CASPER — A Powder River Basin coal mine suddenly ceased operations and sent about 300 workers — a majority from Wyoming — home indefinitely Thursday, over permit disagreements between Montana’s Department of Environmental Quality and the mine’s new owner.
Out-of-state coal firm Navajo Transitional Energy Company (NTEC) recently assumed ownership of the Spring Creek Mine in southern Montana from bankrupt coal company Cloud Peak Energy. But the ownership transfer stalled this week when Montana’s Department of Environmental Quality denied the new operator a permit due to outstanding legal concerns.
In response, NTEC shut down the Spring Creek facility Thursday, leaving hundreds of Wyoming workers, many who commute to the Montana mine, suddenly in the dark.
According to Montana’s Department of Environmental Quality, NTEC, which is a Navajo Nation tribal entity, could potentially protect itself from future liabilities using its sovereign immunity. If NTEC violated mining laws, the company’s sovereign immunity could shield it from state or federal jurisdiction, the state agency reasoned.
“The main issue complicating our ability to accept NTEC as a contract miner is around NTEC’s asserted tribal sovereign immunity,” said Rebecca Harbage, public policy director for Montana’s Department of Environmental Quality. “That’s because without a limited or partial waiver of sovereign immunity, the Department of Environmental Quality, or the public, may not be able to enforce our state laws against NTEC.”
According to Shiloh Hernandez, a staff attorney with the Western Environmental Law Center, sovereign immunity could shield the company from not just environmental laws, but also labor and tax laws.
“In theory, all laws would be subject to the sovereign immunity defense, which would basically — at its farthest limits — allow (NTEC) to operate unrestrained by any law, and that is a really troubling prospect,” Hernandez said.
To NTEC, the denial of the permit came as an affront to the company’s best efforts to responsibly operate the mine.
“We are shocked and disappointed that the State is taking this position and putting the future of Spring Creek at risk,” said Tim McLaughlin, NTEC chairman, in a statement released Thursday. “We have done everything in our power to ensure the State that we will operate under their laws, but we simply cannot consent to a full waiver of the rights preserved in our treaties — to do so would put the foundations of Indian Country at great risk.”
The overwhelming majority of Spring Creek miners live in northern Wyoming. The mine is located about 30 miles from Sheridan.
Dixie Johnson, CEO of Sheridan Chamber of Commerce, estimated that at least 95 percent of Spring Creek mine workers live in Sheridan County.
“We are really hopeful that this is a short-term situation that will be resolved soon,” Johnson said. “I would I hate to (consider) the worst of the worst, but we know in our community that the employees living in Sheridan County and working at Spring Creek — they have families and children going to school.”
The closures could also quickly impact subcontractors and businesses providing services to the mine, she added.
“This could have a ripple affect,” Johnson said.
Sheridan Mayor Roger Miller also said a long-term mine closure could have a “serious effect on the community.”
“We hope that Montana and the mine company can work this out,” Miller told the Star-Tribune. “At this time, we don’t know all the details, but the city will help the best we can … we will keep workers high on our minds.”
NTEC also became the new operator of the Antelope and Cordero Rojo mines in Wyoming on Thursday.
But according to a spokesman for Wyoming’s Department of Environmental Quality, NTEC obtained a license to mine and has continued production.
The permits to the mines have yet to be transferred from the former owner, Cloud Peak Energy.
Ever since NTEC announced it had placed the winning, multi-million dollar bid on the thermal coal facilities in Wyoming and Montana, debate over the company’s ability to waive its sovereign immunity has been a contentious issue on the Navajo Nation. Unbeknownst to several Navajo Nation Tribal Council members, NTEC agreed to purchase mines outside the Nation.
It would make a $15.7 million cash payment for the three mines, in addition to a $40 million second lien promissory note and payment of royalties for coal produced over the next five years, according to the sales agreement with Cloud Peak Energy. The coal company would also assume $94 million in pre- and post-petition taxes.
But for the sale to come to fruition, the tribal entity likely needs the Navajo Nation’s financial support. That’s because a coal company must demonstrate it has adequate financial backing for future reclamation, according to federal law.
Operators often turn to surety companies for bonds. If a company abandons a mine, or can no longer afford to complete its cleanup obligations, a surety company steps in. But unlike other forms of insurance, a surety company does not plan to front the full costs and take significant steps to shield itself from any loss.
That’s where the Navajo Nation becomes potentially implicated in the deal.
The Navajo Nation extended partial sovereign immunity to NTEC when it assumed ownership of a coal mine and power plant on the Navajo Nation in 2013. The corresponding indemnity agreement placed the Navajo Nation government potentially on the hook for about $463 million in cleanup costs (attached to the Navajo Nation coal mine and Four Corners Power Plant), if NTEC failed to fulfill its reclamation obligations.
But some Navajo Nation Tribal Council members expressed alarm over extending that support again, as reported by the Navajo Times. Percy Deal, a board member of To Nizhoni Ani, a Navajo Nation environmental organization, told the Star-Tribune recent legislation introduced at the Navajo Nation Council Session this week could dissolve the 2013 indemnity agreement granted to NTEC, and deny the company the Nation’s backing again for the Powder River Basin mines. The Navajo Nation Tribal Council decided to table the legislation for 30 days.
Wyoming and Montana should be cautious when working with NTEC, Deal added.
“I would say to Wyoming and Montana: NTEC is probably hiding a few things from you also,” Deal said. “I wouldn’t trust NTEC, because of what it is doing to the Navajo Nation. They are misusing, abusing and manipulating the immunity agreement that they were given.”