environmental group Diné CARE, praised the move by Nez and Lizer, but said she expects a lawsuit by NTEC.

“We think it’s a great move,” Goodman said. “They finally did as their constituents have been asking them to do and let NTEC go.”

Anne Hedges, deputy director of the Montana Environmental Information Center, said the Navajo Nation’s decision will likely save Montana taxpayers the expense of a lengthy court battle over the mine’s bonding.

Johnathan Hettinger is a journalist based in Livingston. Originally from Central Illinois and a graduate of the University of Illinois, he has worked at the Midwest Center for Investigative Reporting, the Livingston Enterprise and the (Champaign-Urbana) News-Gazette. Contact Johnathan at jhett93@gmail.com and follow him on Twitter @jhett93.

Note: This story originally appeared on Montana Free Press. It is published under a Creative Commons license.

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