Arizona Coal: Economic Development for the Hopi Tribe
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Arizona Coal: Economic Development for the Hopi Tribe

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  • 12,500 Hopi people, about 8,000 living on 1.6 million acre reservation in northern Arizona in Coconino and Navajo counties. The other 4,500 Hopi live in Phoenix, Flagstaff and various border towns near the reservation. The Hopi live in 12 villages spread out across the three Hopi Mesas. The Village of Oraibi was founded somewhere between 950 and 1,000 years ago – probably as a consolidation of several other Hopi villages already existing in the area.
  • Hopi Reservation located in remote Northern Arizona. Surrounded by Navajo Nation’s Reservation. Tribal headquarters 90 miles from Flagstaff. Located off the beaten path, little opportunity for diverse economy and no real tax base Subsistence farming – corn, beans, squash and peaches.
  • Hopi and federal geologic studies have identified the likely extent of the reservation coal resource.
  • United States acts as trustee of Hopi assets to protect possession and ensure that tribe receives economic benefit of the asset. Trust resources intended to fund tribal economic development and underwrite development of Tribal Homeland. United states must consider trust responsibility to tribes when carrying out its environmental regulatory responsibilities.
  • Hopi entered into coal lease with the predecessor of Peabody Coal Company in 1966. The lease provided for an initial 200 million tons. Amended in 1987 to add an additional 180 million tons. Coal dedicated to two coal fired generating plants 1580 MW Mohave at Laughlin Nevada and 2280 MW Navajo at Page AZ. Until 2005 MGS bought 4.5 MM tons Closed in 2005 by court order. Tribe lost 6.5 million in annual revenues. NGS continues to buy about 8 million tons annually. Off reservation market access requires rail line
  • Hopi lost an escalating revenue stream when it lost MGS. Millions of dollars in bonuses paid for education scholarships were also lost. Perhaps most importantly, Hopi lost investment dollars economic development and economic diversity
  • Selective Catalytic Reduction (SCR) Technology The Hopi government uses these dollars to hire Hopi people to carry out the day to day work of Tribal government. These dollars support Hopi individuals and families as they work to pay the bills and make a life for themselves within their homeland.
  • Low Nox about $50 million with ½ deciview improvement in visibility - albeit not perceptible to the human eye SCR about $700 million with ¼ deciview additional improvement over low nox

Transcript

  • 1. Presentation to NGS Meeting January 21, 2011
  • 2. Background
    • The Hopi People
        • Population of 12,500 Hopi – about 8,000 live on 1.6 million acre reservation
        • Hopi live in 12 villages across the three Hopi mesas
        • Oraibi founded 950-1000 years ago - known as oldest continually inhabited community in United States
        • Traditional theocratic government and independent Villages
        • 1936 Hopi Constitution and Hopi Tribal Council – representatives sent by villages to central government
  • 3. Background - Continued
    • The Hopi Economy
        • Remote isolated location – limited development potential
        • Non-gaming Tribe – twice voted down
        • One-third Arizona and national per-capita income
        • Fifty percent live below the federal poverty rate
        • Fifty percent unemployment rate
        • Historic economy – subsistence farming
        • Abundant coal resources - foundation of Hopi economy since 1970.
  • 4. Hopi Coal Reserves
      • At least 1.3 billion tons of high quality low sulphur/high BTU surface-minable coal on Hopi land alone
      • An estimated 20 billion tons in deeper seams
      • Coal is jointly owned and managed with the Navajo Nation
      • Coal mining regulated by the United States and the Tribes under federal law
      • Tribe’s participate in regulatory monitoring and enforcement
      • Coal sales provide millions in tribal revenues and state taxes
  • 5. United States Trust Responsibility
    • Land and resources of Hopi Reservation are held in trust by the United States for the benefit of Hopi Tribe and its people
    • United States has fiduciary trust responsibility to Hopi Tribe under federal law and court decisions to protect economic value of Tribe’s coal and other natural resource assets
    • Tribe uses reservation lands and natural resources to build a viable economy and a permanent homeland.
  • 6. History of Coal Mining in Northern Arizona
        • Hopi sign coal lease in 1966 – revenues for government operations and economic development
        • Coal mining on Hopi and Navajo Land began in1970
        • No off-reservation markets due to transportation constraints
    • Hopi coal sold to two power plants:
      • Mohave Generating Station (MGS) at Laughlin, Nevada – low-cost power for AZ, NV, and Calif.
      • Navajo Generating Station (NGS) near Page AZ, low-cost power for CAP system and AZ, NV, and Calif.
    • Coal sales fund Hopi government operations and provide jobs
  • 7.      Economic Losses From MGS Closure
    • MGS permanently closed December 2005 under federal court order - owners fail to install air emissions equipment
    • MGS closure results in annual Hopi revenue losses of $8.5 million
    • Loss of the MGS coal revenues has been devastating to the Hopi economy and Tribe’s government operations
      • Essential government services reduced
      • Layoffs of tribal government employees
      • Fewer dollars for Hopi Village local governments
      • Surplus investment capital disappears
  • 8.      Navajo Generating Station Critical to Hopi Economy
    • NGS - only remaining customer for Hopi Coal
    • NGS coal sales provide most of Tribe’s operating revenues
    • In FY2010, revenue from NGS coal comprises 88% of the Tribe’s annual operating budget.
    • Without a viable Hopi tax base these revenues fund Tribe’s delivery of essential governmental services
        • Law enforcement
        • Health and education
        • Housing
        • Natural resource protection
  • 9. Federal Regulatory Threats to NGS
    • EPA proposes to require NGS to install SCR technology to address Grand Canyon visibility issues
    • SCR achieves very little visibility improvement over low-NOX burners but requires large unnecessary expense – as much as $1 billion
    • Cost effectiveness of SCR over low-NOX is non-existent and does not justify the risks of economic collapse imposed on Hopi Tribe
    • EPA rulemaking must weigh the cost of small incremental visibility improvements against costs to Hopi economy and economic survival of individual Hopi families
  • 10. The Future of Hopi Coal Resources and the Hopi Economy
        • Tribes future economy tied in part to future of coal in Arizona/national economy and energy portfolio
        • Coal will likely remain in energy Arizona and National energy portfolio for foreseeable future
        • Federal Trust responsibility requires that:
          • carbon legislation provide Hopi allowances that enable Hopi to economically develop its coal resources and time to catch up economically with Arizona and nation
          • EPA’s NGS rulemaking must consider the small incremental visibility benefit of expensive SCR technology over low NOX combustion
  • 11. The Future - Continued
        • EPA’s NGS rulemaking must allow a transitional glide path for NGS in order for there to be economic stability for the Hopi and Navajo Tribes
        • The national and state approach to environmental regulation should be based both on the prevailing science and on rules of common sense and reason that account for the impacts of regulatory controls on individuals and communities
  • 12. Thank You