NTEC’s Montana mine reopens, questions remain
Navajo Transitional Energy Company has signed a 75-day limited waiver of sovereign immunity with the Montana Department of Environment in order to reopen the Spring Creek Mine after having to shut it down last week because it wouldn’t be able to operate without this waiver.
The Spring Creek Mine in Big Horn County, Montana, is one of three mines that NTEC had acquired from Cloud Peak Energy Inc. during that company’s bankruptcy sale. The other two mines, Antelope and Cordero Rojo mines, are located in Wyoming.
“The interim limited waiver of sovereign immunity agreement was signed by NTEC and DEQ on Friday,” emailed Rebecca Harbage, public policy director for Montana’s DEQ, to the Times. “It is a limited waiver of NTEC’s sovereign immunity with respect to all laws administered by DEQ.
“The limited waiver is in effect for an interim period of 75 days, unless both parties agree to extend the interim period,” she said. “During the interim period, DEQ and NTEC will continue to negotiate the terms of a long-term limited waiver.”
Without assurance that NTEC would be subject to the environmental and mining laws of the state of Montana, DEQ was unable to find NTEC to be an acceptable contractor responsible for day-to-day operations of the Spring Creek Mine.
Following the agreement being signed on Oct 25, DEQ issued its acceptance of NTEC as an acceptable contractor, which allows operations to resume at the mine, Harbage said.
When April Quinn, a Navajo Nation Department of Justice attorney, first reported to the Naabik’iyati’ Committee in September, she made note of two issues: No. 1, NTEC had not gone through the proper channels as a Navajo Nation entity of notifying the Nation of its intent to wave its company’s sovereign immunity; and she, being the Navajo Nation’s legal representative, was banned from a meeting with NTEC even though their counsel was allowed in the meeting.
“Navajo Nation attorney should’ve been in the room,” said Quinn in a Sept. 19 Naabikiyati Committee meeting. “There were security guards at the door and I wasn’t allowed. This was the first time I’ve been restrained from being in the room with a client.”
This seemingly clandestine move was topped by the fact that NTEC failed to notify President Jonathan Nez, Speaker Seth Damon and its two shareholder representatives, delegates Eugenia Charles-Newton and Nathaniel Brown. All all stated publicly they were left in the dark about NTEC’s purchase until it was announced publicly Aug. 19. Damon said he and Nez received a letter from NTEC on this day about the purchase.
After Quinn brought up these concerns, NTEC has notified the Nation of its intent to wave sovereign immunity, Quinn said during an Oct. 17 Naabik’iyati’ meeting. Then in another Naabik’iyati’ meeting with the committee Oct. 10, NTEC reps said Quinn wouldn’t be prevented from attending any future meetings.
“This was an incredible opportunity for NTEC,” said NTEC Chairman Tim Mclaughlin, during the Oct. 10 meeting. “We will probably never see this type of deal again in the next who knows. It was an incredible opportunity and we took advantage.”
NTEC has received much criticism and skepticism on the purchase of the Cloud Peak properties and buying them from a bankrupt company.
Mclaughlin stood by the company’s decision and said the mines are exceptional mines, and the reason Cloud Peak is in dire straights is because of bad financial decisions, not because of the mines themselves.
“These mines, the mines themselves, are well run. They’re not the reason why Cloud Peak went bankrupt,” said Mclaughlin. “Cloud Peak went bankrupt because they made a series of bad investments and took on $340 million of debt that they could not pay back.”
The purchase assets include almost one billion tons of leased coal reserves, almost 100,000 acres of owned surface lands, and a huge fleet of mining equipment.
The purchase price is $15.7 million plus a seller note of $40 million to be paid over time, according to an NTEC study.
Quinn has been a prominent legal advisor for the Nation when it came to NTECs failed attempt to take over Navajo Generating Station and Kayenta Mine, which was only a few months before NTEC’s sudden purchase of the Cloud Peak mines.
During the Oct. 17 meeting, Quinn advised and warned the Naabik’iyati’ Committee, alongside Navajo Nation Controller Pearline Kirk. Their main concern was NTEC’s bonds.
“Mine owners and operators are required to have reclamation bonds in place in order to operate their mines,” said Quinn.
In 2013, NTEC was a brand new company given the task of purchasing the Navajo Mine and for this to happen NTEC had to obtain the performance and reclamation bonds for the mine.
To do this, Council approved a limited waiver of the Nation’s sovereign immunity to be included in the general indemnity agreement.
Then in 2015, an amendment was made to extend the same limited waiver to eight additional sureties and their subsidiaries, affiliates and associated companies.
Fast-forward to the current NTEC purchase of the three Cloud Peak mines. Each bond for these much larger mines could total between $350 and $400 million, and NTEC wants the Nation’s backing on surety bonds.
Surety companies are taking the position that the 2013 and 2015 resolutions are all they need to believe the Nation will cosign for reclamation bonds.
“They will need new bonds … the bonds related to Navajo Mines don’t cover anything going on in Wyoming or Montana,” said Quinn. “NTEC and the surety (company) are taking the position that the legislation passed in 2013 and 2015 provides the Nation’s consent for any bond NTEC takes out for any mine.
“Basically, it’s a blank check …. allowing the Nation to cosign any bond NTEC wants to take out,” she said. “They’re not going to come back to this Council to ask the Nation…they believe they have the Nation’s consent.”
This is a risk the Navajo Nation should not be taking, because the coal industry is a dying industry and at the end of the day the Nation is fiscally responsible for the mine, Kirk added during the Oct. 17 meeting.
Not only that, there are still many unanswered questions, she said.
“Let’s say they don’t put enough money away for the reclamation,” said Kirk. “We don’t know what the reclamation is as well. The surety company fronts the money and they’ll look at us because we are the ones with deep pockets.”
Delegate Rickie Nez, after he introduced the legislation for NTEC to take over NGS that ultimately failed, that NTEC had “taken a beating.” Nez said he supports the company’s current efforts, because he believes it purchased the mines with good intentions to replace funding for the Nation.
“What if NTEC starts rolling in money for us and replaces the $40 million (that will be lost with the closure of the Navajo Generating Station)?” asked Nez. “Should we have the confidence in them to do that? We don’t seem to do a whole lot about our environment, we just talk it.”
When it comes to the notion that business and politics should be separate, Kirk said NTEC and the Navajo Nation “are joined at the hip,” through surety bonding and financial backing by the nation of NTEC’s bonding capacity.
“They are legally separate — they can do what they want according to the formation documents,” said Kirk. “But when there’s a connection, that is what this body needs to understand and take into consideration of what does that mean? Those bonding capacity is a big deal.”
When delegates attempted to dismiss Kirk’s and Quinn’s analysis, Delegate Carl Slater said what they have given Council is based on fact.
“There is no such thing as keeping business out of politics or politics out of business,” said Slater.
During the Navajo Nation Council’s fall session, Slater co-sponsored an emergency bill seeking to terminate NTEC’s general indemnity agreement, which would require President Jonathan Nez to submit notices of termination to the surety companies related to the NTEC’s general indemnity agreements.
But this bill was tabled with a vote of 11-9 after Delegate Edmund Yazzie asked if newly appointed Chief Legislative Counsel Dana Bobroff was sufficiently briefed on the issue.
“There has been a lot of questions asked, there is a lot of assumptions going on,” said Yazzie on Bobroff. “In some of her statements she’s made assumptions so that draws a lot of concerns that we are uncertain of what is happening.
“For Ms. Bobroff and our AG to get a grasp and get everything in order and for us, I motion we table this legislation,” he said. “For us to get the facts… to get more info on this before we make the crucial vote.”
Bobroff said that she has reviewed the emergency bill, documents and agreements. She said the only information she has not looked over was communication from NTEC and the attorneys who dealt with the Cloud Peak bankruptcy. But Navajo DOJ has that information and they were able to review it at that moment.
“The combination of the two of us can do a thorough presentation,” said Bobroff. “We could do it right now.”
Even after three NTEC-related reports given at three different Naabik’iyati’ meetings in September and October, as well as assurance from Bobroff and Attorney General Doreen McPaul, and Damon recommending a work session following reconvening in order to vote on the emergency bill, Yazzie stood by his tabling motion.
“Tabling the legislation was irresponsible,” said Slater. “Right now, if NTEC bought a mine in Brazil or an oilfield in Alberta, the Navajo Nation would be on the hook for any surety bonding they pursued under these agreements.”
He added that Cheyenne, Crow, Arapaho, and Lakota – these are their lands and they should be returned to them. Crow youth have asked lawmakers not tocontinue these mines or develop the Big Metal mine on their reservation, said Slater.
“I will not support a waiver of sovereign immunity or placing any of the Navajo Nation’s assets as collateral for NTEC’s business dealings,” said Slater.
He said he met with several of his chapters and the Chinle Agency Council before the Council session began and they do not support any subsidization of NTEC, a waiver of sovereign immunity, or backing NTEC’s deals with the Navajo Nation master trust.
Erny Zah, NTEC’s communications director, did not respond to questions sent to him by press time Wednesday.