Council passes $4.1 million to acquire Navajo Mine
By Alastair Lee Bitsoi
WINDOW ROCK, Oct. 18, 2013
(Donovan Quintero - Navajo Times)
On Tuesday, the Council voted in favor -- 17 to 2 -- of providing the Navajo Transitional Energy Company, LLC, a wholly owned company of the tribal government, the $4.1 million supplemental appropriation from the Undesignated, Unreserved Fund Balance, so that it can move forward with its acquisition of Navajo Mine.
When Council established NTEC on April 29 to carry out the necessary business actions on behalf of the tribe to purchase Navajo Mine, estimated to be $85 million, sponsor LoRenzo Bates said that Council didn't forward any other money, besides the $3 million allocated for phase 1 and 2 of the due diligence investigation.
"As we move forward, NTEC will incur and continue to incur costs in being owner of Navajo Mine," said Bates, explaining to Council why it should approve the bill.
Bates (Nenahnezad/Newcomb/San Juan/T'iistoh Sikaad/Tse Daa K'aan/Upper Fruitland), who was sitting with NTEC's Steven E. Gunderson and legal counsel Paul Frye as his agents, added that with the creation of NTEC, it showed the coal industry that the Navajo Nation is serious of sitting at the table and being a coal miner.
"Technology will show that coal will be a much valuable resource," said Bates, who also serves as the chairman for the Budget and Finance Committee. "There is a future for coal."
With the Council's passage of the bill, which now awaits President Ben Shelly's signature, it would disperse the supplemental appropriation into three disbursements to NTEC.
The first disbursement, in the amount of $1.6 million, will be for NTEC's pre-closing operating expenses and used for any outstanding invoices for transaction expenses. The second disbursement, approximately $1.3 million, will be released for additional estimated transaction expense to closing, upon the signing of an Equity Interest Purchase Agreement between NTEC and BHP Billiton. The final installment, which totals about $1.1 million will be used for NTEC's post-closing operating expenses, after the signing of the Coal Supply Agreement between NTEC and Arizona Public Service, the owners of the 2,000 megawatt Four Corners Power Pant.
Gunderson added that projections of NTEC's acquisition of Navajo Mine shows cash flow to be positive in the foreseeable future.
"Aside from the $4.1 million, BHP is paying for the rest of the transaction to occur," he added.
He also clarified a concern by Elmer Begay (Dilkon/Greasewood Springs/Indian Wells/Teesto/White Cone), who said that the legislation doesn't require NTEC to transition or invest into renewable energy. According to Gunderson, at least 10 percent of net income NTEC generates from the mine would be reinvested to fund the research and development of renewable and alternative sources of energy.
For Council delegates Leonard Tsosie (Baca-Prewitt/Casamero Lake/Counselor/Littlewater/Ojo Encino/Pueblo Pintado/Torreon/Whitehorse Lake) and Mel Begay (Bahastl'ah/Coyote Canyon/Mexican Springs/Naschitti/Tohatchi), NTEC's purchase of Navajo Mine means economic sovereignty. Sure acquiring Navajo Mine means saving the 800 jobs at both Navajo Mine and Four Corners, but it also sustains tribal coffers with millions in royalty and tax revenue.
"Coal mining does support half of the budget," he said.
Tsosie added that he is confident in the federal, state and tribal regulations when it comes to understanding the environmental concerns and impacts of power plants like Four Corners and Navajo Generating Station, near Page, Ariz.
To alleviate confusion on the supplemental appropriation, Tsosie motioned for an amendment to eliminate a section in the bill, known as Section 2, Subsection 6, that would have created a line of credit in the amount of $36 million. His motion was seconded by Jonathan Hale and passed the Council by a vote of 15-3.
The amendment was approved after Department of Justice attorney Dana Bobroff clarified that section of the bill that Council delegate Lorenzo Curley (Houck/Klagetoh/Lupton/Nahata Dziil/Wide Ruins) brought forth as an issue.
Curley, who voted against the measure, had issue with the heading, or title, of the legislation because it didn't include the $36 million that he thought was a request on top of the $4.1 million.
"There is very little known on how this will be paid back," Curley said, adding that he fears NTEC becoming another Diné Power Authority.
Curley explained that when the tribe was considering being an owner of the now-defunct and so-called clean coal power plant know as Desert Rock, the tribe invested $40 million in DPA, but lost it all.
Because he had an issue with the piece of legislation's title, he called it out of order.
But according to Bobroff, it's about establishing rules and parameters of the tribe's investment committee, which will determine a line of credit to NTEC, if need be.
Regarding Curley's concern of Navajo money being used to purchase the mine, Begay said, "Were just putting it back in there for a bigger investment. If we don't do this, then we won't have that money. Now, we have that blessing and opportunity."
The tribe receives $40 million in taxes and royalties from Navajo Mine.
Shelly supports the purchase of Navajo Mine and the $4.1 million supplemental appropriation to make it happen, so long as Council considers the passage of the Navajo Nation Energy Policy of 2013. The bill, co-sponsored by Charles Damon II, Speaker Johnny Naize and Roscoe Smith, was being considered by Council as of press time on Wednesday, and is a policy project part of the president's platform.
The bill would essentially rescind the 1980 Navajo Nation Energy Policy, and update and amend language in the policy act. Specifically, it calls for clean coal technology and any of its advancements and would set the policy of exploration, development, sustainable management and use of energy resources.
At a Nabik'iy‡t’' Committee meeting last week on Oct. 10, committee members approved two amendments in an effort to strengthen the legislation, according to a Council press release. Those amendments included removing a section of the legislation that expresses disappointment with current federal policies regarding the use of coal and another amendment to remove language stating that the Navajo would adapt to the future federal regulatory environment. Council approved its own and third amendment.
Some Council delegates like Tsosie oppose the energy policy act, saying it "doesn't have teeth" and Pete, who wondered why it took 33 years to update the act in the first place.
On Wednesday, Council delegate Dwight Witherspoon (Forest Lake/Hardrock/Kíts'iili/Pinon/Whippoorwill) motioned to take the legislation off the agenda, in an effort to allow time for amendments and people outside the Council to comment on the bill. Deleting the item off of the agenda would have allowed the legislation to go before the Council during its fall session next week, but it failed. Witherspoon's amendment was voted down, 7 in favor and 8 opposed. He then offered to table the legislation but that failed Wednesday evening.
Following the vote, Lori Goodman and Sylvia Clahschischilli, both of Diné CARE, expressed disappointment in the Council's vote.
As a result of approving the amendments, Naize called for a vote on the main motion, but the Council lost quorum after four delegates walked out.