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Navajo Nation Extends Power Plant Lease to 2041

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The Navajo Nation extended its lease on the coal-fired Four Corners Power Plant on its tribal land in northwestern New Mexico till 2041, reported Susan Montoya Bryan for the Associated Press.

When Navajo Nation President Ben Shelly authorized the agreement with the Arizona utility service on March 8, he highlighted the plant’s economic value to the tribe, reported the AP’s Bryan. Shelly said the plant generates about $65 million in taxes for the tribe and $100 million to the workforce, including 700 Navajos who work at the plant and the related coal mine. "This is a step in the right direction, and it's a business decision we did not take lightly," Shelly said in a statement.

A lease extension would secure the tribe $7 million a year with controlled inflation, stated the AP’s Felicia Fonseca. Under the previous lease, the tribe only scored an average of $1.5 million annually, Fonseca reported. The tribe’s Minerals Department projected that rejecting the lease agreement would cause an estimated annual shortfall of $42 million to $50 million beginning in 2016, stated Chuck Slothower for The Daily Times.

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Shelly’s signature followed the Navajo Tribal Council’s February 15 approval for a lease extension. The Arizona Public Service Co. had threatened to close the aging coal-fired plant, as the previous lease was set to expire in 2016, reported the Times. Damon Gross, a spokesman for Arizona Public Service, commended the lease extension. He says the decision will ensure the plant’s long-term viability and maintain a reliable source of revenue for the tribe, reported the AP’s Bryan. The utility service's next move will be negotiating a new contract with BHP Billiton, the sole supplier of coal to the plant, according to the Times.

Despite an overall pleased reaction to the lease extension, not everyone sees the plant as an economic boon to the tribe. While the agreement waited on Shelly's desk for his veto or approval, Senator Lynda Lovejoy lambasted the proposal, calling the annual payment of $7 million a year "meager" in a February 19 letter to Shelly, according to Times. Lovejoy has also criticized the lease payments, which she thinks should be tied to inflation or increased incrementally over time. She additionally condemned a waiver limiting the tribe's ability to sue the utility service.

The plant has also come under scrutiny by the U.S. Environmental Protection Agency, which proposed cutting nitrogen oxides at the 2,040-megawatt plant by 87 percent under a regional haze rule, reported the AP’s Fonseca. The plant is the largest single source producer of nitrogen oxide emissions in the country. A recent amendment to the agreement will required the plant have the best available technology to reduce sulfur oxide and carbon dioxide emissions. The new regulation was added in response to concerns about pollution voiced by tribal leaders, who said they would honor decisions federal regulators made regarding emissions in the plant’s operating permit, stated Fonseca. "It just lays a good, solid foundation and stresses that environmental compliance is important in the renewed lease," the Navajo Nation EPA's Executive Director Stephen Etsitty told the AP's Fonseca.