Tribe considers bill to create new company to operate Navajo mine

By Noel Lyn Smith
Navajo Times

WINDOW ROCK, April 11, 2013

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E ven though the due diligence team continues investigating the pros and cons surrounding the possible purchase of Navajo Mine, a bill has been introduced to create a new company to eventually operate the mine.

The legislation would authorize the creation of the Navajo Transitional Energy Company LLC.

It would also permit the new company to "conduct and complete" all due diligence with regard to the potential purchase of Navajo Mine; negotiate and execute all agreements on the transaction, including the stock purchase; negotiate and accept rights, obligations and liabilities from BHP Navajo Coal Co., owners and operators of Navajo Mine; and execute a coal supply agreement with Four Corners Power Plant, which solely receives coal from Navajo Mine.

The bill was assigned to the Resources and Development Committee, the Budget and Finance Committee, the Naa'bik'iyáti' Committee and the Council, where final authority rests.

Speaker Johnny Naize (Blue Gap-Tachee/Cottonwood-Tselani/Low Mountain/Many Farms/Nazlini), who is sponsoring the legislation, was ready Tuesday to present it to the RDC, which consists of six delegates, but his effort was hampered when none of the committee members entertained a first or second motion for the bill.

Without a motion, the bill was automatically stricken from the agenda, according to the standing committee rules of order.

The bill automatically moves to the next meeting agenda, which could take place after the spring session convenes April 15.

Moments before the committee was ready to adjourn, committee member Roscoe Smith (Crystal/Fort Defiance/Red Lake/Sawmill) motioned to have a discussion on the bill.

After the committee approved Smith's motion and before Naize, Navajo Nation Department of Justice attorney Brian Lewis and Legislative Staff Assistant Anthony Peterman spoke, committee member Leonard Tsosie called the legislation "premature" and "worrisome" because the due diligence team is continuing its work and the Council remains undecided.

Tsosie, who represents Baca-Prewitt, Casamero Lake, Counselor, Littlewater, Ojo Encino, Pueblo Pintado, Torreon and Whitehorse Lake, was displeased at the fast track the legislation seemed bound to take to reach Council by the spring session.

"I think this is such an important issue, it's an issue that could bankrupt the Navajo Nation if we do it wrong," Tsosie said.

Naize acknowledged that the legislation outlines the "complicating process" to establish the Navajo Transitional Energy Company LLC but necessary in case the Council determines the tribe should purchase the mine.

Lewis outlined the options the Council could take to establish the Navajo Transitional Energy Company LLC.

The first option would have it be an independent limited liability company not a Section 17 Corporation at this time.

The second option is to create the limited liability company as a subsidiary of an existing Section 17 Corporation, like Navajo Oil and Gas Company.

The third option is having the tribe revamp an existing entity like Diné Power Authority or Diné Development Company rather than develop a new company.

"All three are options but the preferred option or the advised option would be the LLC," Lewis said.

Lewis also said there were amendments to the Operational Agreement attached to the legislation and committee members could request the updated version of the agreement.

Tribes are allowed to conduct commercial activities through federally chartered corporations formed under Section 17 of the Indian Reorganization Act.

In order to form a Section 17 Corporation, a tribe must petition the Secretary of the Interior for issuance of a corporate charter.

A Section 17 corporation provides a framework by which a tribe can divide tribal business assets and liabilities from the assets and liability of tribal governmental assets.

Peterman added that there is a May 1 deadline to have a legal entity, such as the Navajo Transitional Energy Company LLC, in place so it can consider the mine manager and stock purchase agreements.

In order for the Navajo Transitional Energy Company LLC to be established, the bill needs to be considered by the standing committees this week for its placement on the spring session agenda, he said.

"If this committee decides not to move this legislation forward, this is the first domino effect and we will not meet the May 1 deadline and nothing else will really matter," Peterman said.

The comments did not sit well with Tsosie, who said he was under the impression that the Navajo Transitional Energy Company would be a Section 17 Corporation and did not appreciate the last minute decision to have it created as a limited liability corporation.

He went as far as to suggest that a chart be created to outline the benefits and non-benefits of developing the company as a Section 17 Corporation or an LLC then use that information to educate the delegates.

"That type of communication is not happening with us," he said.

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