Comments to Department of Interior on Coal Royalties on Public Lands


To:      Department of Interior
From: Nancy Freeman 
            P. O. Box 934
            Green Valley , AZ 85622
Date:  September 17, 2015
Subject: Comments on Coal Royalties

Dear Committee Members:

Of course, this issue of charging to a market value for coal mining on Goverment land is a logical policy that should be implemented. My concern is will the Native Americans be treated as other private landowners? Since I live in Arizona , I have researched and found a lot of evidence using the situation with the Dine (Navajos) that the Native Americans are not treated equally or fairly.

The Navajo Nation land is a National Disaster Area. When will the betrayal of the Navajo Nation by the U.S. Government through the funnel of the Department of Interior end? Currently, there are three coal power plants polluting the air, land and water on the Navajo Nation. One is on the northeast border. The other two send power as far as Los Angeles, while 40% of the Navajos do not have electricity in their homes.

I cover four issues in this report:

Issue One: Increasing coal royalty rate to 18.75% to match that of other federally-owned fossil fuels.
Issue Two: Closing loopholes that let coal companies avoid paying some royalties by selling coal through their subsidiaries.
Issue Three: Updating agency policies to make sure that potential profits from coal exports are considered in setting the market value.
Issue Four: Updating policies related to bonding to prevent taxpayers from being stuck with hundreds of millions of dollars in mining cleanup fees.

First issue: Increasing coal royalty rate to 18.75% to match that of other federally-owned fossil fuels.

The DOI has processed permits for coal mines and power plants without a full disclosure of the health risks and without requiring that the plants to use OSHA standards. Did the DOI agents explain to the workers the pollutants they would be inhaling, did they explain to the community the pollutants that would be in the air on their crops, their water supplies and in their lungs? Did they explain to the community members why they would not be hooked up to power, when it was possible to send power to Los Angeles?

In addition coal power uses water. The U.S. Government can permit unlimited water use for the coal plants, even without any disclosure to the Navajo Nation, yet the U.S. has not formulated a reasonable, just water settlement for the Navajo Nation. In 2003, the Government rejected the carefully planned Water Settlement that the Navajo and Hopi Governments had drawn up. The Arizona Senators then filed a settlement that divided the interests of the Navajo and Hopi, just as the U.S. Government has done with the reservation boundaries. At this time, the Navajo do not have rights to the Little Colorado River that runs across their Nation, yet the DOI allowed Peabody Energy to use from the Navajo Aquifer.

How can the Navajo and 79 other tribes trust DOI to treat them adequately? The mismanagement of payments for trust leases was well illustrated in the Cobell v. Babbitt, Kempthorne, Norton, Salazar lawsuit over trust payments for leases that took 21 years for the Department of Interior to finalize. In fact, the proceedings in Cobell v. et al exposed a tragic pattern of mismanagement, neglect, malfeasance and attitude of not caring for over a century. The lies and cover ups by the DOI officials put forth in a Federal trial concerning a class of 500,000 plaintiffs who had been cheated were shocking. The Government could not even produce the trust documents for the five named plaintiffs in the case. The Government had agreed to produce these documents by March of 1997. But with their records in complete disarray, they failed to produce documents for any of the named plaintiffs after four years of court. In the face of "clear and convincing evidence," Judge Lamberth held DOI Secretary Babbitt, Treasury Secretary Robert Rubin, and Assistant DOI Secretary Gover in civil contempt.

The Honorable Judge Lamberth described the situation:

The entire record in this case tells the dreary story of Interior's degenerate tenure as Trustee—Delegate for the Indian trust—a story shot through with bureaucratic blunders, flubs, goofs and foul-ups, and peppered with scandals, deception, dirty tricks and outright villainy—the end of which is nowhere in sight. Despite the breadth and clarity of this record, Interior continues to litigate and re-litigate, in excruciating fashion, every minor, technical detail.

The response of the Government (with its 100 attorneys working against the Native Americans) was to request the removal of Judge Lamberth from the case. In 2003, ten years after the filing of the case, which turned out to be good because other judges were brought into the case and they ruled exactly as Lamberth had.

In addition to the withholding of trust payments, several situations of outright fraud by the Government “overseers” were brought out in the proceedings. In particular, for a pipeline “right-of-way” across the San Juan Basin, Navajo allotted land was valued at $25-30 per "rod" (at 16.6-foot unit), whereas neighboring tribal land was valued at $140-$575 per rod, and land belonging to private landowners at $432-$455 per rod. Navajo allottees were cheated, in violation of the Government's fiduciary obligations, plus federal law mandating "just compensation" for such land use.

Another example cited in the proceedings was on Shoshone land in Idaho, which includes prime agricultural property, had been valued at $65 to $75 per acre. Meanwhile, non-Native Americans living adjacent to this property are receiving over $200 per acre for the same use. The problem is that Government officials appraise Native American land without looking at "non-Indian comparables." By only looking at records of leases on other Native American leases, the undervaluation of leases for Native American lands, as compared with non-Native American lands, is self-perpetuating.

Judge Lamberth lamented:

But regardless of the motivations of the originators of the trust, one would expect, or at least hope, that the modern Interior department and its modern administrators would manage it in a way that reflects our modern understandings of how the Government should treat people. Alas, our "modem" Interior department has time and again demonstrated that it is a dinosaur—the morally and culturally oblivious hand-me-down of a disgracefully racist and imperialist Government that should have been buried a century ago, the last pathetic outpost of the indifference and Anglo-centrism we thought we had left behind.

We know for a fact that the coal leases manipulated by DOI on Navajo lands. In 1963 when BLM and DOI negotiated coal contracts on the Navajo Nation land they gave the Navajos an unheard of low rate for coal. I would also like to see the comparisons of coal royalties paid to other tribes and non-tribal lands at that time.

Since DOI/BLM's underpayment continued, when Peter MacDonald became the tribe's chairman in 1971, he went on a campaign to get Peabody to pay the tribe a fair amount for royalties for its coal mining operations. MacDonald pointed out that the tribe was only receiving 20 cents a ton royalty from the company, about the cost of a can of Coke (in 1971). MacDonald and tribal attorneys would after several years get a new agreement from Peabody that would sharply increase the tribe's share to 12.5 percent of the value of the coal at the mine site.

To make matters worse Peabody used a slurry line, not the usual railway to convey coal to Nevada. The Navajos lost 30,000 acre feet of water from their aquifer with no consent or compensation. To make matters worse, Interior Secretary Udall covered for Peabody by stating the compensation for the water was in the royalty (20 cents per ton)!!

Conclusion: Increase of royalty rate to match other fossil fuel rates is a clear statement that you have been undercharging the coal prices on Federal Land, cheating U.S. Taxpayers, but more egregiously cheating Native Americans.

One would think that after the long drawn-out Cobell Trust Settlements (1993-2014) in which the courts showed that the malfeasance and downright criminal injustices to the Native Americans that the DOI would mend their ways. However, I see no evidence that it is happening. The legacy of mining on the Navajo Nation land is a truly egregious story of criminal injustices by the U.S. Government through Department of Interior but of course it is not the only agency, but it appears to be the leader, setting an example for others.

It appears that the Navajos receive no power from two of the dirtiest coal-fired power plants in the country. The Navajo Generating Station (NGS) in Page, Arizona and the Four Corners Power Plant near Shiprock, New Mexico — are among the country's top emitters of carbon dioxide, releasing 17.8 million short tons and 12.9 million short tons in 2013, respectively. Even though they have to bear this load of pollution, it is estimated that 40% of the Navajos are without any power to their homes.

I cannot find the exact users of the APS Four Corners Plant, but it appears that the Navajos do not receive any power from its presence.

The owners of the Four Corners APS power plant:

Units 1, 2, and 3

Arizona Public Service Company (APS) 100%

Units 4 and 5

APS 63%
Public Service Company of New Mexico 13%
Salt River Project 10%
Tucson Electric Power 7%
El Paso Electric 7%

When EPA announced more stringent equipment to control toxic pollutants the CAP (Central Arizona Project) officials of Arizona gave presentations showing that the equipment would double the price of water to Arizona citizens—so the pollution should be continued as is even though the citizens would not want to live in the toxic plume of a coal power plant. [Note: There was money to pay employes to innundate the state with presnations as nay-sayers, but none to fix the problem.]

Navajo coal-fired power generating plant, Page, AZ - AP Photo

The DOI needs to assure that the coal companies have a consultation with Native Americans before any removal of any the Native American ancestral bones and artifacts, so that the Native Americans can retain their ancestral property. In 1967 Peabody Energy (NGS coal plant) needed to clear land it was leasing on the Navajo reservation to mine the coal, but ancient Indian dwellings and graves were in the way. So, as required by law, it did hire archeologists who dug up roughly 1.3 million Navajo, Hopi and ancient Anasazi artifacts – including the remains of 200 Native Americans – which have been warehoused at two universities ever since. The Navajos were not involved in the actions or decisions. They are still attempting to get the bodies of their ancestors returned, so that they can be give them a proper burial.

Another recent betrayal of the Navajos was that when Obama released the carbon reduction plan he left out power plants on the Native American lands. This omission leaves the Native Americans to fend for themselves, without having in regulatory power at all over the power plants, that's not part of their “sovereignty.” The Navajo Nation already has set standards for sulfur dioxide, particulate matter and nitrogen oxide emissions from power plants on the reservation. However, what will this effort mean to the companies who have been with no oversight for years.

However, EPA does keep records of the Toxics that are released to the environment: Not surprisingly, the numbers are high. The releases are given in pounds. There are no numbers for uranium and its daughters, such as radon. As is too well known, uranium is prevalent on Navajo land with over 500 abandoned, un-reclaimed mines there. TRI Data Source

Second Issue: Closing loopholes that let coal companies avoid paying some royalties by selling coal through their subsidiaries.cThis action needs to be taken.

Third Issue: Updating agency policies to make sure that potential profits from coal exports are considered in setting the market value.

This action needs to be taken with the assurance that the Native American tribes will be compensated at the same rate as other off-reservation coal leases.

Fourth Issue: Updating policies related to bonding to prevent taxpayers from being stuck with hundreds of millions of dollars in mining cleanup fees.

This is of utmost importance. In a hearing yesterday of the Senate Committee on Indian Affairs this issue was brought up. Many of the boom and bust mining companies have disappeared. However, there is also a challenge in getting existing companies to clean up their mines—hiding under the excuse of Dawn mining, which declared bankruptcy, was a subsidiary. I just received an update from a environmental friend on the Spokane Reservation that has been fighting for years for a clean up of historic uranium mines there. A representative from their Natural Resource Committe wrote:

This link is to the case summary, I just re-read it and saw that DOI is actually covering the cleanup costs for the role they played. The BIA has almost been nonexistent in this entire process. They are just assuming 1/3 of the responsibility and during the long drawn out legal process, Newmont was also trying to hold the Tribe and individual landowners responsible as well. So, it was a long drawn out case, they had the resources to fight and the Spokane Tribe spent many years and lots of resources alongside EPA to get the clean up moving. The latest update:

Source: Twa-le Abrahamson
Spokane Tribe
Spokane, Washington
Natural Resources Dept.
Manager, Air Quality Dept.

I honestly don't think bonding is enough for a bankrupt company. There has to be real money banked up front. Also, I recommend that a company that is not in environmental compliance, reclamation compliance of financial liquidity should not be permitted. The Spokane Reservation mine operated by subsidiary Dawn is a good example. Newmont should not be given any permit for mining until it has done due diligence in its reclamation of the Spokane Reservation. They are five years into their reclamation plan and nothing is happening on the ground.

Thank you for your attention to these serious matters of the treatment of the Native Americans. I am filing some FOIA's to get some data on the past royalty payments and comparables with other public lands—and private lands. Note the example above of the Shoshone Tribe where DOI was not using public comparables, but the lower rates historically given to Native Americans.

cc:      Sally Jewell, DOI Director

U.S. Rep. Raul Grijalva

U. S. Senator Tom Udall

U.S. Senator Martin Heinrich