The Navajo Nation said Tuesday it is canceling indemnity agreements for the Navajo Transitional Energy Co., fearing the tribe’s finances could be “placed in a state of uncertainty” by the company’s recent purchase of three coal mines.

Navajo Nation President Jonathan Nez said in a statement that the move was made because of the possibility that NTEC would use the nation as a backstop for bonds needed to operate the mines in Montana and Wyoming.

An NTEC spokesman said in a statement late Tuesday that the company is reviewing its options on to how to proceed.

“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,” the statement said. “As such, we will explore our options to best serve our interests as NTEC and the Navajo Nation.”

But Navajo environmental activists, who have been pushing the tribe to get out of the coal business, welcomed the news.

“It’s going to take a long time for the harmony between us as people and Mother Earth to be completely restored, but this is a beginning,” said Percy Deal, a Navajo activist.

NTEC was formed by the tribe in 2013 to buy the Four Corners Power Plant and work to move it away from coal-fired power generation. It was expected to do the same this year with the closure of the coal-fired Navajo Generating Station and the nearby Kayenta coal mine that supplied the plant with fuel. But the tribal council in March blocked NTEC’s plan to buy Navajo Generating Station.

NTEC surprised tribal officials with the purchase of three coal mines in Wyoming and Montana in late August, touting the potential for $1 billion in additional revenue for the company and the Navajo Nation. In a press release announcing the purchase, CEO Craig Mosely said NTEC would be “much better positioned for transitioning to and investing in other forms of energy” with the move.

Navajo Council delegates claimed they were kept in the dark about NTEC’s purchase until it was released to the public. And Nez said while taking questions from council members in October that he, too, was unaware of the purchase until the announcement.

Nez on Tuesday cited that lack of information as one the reasons he chose to end the indemnity agreements.

“This action alone is disrespectful of our Nation’s leaders and the interests of the Navajo people,” his statement said, adding that the tribal government would not continue to back the company financially without detailed information on its finances.

In its fall session, the Navajo Council considered emergency legislation to end the indemnity agreements, but that legislation was tabled for 30 days. Tuesday’s announcement by Nez achieves the same effect.

The Institute for Energy Economics and Financial Analysis released a study shortly after NTEC’s announced purchase of the mines that called the move “an ill-timed gamble” in light of the contracting global market for coal. In a statement Tuesday, the institute praised Nez’s decision for “responsibly protecting the Nation from NTEC’s ill-advised acquisition of bankrupt Cloud Peak mines.”

Navajo environmental groups Diné CARE, Tó Nizhóní Ání and the Black Water Mesa Coalition, who have been critical of NTEC and coal mining on the Navajo Nation, announced #NavajoEqitableEconomy last week, a plan calling for more aggressive steps toward renewable energy and clean water regulation.

Navajo Vice President Myron Lizer said in a statement the decision on NTEC is not an indictment of business in the Navajo Nation but an assertion that companies need to operate 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.

Deal said NTEC has no one to blame but itself.

“They’re left up in Wyoming and Montana completely naked, and it’s all up to them how to work themselves out of this,” Deal said.


Story by Harrison Mantas, Cronkite News