[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





PROTECTING LONG-TERM TRIBAL ENERGY JOBS AND KEEPING ARIZONA WATER AND 
  POWER COSTS AFFORDABLE: THE CURRENT AND FUTURE ROLE OF THE NAVAJO 
                          GENERATING STATION

=======================================================================

                        JOINT OVERSIGHT HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                             joint with the

                       SUBCOMMITTEE ON INDIAN AND
                          ALASKA NATIVE AFFAIRS

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                         Tuesday, May 24, 2011

                               __________

                           Serial No. 112-32

                               __________

       Printed for the use of the Committee on Natural Resources






         Available via the World Wide Web: http://www.fdsys.gov
                                   or
          Committee address: http://naturalresources.house.gov

                                _____

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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
             EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Scott R. Tipton, CO                  Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Raul R. Labrador, ID                 Pedro R. Pierluisi, PR
Kristi L. Noem, SD                   John Garamendi, CA
Steve Southerland II, FL             Colleen W. Hanabusa, HI
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann, 
    TN
Jon Runyan, NJ
Bill Johnson, OH

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief Counsel
                Jeffrey Duncan, Democrat Staff Director
                 David Watkins, Democrat Chief Counsel
                                 ------                                
                    SUBCOMMITTEE ON WATER AND POWER

                      TOM McCLINTOCK, CA, Chairman
            GRACE F. NAPOLITANO, CA, Ranking Democrat Member

Louie Gohmert, TX                    Raul M. Grijalva, AZ
Jeff Denham, CA                      Jim Costa, CA
Scott R. Tipton, CO                  Ben Ray Lujan, NM
Paul A. Gosar, AZ                    John Garamendi, CA
Raul R. Labrador, ID                 Edward J. Markey, MA, ex officio
Kristi L. Noem, SD
Doc Hastings, WA, ex officio

                                 ------                                

            SUBCOMMITTEE ON INDIAN AND ALASKA NATIVE AFFAIRS

                        DON YOUNG, AK, Chairman
                 DAN BOREN, OK, Ranking Democrat Member

Tom McClintock, CA                   Dale E. Kildee, MI
Jeff Denham, CA                      Eni F.H. Faleomavaega, AS
Dan Benishek, MI                     Ben Ray Lujan, NM
Paul A. Gosar, AZ                    Colleen W. Hanabusa, HI
Raul R. Labrador, ID                 Edward J. Markey, MA, ex officio
Kristi L. Noem, SD
Doc Hastings, WA, ex officio

                                 ------                                












                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, May 24, 2011............................     1

Statement of Members:
    Garamendi, Hon. John, a Representative in Congress from the 
      State of California........................................    14
    Gosar, Hon. Paul A., a Representative in Congress from the 
      State of Arizona...........................................    11
        Prepared statement of....................................    13
    Lujan, Hon. Ben Ray, a Representative in Congress from the 
      State of New Mexico........................................    10
    Markey, Hon. Edward J., a Representative in Congress from the 
      State of Massachusetts.....................................    15
        Prepared statement of....................................    23
    McClintock, Hon. Tom, a Representative in Congress from the 
      State of California........................................     2
        Prepared statement of....................................     3
    Napolitano, Hon. Grace F., a Representative in Congress from 
      the State of California....................................     4
        Prepared statement of....................................     6
    Young, Hon. Don, the Representative in Congress for the State 
      of Alaska..................................................     7
        Prepared statement of....................................     9

Statement of Witnesses:
    Johnson, Marshall, Navajo Individual, Kykotsmovi, Arizona....    64
        Prepared statement of....................................    65
    Justice, Hon. William S., Former Mayor and Member Pro Tem, 
      Page Planning and Zoning Commission, Page, Arizona.........    53
        Prepared statement of....................................    54
    Manuel, Hon. Joseph, Lieutenant Governor, Gila River Indian 
      Community, Sacaton, Arizona................................    33
        Prepared statement of....................................    34
        Letter to EPA submitted for the record...................    39
    Masayesva, Vernon, Executive Director, Black Mesa Trust, 
      Flagstaff, Arizona.........................................    61
        Prepared statement of....................................    62
    Modeer, David, General Manager, Central Arizona Project, 
      Phoenix, Arizona...........................................    69
        Prepared statement of....................................    71
    Shelly, Hon. Ben, President, The Navajo Nation, Window Rock, 
      Arizona....................................................    24
        Prepared statement of....................................    25
    Shingoitewa, Hon. LeRoy N., Chairman, Hopi Tribe, Kykotsmovi, 
      Arizona....................................................    29
        Prepared statement of....................................    30
        Letter to EPA submitted for the record...................    32
    Silverman, Richard H., General Manager, Salt River Project 
      Agricultural Improvement and Power District, Phoenix, 
      Arizona....................................................    55
        Prepared statement of....................................    56
    Thelander, Dan, Partner, Tempe Farming Company, Maricopa, 
      Arizona....................................................    75
        Prepared statement of....................................    76


Additional materials supplied:
    Arizna Westside Irrigation & Electrical Districts 
      Association, Letter submitted for the record...............    87
    Brown, G. Brad, Senior Vice President for Southwest 
      Operations, on behalf of Peabody Energy, Statement 
      submitted for the record...................................    89
    Brug, Leisa B., Director, Energy Policy Advisor to Governor 
      Janice K. Brewer, State of Arizona, Letter submitted for 
      the record.................................................    95
    Franks, Hon. Trent, a Representative in Congress from the 
      State of Arizona, Statement submitted for the record.......     2
    Frazier, Anna, Coordinator, Dine' Citizens Against Ruining 
      Our Environment, Letter submitted for the record...........    97
    Innis, Niger, Co-Chairman, Affordable Power Alliance, Las 
      Vegas, Nevada, Statement submitted for the record..........    98
    List of documents retained in the Committee's official files.    86
    McCarthy, Gina, Assistant Administrator, U.S. Environmental 
      Protection Agency, Letter to The Honorable Edward Markey 
      submitted for the record...................................    17
    Rhodes, Hon. William, Governor, Gila River Indian Community, 
      Letter to EPA submitted for the record.....................    39




                                  (VI)
                                     


 
 JOINT OVERSIGHT HEARING ON ``PROTECTING LONG-TERM TRIBAL ENERGY JOBS 
 AND KEEPING ARIZONA WATER AND POWER COSTS AFFORDABLE: THE CURRENT AND 
             FUTURE ROLE OF THE NAVAJO GENERATING STATION''

                              ----------                              


                         Tuesday, May 24, 2011

                     U.S. House of Representatives

            Subcommittee on Water and Power, joint with the

            Subcommittee on Indian and Alaska Native Affairs

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittees met, pursuant to call, at 2:00 p.m. in 
Room 1324, Longworth House Office Building, Hon. Tom McClintock 
[Chairman of the Subcommittee on Water and Power] presiding.
    Present from Subcommittee on Water and Power: 
Representatives McClintock, Gosar, Napolitano, Grijalva, Costa, 
Lujan, Garamendi, and Markey (ex-officio).
    Present from Subcommittee on Indian and Alaska Native 
Affairs: Representatives Young, McClintock, Gosar, Lujan, and 
Markey (ex-officio).
    Also Present: Representatives Quayle and Schweikert.
    Mr. McClintock. The Subcommittees on Water and Power, and 
Indian and Alaska Native Affairs will come to order. The 
Subcommittee Chairman does note a quorum, which under Committee 
Rule 3(e) is two Members. The Subcommittee today meets to hear 
testimony on an oversight hearing, entitled, ``Protecting Long-
Term Tribal Energy Jobs and Keeping Arizona Water and Power 
Costs Affordable: The Current and Future Role of the Navajo 
Generating Station.''
    We are also meeting under the mandate of House Resolution 
72 to identify regulatory impediments to job creation, and I 
think we have stumbled upon one. Before we begin, I have a 
statement from Congressman Franks, which he would like to 
submit for the record. I would ask for unanimous consent that 
Congressman Franks' statement be included. Hearing on 
objections, so ordered.
    And also the Chair would ask for unanimous consent that 
Congressman Quayle be permitted to sit with the Subcommittee 
and participate in today's hearing. Without objection, so 
ordered.
    Also, the Chair has been warned that we are likely to be 
called away for a vote at about 2:15, and so we will have to 
recess. They told us only one vote, and so it will be about 15 
minutes of recess probably after the opening statements by the 
Committee Members, which will begin now with opening statements 
by myself, and the Chairman of the Indian and Alaska Native 
Affairs Subcommittee, and the Ranking Members of each of those 
Subcommittees.
    [The prepared statement of Mr. Franks follows:]

  Statement submitted for the record by The Honorable Trent Franks, a 
          Representative in Congress from the State of Arizona

    I want to thank Mr. McClintock and the Subcommittee on Water and 
Power and Mr. Young and the Subcommittee on Indian and Alaska Native 
Affairs for holding this hearing today. This situation is a stunning 
example of environmentalism run amuck. If the Navajo Generating Station 
(NGS) is forced to close due to the EPA's nonsensical actions, it would 
be devastating to the economies of the surrounding region, including 
those of the Hopi and Navajo tribes.
    As the sole remaining buyer of coal from the Hopi tribe, shutting 
down the NGS would cut nearly 90% of the tribe's income and would 
effectively shut down the Hopi tribe as a functioning government, in 
addition to putting hundreds of Arizonans (including hundreds of 
members of the Navajo tribe) out of work, and affecting hundreds of 
thousands of Arizonans' current ability to receive water and 
electricity.
    In exchange for all of the difficulties created, the only 'benefit' 
yielded would be a change in visibility so slight as to not even be 
detectable without specialized equipment that is significantly more 
sensitive than the human eye. In other words, the supposed 
environmental benefit is functionally non-existent.
    This is far beyond the pale of environmental stewardship, and I 
commend the holding of this hearing during which these concerns can be 
laid out in greater detail.
                                 ______
                                 

STATEMENT OF HON. TOM McCLINTOCK, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. McClintock. As I said, the purpose of today's hearing 
is to comprehend an effort by the EPA to impose cost-
prohibitive mandates on one of the largest sources of 
electricity in the western United States, the Navajo Generating 
Station.
    I want to thank our Arizona colleagues, Paul Gosar and 
Trent Franks, for requesting this hearing. Dr. Gosar has spoken 
eloquently about the need to protest the Navajo Generating 
Station in our past hearings, and today the Subcommittees on 
Water and Power, and Indian and Alaska Native Affairs, get the 
chance to focus entirely on this subject with expert witnesses.
    Since 1975, the Navajo Generating Station has produced 
2,250 megawatts of inexpensive electricity. That is more than 
produced by the entire Hoover Dam. It employs 545 workers, 80 
percent of whom are members of The Navajo Nation and Hopi 
Indian Tribe.
    It pays workers an average of over $100,000 per year in 
wages and benefits. In addition, the nearby coal mines employ 
another 422 tribal workers. Royalties from coal sales comprise 
80 percent of the budget of the Hopi Indian Tribe.
    This electricity powers the Central Arizona Project's 
delivery of affordable water to most of Arizona, and provides 
electricity to the Los Angeles Department of Water and Power, 
the Arizona Public Service Company, Nevada Power, and Tucson 
Electric Power.
    Surplus electricity sales repay Federal funds fronted for 
the construction of the Central Arizona Project and underwrite 
the Arizona Indian Water Rights Settlements. The NGS is 
equipped with $200 million of environmental control equipment 
that removes 99.5 percent of particulate matter.
    In the late 1990s, the NGS was outfitted in addition to 
that with wet limestone scrubbers at a cost of nearly a half-a-
billion dollars that remove more than 90 percent of sulfur 
dioxide emissions. In 2008, low NOx burners were 
installed at the cost of $45 million.
    The problem is this. Beginning in 1998, environmental 
extremists began a concerted effort to shut down the 
inexpensive coal-fired electricity upon which our economy 
depends. Their first victim was the Mojave Generating Station.
    The taxpayer-funded Grand Canyon Trust boasted, and I 
quote, ``This ends an era of coal at that site, and we hope 
that it is the beginning of many in the region.'' Well, it was. 
The EPA pulled an already-granted permit for the clean coal 
Desert Rock Project in 2009.
    A former Navajo Nation President, Joe Shirley, said, quote, 
``These are individuals and groups who claim to have put the 
welfare of fish and insects above the survival of the Navajo 
people, and in fact their only goal is to stop the use of coal 
in the United States and The Navajo Nation.''
    The question today is whether the Navajo Generating Station 
will be their next victim. The EPA is now moving to impose $1 
billion of new costs on the Navajo Generating Station, which 
will make it economically impossible to continue operations.
    This radical agenda does not even pretend to be in support 
of public health. Rather, it is to improve the viewshed. But as 
we will hear, the $1 billion of visibility improvements, even 
if they could be economically supported, won't even be visible 
to the human eye.
    It is important that we understand the irrational extremism 
behind this effort. This Administration is willing, and indeed, 
appears eager, to throw thousands of tribal and non-tribal 
workers into unemployment, devastate the Hopi Indian Tribe, and 
The Navajo Nation, compromise the Bureau of Reclamation's 
ability to make water deliveries to millions of Americans, and 
to repudiate the Federal Government's trust responsibility to 
numerous tribal nations.
    We will be told by the Minority's witnesses not to worry. 
We will replace the electricity with wind and solar power. 
Well, we need to understand what that means. It means replacing 
power that costs less than four cents per kilowatt hour with 
power that costs 10 cents and 21 cents, respectively.
    And because wind and solar power is intermittent and 
unpredictable, it adds absolutely nothing to baseline power 
because it requires us to build one megawatt of reliable backup 
power for every megawatt of wind and solar, and all of this to 
replace a generating station that we have already paid for. 
This is sheer insanity. This is the Obama EPA.
    We have very painfully witnessed how left-wing ideology and 
junk science have made water and energy shortages, and price 
increases, a mainstay in my home state of California. The same 
thing could happen in Arizona if the EPA drives the bus off the 
cliff on the matter before us this afternoon. I hope today's 
hearing brings the EPA back at least to this planet.
    And with that, I yield to the Ranking Member of the Water 
and Power Subcommittee.
    [The prepared statement of Mr. McClintock follows:]

         Statement of The Honorable Tom McClintock, Chairman, 
                    Subcommittee on Water and Power

    The purpose of today's hearing is to comprehend an effort by the 
EPA to impose cost-prohibitive mandates on one of the largest sources 
of electricity in the west--the Navajo Generating Station.
    I want to thank our Arizona colleagues, Paul Gosar and Trent 
Franks, for requesting this hearing. Dr. Gosar has spoken eloquently 
about the need to protect the Navajo Generating Station in our past 
hearings and today the sub-committees on Water and Power and Indian and 
Alaska Native Affairs get the chance to focus entirely on this subject 
with expert witnesses.
    Since 1975, the Navajo Generating Station has produced 2,250 
megawatts of inexpensive electricity--more than produced by the Hoover 
Dam. It employs 545 workers--80 percent of whom are members of the 
Navajo Nation and Hopi Indian Tribe--and pays workers an average of 
over $100,000 per year in wages and benefits. In addition, the nearby 
coal mines employ another 422 tribal workers. Royalties from coal sales 
comprise 80 percent of the budget of the Hopi Indian Tribe.
    This electricity powers the Central Arizona Project's delivery of 
affordable water to most of Arizona and provides electricity to the Los 
Angeles Department of Water and Power, the Arizona Public Service 
Company, Nevada Power and Tucson Electric Power. Surplus electricity 
sales repay federal funds fronted for the construction of the Central 
Arizona Project and underwrite the Arizona Indian Water Rights 
Settlements.
    The NGS is equipped with $200 million of environmental control 
equipment that removes 99.5 percent of particulate matter. In the late 
1990's, the NGS was outfitted with wet limestone scrubbers at a cost of 
nearly a half-billion dollars that remove more than 90 percent of 
sulfur dioxide. In 2008, low NOx burners were installed at 
the cost of $45 million.
    Beginning in 1998, environmental extremists began a concerted 
effort to shut down the inexpensive coal-fired electricity upon which 
our economy depends. Their first victim was the Mojave Generating 
Station. The taxpayer-funded Grand Canyon Trust boasted, ``This ends an 
era of coal at that site and we hope that it is the beginning of many 
in this region.'' It was. The EPA pulled an already-granted permit for 
the clean coal Desert Rock project in 2009.
    Former Navajo Nation President Joe Shirley said, ``These are 
individuals and groups who claim to have put the welfare of fish and 
insects above the survival of the Navajo people when in fact their only 
goal is to stop the use of coal in the U.S. and the Navajo Nation.''
    The question today is whether the Navajo Generating Station will be 
their next victim. The EPA is now moving to impose one billion dollars 
of new costs on the Navajo Generating Station, which will make it 
economically impossible to continue operations. This radical agenda 
doesn't even pretend to be in support of public health--rather, it is 
to improve the ``view-shed.'' But as we will hear, the $1 billion of 
visibility improvements--even if they could be economically supported--
won't even be visible to the human eye.
    It is important that we understand the irrational extremism behind 
this effort. This administration is willing and indeed, appears eager, 
to throw thousands of tribal and non-tribal workers into unemployment, 
devastate the Hopi Indian Tribe and the Navajo Nation, compromise the 
Bureau of Reclamation's ability to make water deliveries to millions of 
Americans and to repudiate the federal government's Trust 
responsibility to numerous tribal nations.
    We will be told by the minority's witnesses not to worry--we'll 
replace the electricity with wind and solar power. We need to 
understand what that means. It means replacing power that costs less 
than 4 cents per kilowatt hour with power that costs 10 cents and 21 
cents respectively. And because wind and solar power is intermittent 
and unpredictable, it adds absolutely nothing to baseline power because 
it requires us to build one megawatt of reliable back-up power for 
every megawatt of wind and solar. All this to replace a generating 
station we've already paid for. This is sheer insanity. This is the 
Obama EPA.
    We have very painfully witnessed how left-wing ideology and junk 
science have made water and energy shortages and price increases a 
mainstay in my home state of California. The same thing could happen in 
Arizona if the EPA drives the bus off the cliff on the matter before us 
this afternoon. I hope today's hearing brings the EPA back to this 
planet.
                                 ______
                                 

  STATEMENT OF HON. GRACE F. NAPOLITANO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Napolitano. Thank you, Mr. Chair. Hopi ancestors left 
these instructions about their sacred homeland. ``Underneath 
your feet lies enormous wealth. Guard it. Do not fall asleep, 
for if you do, it will be pulled out. Do not use it until the 
right time to do it, in the right way, and only use it for the 
right purposes.''
    The words of the Hopi Elders are as relevant today as they 
were hundreds of years ago. The tribal homelands of the Navajo 
and the Hopi Tribes have many natural resources, including 
coal, abundant sunshine, and excellent, and for some other 
adjective, groundwater.
    The Black Mesa of the Hopi and the Navajo Reservations is 
the home to the Kayenta Mine, which provides 8.1 million tons 
of coal to power the Navajo Generating Station annually, 
normally known as the NGS.
    Power produced at the Navajo Generating Station moves 1.6 
million acre-feet of Central Arizona Project water through 300 
miles of aqueducts and lifting the water on the average of 
3,000 vertical feet.
    This provides many Arizonans with affordable, should we say 
inexpensive, and/or cheap, water from the Colorado River. In 
the process of mining this coal, precious groundwater is 
contaminated and sacred sites destroyed. What Peabody Energy, 
the largest coal mining company in the world, pays the tribe in 
royalties, roughly $14 million annually, pales in comparison to 
the $7 billion revenue the company makes each year.
    Compare that to the Navajo 40 percent unemployment, and 48 
percent poverty rate currently. The tribes face a paradox: the 
coal comes from the reservation, the plant is located on tribal 
land. YET there are tribal communities surrounding the 
generating station and the mine that have no access to running 
water and no electricity in their homes. The tribes that do 
have access to electricity pay at market rates greater than the 
3 cents a kilowatt/hour the NGS station produces at cost to its 
owners.
    The tribes that do have access to electricity pay at market 
rates higher and greater than 3 cents a kilowatt hour that the 
NGS produces at costs to its owners. The Navajo and Hopi do not 
own any part of the NGS, and today's hearing is entitled, 
Protecting Long Term Tribal Energy Jobs and Keeping Arizona 
Water and Power Costs Affordable: The Current and Future Role 
of the Navajo Generating Station.
    In order to look at keeping the water and power costs 
affordable, we should ask ourselves a fundamental question. How 
do we provide water and power to all Arizonans, which includes 
the tribes and their non-tribal neighbors.
    Four years ago, we asked children from The Navajo Nation to 
draw where they thought their water came from. I remember that 
as if it were today. The children drew trucks with hundred-
gallon water jugs in their truck bed. You can see it. That is a 
copy of it right there.
    It is in the record and I want you to see it again, and 
engrave it in your mind, because this is sad that in this day 
and age our children think that is where the water comes from. 
A majority of the Navajo communities have to use water in 
stations because there is no access to water in their homes.
    Here we are in 2011, and we are faced with the same 
situation where some communities in The Navajo Nation and the 
Hopi Tribe have no access to clean water, and worse, 
communities are limited or have no access to electricity, and 
many times their water is contaminated.
    Do we really want our children to grow up thinking that 
their water comes from water trucks, and their power from 
lanterns and candlelight? The NGS is no doubt a complex issue 
involving the supply for water deliveries.
    It impacts tribal communities, cities, and the future of 
Arizona, and the contamination of the water is a grave concern 
of mine. People would like to boil down this complex issue to 
the simple and false claim that EPA regulations threaten to 
shut down the Navajo Generating Station, and jeopardize our 
tribal economies. That is not a cut-and-dried case.
    What we do have is an opportunity to support the ongoing 
discussion among stakeholders to find short-term solutions that 
allow for water and power to continue to be delivered, and let 
me tell you that in my years in this Subcommittee that water is 
not getting cheaper. It is getting more costly.
    And we also must involve Federal agencies, all of them, to 
be able to come up with solutions, whether it is Energy, 
Education, Labor, Interior, and others, because it is something 
that affects all of those agencies, and it affects our people 
in the United States.
    At the same time, we must look at options for transitioning 
to clean energy in the future, and providing our tribal 
communities with a chance to develop all resources available to 
them, including job training and on-site manufacturing of 
whatever brings jobs and economy to them.
    We should work to provide equity to The Navajo Nation and 
the Hopi Tribe. Their resources must be valued, and the value 
of their resources must be reflected in what is paid in 
royalties.
    We must provide affordable water for all Arizonans. Thank 
you to our witnesses, and I especially welcome President 
Shelly. Good to see you, sir. And Hopi Chairman Shingoitewa, 
and Gila River Indian Community Lieutenant Governor Manuel, and 
I look forward to your testimony. Thank you, Mr. Chair.
    [The prepared statement of Mrs. Napolitano follows:]

            Statement of The Honorable Grace F. Napolitano, 
       a Representative in Congress from the State of California

    Hopi Ancestors left these instructions about their sacred homeland:
        ``Underneath your feet lies enormous wealth. Guard it. Do not 
        fall asleep for if you do, it will be pulled out. Do not use it 
        until the right time to do it, in the right way, and only use 
        it for the right purposes.''
    The words of the Hopi Elders are as relevant today as they were 
hundreds of years ago. The tribal homelands of the Navajo and Hopi 
tribes have many natural resources, including coal; abundant sunshine 
and excellent groundwater.
    The Black Mesa on the Hopi and Navajo Reservations is home to the 
Kayenta Mine. This mine provides 8.1 million tons of coal to power the 
Navajo Generating Station annually.
    Power produced at the Navajo Generating Station moves 1.6 million 
acre-feet of Central Arizona Project water through 300 miles of 
aqueducts and lifting the water on average 3,000 vertical feet. This 
provides many Arizonans with affordable (should we say cheap?) water 
from the Colorado River.
    In the process of mining this coal, precious groundwater is 
contaminated and sacred sites were destroyed. What Peabody Energy, the 
largest Coal Company in the world pays the tribes in royalties, roughly 
$14 million annually, pales in comparison to the $7 billion dollar 
revenue the company makes each year.
    The tribes face a paradox: the coal comes from the reservation, the 
plant is located on tribal land. YET there are tribal communities 
surrounding the generating station and the mine that have no access to 
running water and no electricity in their homes. The tribes that do 
have access to electricity pay at market rates greater than the 3 cents 
a kilowatt/hour the NGS station produces at cost to its owners.
    The Navajo and the Hopi Tribes do not own any part of the NGS.
    Today's hearing talks is entitled ``Protecting Long-Term Tribal 
Energy Jobs and keeping Arizona Water Costs Affordable, the Current and 
Future Role of the Navajo Generating Station.
    In order to look at keeping Water and Power Costs affordable, we 
should ask ourselves a fundamental question: how do we provide water 
and power to all Arizonans, which includes tribes and their non-tribal 
neighbors?
    Four years ago, we asked children from the Navajo Nation to draw 
where they thought their water came from.
    Children drew trucks with 100 gallon water jugs in the truck bed.
    A majority of the Navajo communities have to use watering stations 
because there's no access to water in their homes.
    Here we are in 2011--and we are faced with the same situation where 
some communities in the Navajo Nation and Hopi Tribe have no access to 
clean water--and worse, communities with limited or no access to 
electricity.
    Do we really want our children to grow up thinking that their water 
comes from water trucks and their power from lanterns and candle light?
    The NGS is no doubt a complex issue involving the power supply for 
water deliveries. It impacts tribal communities, cities, and the future 
of Arizona Water.
    People would like to boil down this complex issue to the simple, 
and false, claim that EPA regulations threaten to shut down the Navajo 
Generating Station--and jeopardizing our tribal economies. This is not 
a cut and dry case.
    What we do have is an opportunity to support the ongoing 
discussions among stakeholders to find short-term solutions that allow 
for water and power to continue to be delivered.
    At the same time, we must look at options for transitioning to 
clean energy in the future, and providing our tribal communities with 
the chance to develop all the resources available to them.
    We should work to provide equity to the Navajo Nation and the Hopi 
Tribe. Their resources must be valued and the value of their resources 
must be reflected in what is paid in royalties. We must provide 
affordable water for ALL Arizonans.
    Thank you for our witnesses for traveling today. We especially 
welcome President Shelley, Hopi Chairman Shingoitewa, and Gila River 
Indian Community Lt. Governor Manuel. WE look forward to hearing your 
testimony.
                                 ______
                                 
    Mr. McClintock. The Chair next recognizes the distinguished 
Chairman of the Indian and Alaska Native Affairs Subcommittee, 
Mr. Young of Alaska, for his opening statement.
    Mr. Young. Mr. Chairman, I ask for unanimous consent to 
submit for the record a comment from the Affordable Power 
Alliance.
    [The comment from the Affordable Power Alliance follows:]
    Mr. McClintock. Without objection.
    [NOTE: The comments have been retained in the Committee's 
official files.]

STATEMENT OF HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF ALASKA

    Mr. Young. Mr. Chairman, I am pleased to be here today, and 
I want to thank the witnesses. I love my lady and her comments, 
but I disagree. The EPA is trying to stop coal, and this is 
native land. This is their land, and you have outside agencies 
taking away the right of their land. That is a taking without 
compensation.
    It is their decision how it should be utilized, and they 
say it is not. I have watched the EPA, and it is a lousy 
agency. It has not done what it should do. It is not really 
protecting the environment. It is stopping the economic 
development of this Nation by actions that they do not have the 
authority to do so by regulatory law.
    Eighteen thousand EPA employees figuring out why you can't 
do something, and they have never done anything to improve the 
environment, and I will back that up. I watch what they are 
doing to my state every day and it is wrong.
    These are Nations, and they have a right to develop their 
lands as they wish to do so. Yes, protect them, but who should 
decide how it shall be done, and as far as the royalties go, I 
want you to develop your own sources.
    Peabody was leased that land by the BIA and not you, and 
under a Federal agency. The Federal Government has failed 
miserably on all the reservations. They have created the 
poverty. They created the drugs. They created the non-
education, and they have not given the opportunity to take 49 
permits on reservation land. It takes two off of reservation 
land because of the government.
    In this one case the government and the Nation has failed 
miserably, and my role as Chairman of this Committee is to make 
sure that I am writing this empowerment act that gives you the 
power to do as you wish to do to benefit your people as you 
should be able to do, instead of patting you on the head, and 
stay where you are, and do not improve your lot.
    We don't need you anymore, and we want you to keep your 
culture as you wish it to be, and not so as we wish it to be, 
and as we see it as white men. And that is where we have gone 
wrong in this whole body.
    We keep saying that we are helping the poor Alaskan 
Natives, the poor American Indians. You are not helping and we 
are not helping. We have not done the job that we should have 
done.
    We have an agency, the BIA, which is outdated, miserably 
outdated--1925, 1825--using the same principles, the same 
policy. Put them on a piece of ground, and don't let them go 
ahead, and just take care of them a little bit. Give them some 
poor beef. Don't give them the opportunity. After all, they are 
not too smart.
    That is the attitude of this government, and I am saying 
that is wrong, and we should overcome that quickly. You have 
your water, yes, and utilize it correctly. Water is a big 
issue. You have your power, yes. You have your power and it is 
providing for the rest of the State of Arizona and other areas.
    And you have minerals, and you have timber, and you have 
wildlife land. You have all of that, but you should be the 
manager and not some government agency, and this is why I feel 
so strongly about this issue.
    And when I get done with this bill that I am writing, Mr. 
Chairman, I hope to empower the American Indian and the Alaska 
Natives to the point where they can be self-sufficient, with a 
trust relationship with this Congress, who has a 
responsibility.
    This is important. You are a minority of minorities, and 
that is the scary part. If what has been done to you had been 
done to African-Americans, there would be a huge cry of 
outrage, but here, because you are a minority, we give you lip 
service. That is not going to happen under my watch.
    We are going to solve this problem with these agencies that 
take away your rights, and given to you as a trust relationship 
with this Nation, and they have taken it away, and I have seen 
it time and again.
    The EPA, the Corps of Engineers, the BIA, and Fish and 
Wildlife preserve parks surrounding your land so that you are 
no longer compatible, no longer compatible with those lands 
that are Federally designated so that you can't develop your 
lands.
    So it is a giving and a taking with no compensation due to 
your people. So I look forward to your testimony, and I am 
confident that you will do a good job, but we are going to have 
the EPA in front of us, because they are doing wrong to you, 
and they are doing wrong to my people in Alaska, and they are 
doing wrong to this Nation.
    They are a rogue agency. They are passing regulatory law 
that has no authority, no authority at all, and the fact that 
they can fine you, shut you down, and keep you from doing what 
you have been given the God-given right to do. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Young follows:]

            Statement of The Honorable Don Young, Chairman, 
            Subcommittee on Indian and Alaska Native Affairs

    Today's hearing will focus on the uncertain future of the Navajo 
Generating Station, a 2,250-megawatt coal-fired generation power plant, 
located on the Navajo Nation. I want to thank my colleagues from 
Arizona, Mr. Paul Gosar and Trent Franks, for requesting this important 
hearing.
    The U.S. Environmental Protection Agency, which regulates power 
plants on reservations, is endangering the survival of the Navajo 
Generating Station with absurd pollution controls. The costs and 
timeframes of such potential regulations regarding regional haze in the 
Grand Canyon could substantially increase power rates for customers or 
in a worst case scenario, close the plant. Shutting down the power 
plant would jeopardize jobs, tribal economies, and water rights for 
thousands of Native Americans in Arizona.
    The Navajo Generating Station provides affordable power production 
for water and power customers in Arizona, California and Nevada. It is 
the eighth largest coal plant, in terms of output, in the nation. The 
plant, which became operational in 1976, provides the power necessary 
to move Arizona's allocation of the Colorado River to central and 
southern Arizona, through a water system called the Central Arizona 
Project. The importance of the Navajo Generating Station to the Central 
Arizona Project and its customers will be addressed by others 
testifying today. However, I would like to point out that the largest 
single customer of the Central Arizona Project water is the Gila River 
Indian Community.
    As we all know, unemployment is high and rampant in most Indian 
communities. However, thanks to the Navajo Generating Station, hundreds 
of Native Americans are employed. In fact, the power plant employs 545 
full-time works and over 80% are Native Americans. The Kayenta (KAY-en-
TA) Mine, which supplies coal for the power plant, employs 415 full-
time workers and over 90% are Native American. These high-paying jobs 
would be lost, should the plant close its doors.
    I want to welcome our witnesses and especially thank the elected 
tribal officials who are here to testify about the potential economic 
and cultural damage the EPA's actions will have on your communities.
                                 ______
                                 
    Mr. McClintock. Thank you, Mr. Chairman. I have some good 
news and some bad news. The bad news is that we have about 
four-and-a-half minutes left to record our first of two votes 
on the House Floor.
    The good news is that it shouldn't take more than about 20 
minutes, and at that point, I am told that we should be clear 
for the rest of the afternoon. So without objection the 
Committee will stand in recess for about 20 minutes.
    [Recess.]
    Mr. McClintock. The Subcommittees will come to order. We 
were in the middle of opening statements when we were so rudely 
interrupted. I am assured or we do not expect another vote 
until about five o'clock, by which time I hope to have this 
hearing wrapped up and placed in the annals of history here.
    On opening statements, Mr. Grijalva, and so Mr. Lujan.

 STATEMENT OF HON. BEN RAY LUJAN, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW MEXICO

    Mr. Lujan. Thank you very much, Mr. Chairman, and we want 
to welcome our friends, our guests that we have here with us 
today, especially our friend from The Navajo Nation, who I have 
the honor of representing in New Mexico with the Eastern 
Agency, Ya'at'eeh, my friend, and it is good to have you.
    Mr. Chairman, this is an important hearing to talk about 
how we can work closely with tribal communities to ensure that 
the U.S. Government is doing its due diligence with tribal 
governments when it comes to consultation.
    This is also an opportunity to highlight what we can do 
better and smarter to produce energy in this country, and I 
again want to thank President Ben Shelly of The Navajo Nation, 
and Hopi Tribal Councilman and Chairman Shingoitewa, thank you 
for being here, sir.
    And, of course, Gila River Lieutenant Governor Joseph 
Manuel for being here. I appreciate it, sir. It is always good 
to see you, and for coming to talk with us today as we talk 
about the need for a thorough tribal consultation during the 
important decision making process, like the one that we are 
talking about here today.
    Fair and open tribal consultation is important as we 
strengthen our government to government relationships with 
tribal communities, the Obama Administration has reaffirmed its 
commitment to Indian country to ensure that we are properly 
addressing tribal concerns, and bringing them to the table when 
we are making decisions about the future of Indian country, and 
the future of the United States of America.
    I hope that the Administration through the EPA, and 
National Park Service, and BIA, and the Department of the 
Interior, will take adequate actions to consult and consider 
tribal consultations in the future.
    And, Mr. Chairman, I think that it is important that as we 
talk about the future of energy in the country, and the future 
of water to some of the parts of the Nation that are 
restricted, that we talk about how we as a Congress can further 
support our tribes.
    Most recently, we had the ability to get authorization and 
to move forward the Navajo Nation water pipeline project, which 
was opposed by some Members in Congress, and I think that it is 
important that as we talk about the future of energy in the 
country, but we cannot forget about the importance of water.
    And surely what we can do as a Congress is to be supportive 
of sovereignty as a whole as we look to make sure that we are 
looking from economic opportunities, job opportunities, 
developing tech transfer opportunities, all of which require 
energy.
    And as we see with The Navajo Nation specifically, we have 
seen other areas of manufacturing come to the Nation, where 
they are putting people to work, and we have seen the 
importance of training facilities, like San Juan Technical 
College, that provides that round of training not only to be 
able to support energy industry in the country, but again, we 
had an opportunity this year to vote for funding to be able to 
provide support for educational opportunity for The Navajo 
Nation, and it was rejected by many of our Members here.
    And so, I hope, Mr. Chairman as we go forward that we truly 
talk about a holistic approach to making sure that we are 
supporting water projects like The Navajo Nation pipeline, 
which still needs funds to be completed.
    That we have serious conversations about training, so that 
way we can support the Nation. We can support all our Native 
American brothers and sisters when we talk about the future of 
providing job opportunity on the reservations as well.
    I think that there are areas where we can come together and 
be able to get this done. So, again, Mr. Chairman, I am honored 
to be able to be here with our friends, and I look forward to 
seeing you very soon in your home, and I always appreciate the 
invitations. So thank you very much, Mr. Chairman. I look 
forward to this important conversation that we are about to 
have.
    Mr. McClintock. Thanks very much. Dr. Gosar.

 STATEMENT OF HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ARIZONA

    Dr. Gosar. Thank you very much, Chairmen McClintock and 
Young, and Ranking Members Napolitano and Boren, for holding 
this hearing regarding the regulatory challenges facing the 
Navajo Generating Station.
    This is an important and complex issue facing my community, 
the State of Arizona, and the Southwestern region of the United 
States. I truly appreciate the Committee's accommodating my 
request.
    For nearly 30 years the Navajo Generating Station has been 
a vital economic engine and job provider in Northern Arizona 
and directly influences job creation in Central and Southern 
Arizona as well.
    The plant is paramount to sustaining jobs, job creation, 
and economic recovery. In addition, the plant has play an 
instrumental role in providing affordable year around energy, 
and an affordable reliable and sustainable water supply to 
cities, industries, farms, and tribal communities, encompassing 
nearly 80 percent of Arizona's population.
    The Navajo Generating Station is critical to Arizona's 
water supply, because it provides 95 percent of the power for 
the Central Arizona Project or CAP. Each year, CAP uses 
approximately 2.8 million megawatt hours of electricity to 
deliver more than 500 billion gallons of Colorado River water 
to a three county service area, that includes more than 80 
percent of the state's population.
    This includes 45 percent of the City of Phoenix's projected 
water demand, and over 80 percent of Tucson's projected water 
demand. The Bureau of Reclamation owns nearly 25 percent of the 
Navajo Generating Station, and revenues from the sale of excess 
power generated from the plant are used to repay the Federal 
Government for Arizona's share of the project.
    These revenues will also be used to help pay for the cost 
of Indian water rights settlements in Arizona. At a time when 
48 percent of the Navajos are unemployed, and 40 percent live 
below the Federal poverty level, the plant provides 500 well-
paying jobs, with almost 80 percent going to the Members of The 
Navajo Nation.
    In addition, the plant and the associated Kayenta coal mine 
provides $137 million in revenue and wages to The Navajo 
Nation, and about $12 million annually to the Hopi Tribe, 
nearly 88 percent of their annual operating budget.
    There, the plant both directly and indirectly supports the 
Native Americans' overall economic viability, and is vital to 
their sustainability as an independent sovereign nation. We 
have long encouraged Native American self-sufficiency, and to 
now see the Federal Government try to pull the rug out from 
under a successful, self-sufficient Native American industry, 
is beyond comprehension.
    In addition, it is important to note the loss of revenue 
from the sale of excess Navajo Generating Station power 
threatens the continued viability of all current Native 
American water rights settlements in Arizona, and jeopardizes 
the ability of the United States to settle with other tribes in 
an ongoing water rights settlement negotiations.
    Despite these proven benefits the Navajo Generating Station 
is in danger of being closed down due to unreasonable air 
visibility regulations. The Obama Administration's 
Environmental Protection Agency has spent in the last few years 
reevaluating and drastically changing the rules and policies, 
even though Congress has made little to no changes to the 
environmental law.
    Specifically, the EPA is imposing regulatory uncertainty on 
the Navajo Generating Station by utilizing the best available 
retrofit technology, or BART, determination under the Regional 
Haze Rules of the Clean Air Act.
    Since its construction, the owners of NGS have been 
committed to stewardship of the environment, continually taking 
actions toward the continued long-term safe, reliable, and 
economical operations of the plant.
    They have been pro-active in implementing science-based 
environmental controls to ensure the plaint meets ever-changing 
environmental regulations imposed by the Federal Government.
    Over the past two decades, they have invested over $650 
million in construction of the plant, including $200 million in 
environmental control equipment, with negligible rate increases 
to the consumer.
    However, these pro-active measures are not enough for the 
EPA. Even when industry goes above and beyond these demands of 
Federal law, the agency continues to use rules and regulations 
to continue to move the bar further down the line, implicating 
economic impact.
    The agency is strongly considering imposing over $1 billion 
of new costs on the Navajo Generating Station, a cost almost 20 
times more than equally effective environmental measures that 
NGS owners are willing to undertake.
    The cost and time frames of EPA's pending mandates would 
make it economically impossible to continue operations. This is 
very tactic and used in the past in my state, and across the 
country, to dictate winners and losers in the energy field.
    I look forward to the hearing with the rest of my Arizonans 
about the true effect of the Administration's actions could 
have on our communities and continuing t push this issue into 
the forefront as the EPA considers its regulatory stance. Thank 
you.
    [The prepared statement of Dr. Gosar follows:]

      Statement of The Honorable Paul A. Gosar, a Representative 
                 in Congress from the State of Arizona

    Thank you Chairmen McClintock and Young, and Ranking Members 
Napolitano and Boren, for holding this hearing regarding the regulatory 
challenges facing the Navajo Generating Station. This is an important 
and complex issue facing my community, the State of Arizona, and the 
Southwestern region of the United States. I truly appreciate the 
committees' accommodating my request.
    For nearly thirty years, the Navajo Generating Station (NGS) has 
been a vital economic engine and job provider in Northern Arizona and 
directly influences job creation in central and southern Arizona. The 
plant is paramount to sustained jobs, job creation, and economic 
recovery. In addition, the plant has played an instrumental role in 
providing affordable year-round energy and an affordable, reliable and 
sustainable water supply to cities, industries, farms, and Tribal 
communities encompassing nearly 80 percent of Arizona's population.
    The NGS is critical to Arizona's water supply because it provides 
95% of the power for the Central Arizona Project (CAP). Each year, CAP 
uses approximately 2.8 million megawatt hours of electricity to deliver 
more than 500 billion gallons of Colorado River water to a three-county 
service area that includes more than 80% of the state's population. 
This includes 45% of the city of Phoenix's projected water demand and 
80% of Tucson's projected water demand.
    The Bureau of Reclamation owns nearly 25% of the NGS, and revenues 
from the sale of excess power generated from the plant are used to 
repay the federal government for Arizona's share of the project. These 
revenues will also be used to help pay for the costs of Indian water 
rights settlements within Arizona.
    At a time when 48% of the Navajos are unemployed and 40% live below 
the federal poverty line, the plant provides 500 well-paying jobs, 
almost 80% going to members of the Navajo Nation. In addition, the 
plant and the associated Kayenta coal mine provide $137 million in 
revenue and wages to the Navajo Nation and about $12 million annually 
to the Hopi Tribe, nearly 88 percent of their annual operating budget. 
Therefore, the plant both directly and indirectly supports the Native 
Americans' overall economic viability and it vital to their 
sustainability as independent sovereign nations. We have long 
encouraged Native American self-sufficiency. To now see the Federal 
Government try to pull the rug out from under a successful, self-
sufficient Native American industry is beyond comprehension.
    In addition, it is important to note, the loss of the revenue from 
the sale of excess NGS power threatens the continued viability of all 
current Native American water rights settlements in Arizona and 
jeopardizes the ability of the U.S. to settle with other Tribes in on-
going water rights settlement negotiations.
    Despite these proven benefits, the NGS is in danger of being closed 
down due to unreasonable air visibility regulations. The Obama 
Administration's Environmental Protection Agency has spent the past two 
years reevaluating and drastically changing rules and policies even 
though Congress has made little-to-no changes to environmental law.
    Specifically, the EPA is imposing regulatory uncertainty on the 
Navajo Generating Station, by utilizing the Best Available Retrofit 
Technology (BART) determination under the Regional Haze Rule of the 
Clean Air Act.
    Since its construction, the owners of the NGS have been committed 
to stewardship of the environment, continuously taking action towards 
the continued long-term safe, reliable, and economical operation of the 
plant. They have been pro-active in implementing science-based 
environmental controls to ensure the plant meets ever-changing 
environmental regulations imposed by the federal government. Over the 
past two decades, they have invested over $650 million in construction 
of the plant, including $200 million in environmental-control 
equipment, with negligible rate increases to the consumer.
    However, these proactive measures are not enough for the EPA. Even 
when industry goes above and beyond the demands of federal law, the 
agency continues to use rules and regulations to continue to move the 
bar further without regard for the economic impact. The agency is 
strongly considering imposing over one billion dollars of new costs on 
the Navajo Generating Station, a cost almost 20 times more than equally 
effective environmental measures that NGS owners are willing to 
undertake. The cost and timeframes of EPA's pending mandates would make 
it economically impossible to continue operations. This very tactic has 
been used in the past in my state and across the country to dictate 
winners and losers in the energy field.
    Despite what some might have you believe, over 2,200 mw of power 
cannot be easily replaced. While I support an all-of-the-above energy 
approach, which includes alternatives like solar and wind, those types 
of intermittent energies simply are incapable of replacing the NGS in 
the next 25 to 30 years, let alone in the next 10 years. At a time when 
long-term, good paying jobs are critical to our economic recovery, it 
would be devastating to our constituents and the State of Arizona to 
lose this important asset and its numerous benefits.
    It is important to note that the final rule has not been issued. 
However, the Administration's conduct in this matter has made its 
intentions clear: it plans to impose the worst case scenario on the 
plant. There is no doubt that this scenario will effectively shut the 
NGS plant down, and devastate the already struggling Arizona economy. 
And by so doing, inflict another injustice against the Hopi, Gila River 
Community and the Navajo.
    The EPA's hard line approach with respect to Navajo Generating 
Station is nothing short of a case study for this Administration's EPA: 
overreaching its regulatory authority, exceeding Congressional intent, 
and forgoing consultation with stakeholders. EPA's continued hard-line 
stance is a direct threat to the State of Arizona's long-term water and 
energy security.
    I look forward to hearing from my fellow Arizonans about the true 
effect the Administration's actions could have on our communities and 
continuing to push this issue into the forefront as the EPA considers 
its regulatory stance.
                                 ______
                                 
    Mr. McClintock. Thank you. Mr. Garamendi.

STATEMENT OF HON. JOHN GARAMENDI, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Garamendi. Mr. Chairman, and Members, thank you very 
much for being here. It is good to be once again working with 
you. In the mid-1990s, I was engaged in this particular issue 
while I was Deputy Secretary to the Department of the Interior.
    And shortly after I left the Department, an agreement was 
worked out to proceed, and here we are 10 years or 12 years 
later still trying to figure out what to do. Obviously complex 
and with economic and social impact for the Navajo Tribe, as 
well as an environmental impact for one of the--well, many of 
the most spectacular places in America, not only the tribal 
reservation, but also the Grand Canyon and areas around that.
    There is no doubt that there is a haze problem in the area, 
having traveled through the area, and I know that you gentlemen 
live there, you are undoubtedly well aware of it, and it is 
also a health hazard as well. It is not just haze.
    And also an economic problem in that many of the 
spectacular views are obscured by the haze from generating 
plants, not only this one, but others in the area. It needs to 
be dealt with, and we need to come to some sort of a conclusion 
to clean up these plants.
    The technology has aged, is insufficient, and creates a 
problem. Will it be expensive? Yes. Will it be more expensive 
than doing nothing? I don't think so. And I would hope that the 
EPA moves along expeditiously with its current effort to find 
an appropriate accommodation, one that would significantly 
limit the pollution from the plant, and simultaneously allow 
for the necessary electrical generation and jobs associated 
with it.
    I think it can be done. I know that when I was dealing with 
this in the 1990s, we were on a way toward solving it. 
Obviously, that has not happened in the intervening years. But 
at the end of the day, it does no one any good to pollute both 
the environment, the extraordinary view sheds of the region, 
and ultimately the atmosphere.
    This has to be dealt with, and I urge all parties to stay 
with it. I will do what I can to accommodate that, but a hiatus 
and to stop this process would be in my view inappropriate. I 
yield back my time.
    Mr. McClintock. Mr. Markey.

 STATEMENT OF HON. EDWARD MARKEY, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF MASSACHUSETTS

    Mr. Markey. In the early 1900s, Arizona's sunshine and 
clean desert air was advertised as a cure for tuberculosis. 
Today, the sunshine is still abundant in Arizona, but the clean 
air that the ``lungers'' sought is not always there.
    Over the last decades the Clean Air Act has improved the 
air quality across the Nation, providing significant health 
benefits and beginning the clearing of our most iconic vistas, 
but as much progress as we have made cleaning up our cars, and 
power plants, some facilities, like the Navajo Generating 
Station, still need to improve.
    Based on 2010 emissions, it is the third largest emitter of 
nitrogen oxides in the Nation, even with some nitrogen 
pollution controls installed on two of its three units. 
Nitrogen oxide are one of the main pollutants that reduce 
visibility.
    They also have serious health impacts, both directly and as 
a component of ground level ozone and particulate matter, 
including asthma, other respiratory illnesses, heart disease, 
and premature death.
    Just 15 miles from the Grand Canyon National Park, 
pollution from the Navajo Generating Station can impair the 
view, and at 10 other national parks and wilderness areas in 
the region.
    The nearly five million people who visit the Grand Canyon 
annually expect a grand view, like this one on a good 
visibility day in 2010. But some days, as they stand on the rim 
of the canyon, their view is limited by the haze of pollution, 
like in this picture, a poor visibility day in that very same 
year.
    Recognizing that preserving the air and the view was as 
important as preserving the land, Congress included a program 
to protect scenic vistas in the 1977 amendments to the Clean 
Air Act.
    In 1999, the Regional Haze Rule finally established the 
requirements to carry out these protections. The owners of the 
Navajo Power Plant, and those owners of the Salt River Project 
Reclamation, the Los Angeles Department of Water and Power, the 
Arizona Public Service Company, Nevada Energy, and Tucson 
Electric Power, all those companies, they all knew it.
    They knew what the rule was. They knew that they would have 
to make additional investments to clean up its pollution. The 
EPA is currently analyzing what pollution controls must be put 
in place to bring this generation station owned by those six 
entities into compliance with the Clean Air Act.
    As part of that work, they are looking at the economic 
impact and the water and electricity users in Arizona that are 
clearly critical, and that have complex issues. At the same 
time the Salt River Project, the operator and partial owner of 
the plant, is conducting a stakeholder process to develop a 
consensus proposal to submit for EPA's consideration.
    The EPA intends to release a proposal this summer, and 
after an additional period of public comment, they hope to make 
a final determination next year. In spite of this ongoing work, 
the Republican majority have called this hearing today.
    And while they might want to portray it as a way to clear 
the air, I think it will just probably muddy the waters, 
although the EPA has not proposed to close the plant, you will 
hear dire predictions to that effect from my colleagues across 
the aisle.
    Radio evangelist Harold Camping circulated that the world 
would end last Saturday at 6:00 p.m., and much like that 
prediction, today's forecast of a regulatory rapture of the 
Navajo Generating Station is overblown.
    The power plant is too important and too profitable to shut 
down anytime soon. To bring some reality to the apocalyptic 
vision that some might try to portray today, I asked the EPA to 
answer some questions about their ongoing work at the 
generating station, as well as their work on other power plants 
in The Navajo Nation. I would like to submit their response for 
the record without objection.
    Mr. McClintock. Without objection.

    [The letter submitted for the record by Mr. Markey from the 
U.S. Environmental Protection Agency follows:]




    Mr. Markey. Now, is the time to develop a plan that 
will reduce pollution, increase economic development, and 
overcome the decades of economic and health inequities faced by 
the tribes. There is a reason for optimism that that can be 
done.
    In 1991, diverse stakeholders came together to craft a 
broad agreement to address sulfur dioxide emissions from the 
Navajo Power Plant and other similar issues that confront the 
plant today.
    Rather than trying to protect the status quo of this 
Committee, should like in 1991 work to try to find a solution 
that leads to clean air and to clean energy. Mr. Chairman, I 
yield back the balance of my time.
    [The prepared statement of Mr. Markey follows:]

     Statement of The Honorable Edward J. Markey, Ranking Member, 
                     Committee on Natural Resources

    In the early 1900s, Arizona's sunshine and clean desert air was 
advertised as a cure for tuberculosis. Today the sunshine is still 
abundant in Arizona, but the clean air that the ``lungers'' sought is 
not always there.
    Over the last decades, the Clean Air Act has improved the air 
quality across the nation, providing significant health benefits and 
beginning the clearing of our most iconic vistas. But as much progress 
as we have made cleaning up our cars and power plants, some facilities, 
like the Navajo Generating Station, still need to improve.
    Based on 2010 emissions, it is the third largest emitter of 
nitrogen oxides in the nation, even with some nitrogen pollution 
controls installed on two of its 3 units. Nitrogen oxides are one of 
the main pollutants that reduce visibility. They also have serious 
health impacts--both directly and as a component of ground-level ozone 
and particulate matter--including asthma, other respiratory illnesses, 
heart disease and premature death. Just 15 miles from the Grand Canyon 
National Park, pollution from the Navajo Generating Station can impair 
the view there and at 10 other national parks and wilderness areas in 
the region.
    The nearly five million people who visit the Grand Canyon annually 
expect a grand view like this one on a good visibility day in 2010. 
[picture of Grand Canyon on a good day]
    But some days, as they stand on the rim of the canyon, their view 
is limited by the haze of pollution like in this picture of a poor 
visibility day in that same year. [picture of bad visibility]
    Recognizing that preserving the air and the view was as important 
as preserving the land, Congress included a program to protect scenic 
vistas in the 1977 amendments to the Clean Air Act. In 1999, the 
Regional Haze Rule finally established the requirements to carry out 
these protections. The owners of the Navajo power plant have known for 
decades that they may have to make additional investments to clean up 
its pollution.
    The EPA is currently analyzing what pollution controls must be put 
in place to bring the Navajo Generating Station into compliance with 
the Clean Air Act. As part of that work, they are looking at the 
economic impact on Tribes and water and electricity users in Arizona, 
which are clearly critical and complex issues. At the same time, the 
Salt River Project, the operator and partial owner of the plant, is 
conducting a stakeholder process to develop a consensus proposal to 
submit for EPA's consideration. EPA intends to release a proposal this 
summer. After an additional period of public comment, they hope to make 
a final determination next year.
    Despite all this ongoing work, the Republicans have called this 
hearing today. While they might want to portray it as a way to clear 
the air, I think it will just muddy the waters. Although EPA has not 
proposed to close the Navajo power plant, you will hear dire 
predictions to that effect from my colleagues across the aisle.
    Radio evangelist Harold Camping calculated that the world would end 
last Saturday at 6 p.m. And much like that prediction, today's forecast 
of a ``regulatory rapture'' of the Navajo Generating Station is 
overblown. The power plant is too important and too profitable to 
shutdown any time soon.
    To bring some reality to the apocalyptic vision that some might try 
to portray today, I asked the EPA to answer some questions about their 
ongoing work on the Navajo Generating Station, as well as their work on 
other power plants in the Navajo Nation. I would like to submit their 
response for the record.
    Now is the time to develop a plan that will reduce pollution, 
increase economic development and overcome the decades of economic and 
health inequities faced by the Tribes.
    There is reason for optimism that this can be done. In 1991, 
diverse stakeholders came together to craft a broad agreement to 
address sulfur dioxide emissions from the Navajo power plant and other 
similar issues that confront the plant now. Rather than trying to 
protect the status quo, this committee should be trying to help find 
the solution that leads to clean air and clean energy.
                                 ______
                                 
    Mr. McClintock. Thank you. Well, we will now hear from our 
first panel of witnesses. Each witness' written testimony will 
appear in full in the hearing record, and so I would ask that 
the witnesses keep their oral statements to five minutes as 
outlined in our invitation letter, and also under Committee 
Rule 4[a].
    I also want to explain how our timing lights work. When you 
begin to speak, our Clerk will start the timer, and a green 
light will appear. After four minutes, a yellow light will 
appear, which means that you should talk very, very fast, and 
at five minutes, the red light will come on, and that means 
that you should stop talking because the Members have stopped 
listening.
    And if it is any consolation, we hold ourselves to the same 
rules. The Committee is very honored to have as our first 
witness The Honorable Ben Shelly, President of The Navajo 
Nation, from Window Rock, Arizona, to testify. Mr. President, 
thank you for coming.

           STATEMENT OF HON. BEN SHELLY, PRESIDENT, 
            THE NAVAJO NATION, WINDOW ROCK, ARIZONA

    Mr. Shelly. Mr. Chairman, Members of the Committee, Tribal 
Leaders, Ya'at'eeh. I am Ben Shelly, President of The Navajo 
Nation. I thank the Committee for the opportunity to provide 
testimony on the future of the Navajo Generating Station, a 
power plant located on The Navajo Nation, employing Navajo 
people, utilizing Navajo coal, that is critical to our economy.
    The Navajo Generating Station, NGS, is located near the 
Town of Page, Arizona. The Navajo Nation leased the site to a 
variety of stakeholders of NGS. The plant has been in operation 
since 1974. The many interests in the plants are far-reaching 
and have great impact on the region's economy.
    The Navajo Nation wished to first preserve jobs in an 
already stressed economy, and the area of these jobs includes 
545 full-time positions, 80 percent of which are Native 
Americans.
    In addition to the Navajo Generating Station the jobs at 
the Kayenta Mine, which is supported by NGS, employs 415 full-
time workers, and 90 percent of them are Native Americans. NGS 
and Kayenta Mine together contribute about $140 million 
annually in revenues and wages to the Navajo Nation.
    The Navajo Nation recognized the importance of the Navajo 
Generating Station and the deliveries of the Central Arizona 
Project, CAP, water for the entire valley of Arizona. We wish 
for this body to recognize the significant benefits The Navajo 
Nation gave up in the interests of external stakeholders and 
the development of NGS.
    Now The Navajo Nation is engaged in negotiations to settle 
its water rights claims in Arizona. We ask for the support of 
Congress in this settlement. The Navajo Nation wishes to 
express support for utilizing an energy mix to ensure we are 
being a responsible caretaker of our environment, while 
providing economic opportunity to our people.
    The Navajo Nation supports renewable energy development as 
part of its overall energy portfolio and energy policy. The 
Navajo Nation will continue to seek to develop a cleaner 
portfolio, to include such renewable sources such as wind solar 
and biomass.
    The United States EPA proposed rules do not make sense for 
the Navajo Generating Station. The costs to implement these 
rules would force the plant closure, and would have damaging 
economic impact on The Navajo Nation, and the state dependence 
on NGS energy.
    It would put nearly 1,000 people out of work and jeopardize 
our water settlement plan. Instead, The Navajo Nation supports 
using a phased approach to emission reduction for NGS, and we 
feel that this approach is reasonable to meet the EPA's 
timeline for the Regional Haze Rule, and is the most effective 
method for balancing the economy and environmental needs of our 
people.
    The Navajo Nation's economy depends upon the development of 
this energy resource due to the past Federal policy. The Navajo 
Nation is heavily dependent on oil extraction, like the rest of 
the world, and The Navajo Nation faced the challenges 
associated with energy dependencies, including climate change 
effects on our health, environment, and other impacts for 
energy development.
    As the President of The Navajo Nation, I am regularly 
required to evaluate competitive interests in making decisions 
that affects my people. The Navajo Nation is blessed with 
natural fossil fuels and renewable energy resources that we 
have the right to develop.
    NGS is an essential component of The Navajo Nation's 
economy and must remain viable for the sake of The Navajo 
Nation and our people. Ahe'hee'. Thank you.
    [The prepared statement of Mr. Shelly follows:]

           Statement of Ben Shelly, President, Navajo Nation

INTRODUCTION
    Ya'a'teeh. I am Ben Shelly, President of the Navajo Nation. I thank 
the Committee on Natural Resources, Subcommittee on Indian and Alaska 
Native Affairs and Subcommittee on Water and Power, for this 
opportunity to provide testimony to the Committee regarding the future 
of the Navajo Generating Station, a coal-fired power plant located on 
the Navajo Nation, employing Navajo people and utilizing Navajo coal 
that is critical to the economy of the Navajo Nation.
THE NAVAJO NATION
    The Navajo Reservation, or Dine'tah, is the homeland of the 
approximately 300,000 Navajo people. It covers more than 27,000 square 
miles within the exterior boundaries of Arizona, New Mexico, and Utah, 
also occupying parts of 13 counties in those states, and is a place of 
great beauty.
    The Navajo people struggle with extreme poverty that places the 
reservation among the poorest regions in the United States. 48% of the 
Navajo people are unemployed and 40% live below the federal poverty 
line.
    Our living conditions are substandard when compared with the rest 
of the United States. Navajo homes often lack basic infrastructure and 
amenities: 31% of homes do not have complete plumbing; 28% do not have 
operational kitchen facilities; 38% do not have water services; 32% are 
without electricity; and 60% of the homes lack basic telephone 
services, let alone having access to broadband and the internet.
NAVAJO GENERATING STATION
    The Navajo Generating Station (NGS) is located in the outermost 
northwestern edge of the Navajo Reservation near the town of Page, 
Arizona. The Nation and owners of NGS entered into a plant site lease 
in 1969. NGS's operating agent is the Salt River Project (SRP), which 
owns 21.7% of the electric generating unit. The U.S. Bureau of 
Reclamation (BOR) owns 24.3%, Los Angeles Department of Water and Power 
(LADWP) owns 21.2%, Arizona Public Service Company owns 14.0%, Nevada 
Energy (NE) owns 11.3%, and Tucson Electric Power (TEP) owns 7.5%. NGS 
provides electricity to customers in Arizona, Nevada, and California, 
and also supplies a majority of the electricity for the Central Arizona 
Project (CAP).
    Construction of the first of three electric generation units (EGUs) 
began in 1969. The first unit went online in 1974, and construction of 
the third unit was completed in 1976. Each EGU at NGS is rated at 750MW 
for a combined total of 2,250 MW. NGS uses high quality low-sulfur 
bituminous coal that is mined 78 miles away at the Kayenta Mine. The 
Kayenta Mine is located on Navajo and Hopi lands on Black Mesa and 
operated by Peabody Western Coal Company.
    NGS employs 545 full-time workers, 80% of which are Native 
American. The Kayenta Mine employs 415 full-time workers, 90% of which 
are Native American. NGS and the Kayenta Mine together contribute 
approximately $140 million annually in revenues and wages to the Navajo 
Nation, and the Hopi Tribe has commented that 80% of its general 
revenues are from coal. NGS thus both directly and indirectly supports 
the Nation's overall economic viability, the health and welfare of the 
Navajo people and its communities, and the sustainability of the Navajo 
Nation as an independent sovereign nation.
CENTRAL ARIZONA PROJECT
    Energy generated by NGS and attributable to the federal share of 
ownership in the plant is used to deliver water through the CAP system. 
Many benefits from NGS flow to and through the CAP system. The 
importance of NGS to the CAP and its customers will be addressed by 
others testifying today. However, I would like to touch briefly on the 
relationship of NGS to Indian water rights settlements in Arizona. The 
Secretary of the Interior has reserved a pool of Arizona's CAP water to 
be used to settle the water rights claims of Arizona tribes. NGS power 
keeps that water affordable. Increased power costs, whether 
attributable to capital improvements at NGS mandated by environmental 
regulatory action or plant closure would increase the cost of tribal 
CAP water significantly. In addition, revenue derived from the sale of 
surplus federal power is deposited in the Lower Colorado River Basin 
Development Fund and provides a source of funds for tribal water rights 
settlements. The Navajo Nation is engaged in negotiations to settle its 
water rights claims in Arizona. It is likely that any settlement will 
include CAP water delivered with NGS power and money from the Lower 
Basin Development Fund to build water delivery infrastructure projects.
UNCERTAINTIES FACING NAVAJO GENERATING STATION
    The Navajo Nation, Navajo employees of NGS and the Kayenta mine, 
and their families and communities, and the various other stakeholders 
at NGS, are currently faced with uncertainty over the future of the 
plant. This uncertainty stems from several issues: the current lease 
negotiations between the Navajo Nation and the plant owners, proposed 
rule-making by the Environmental Protection Agency (EPA) which would 
impose Best Available Retrofit Technology (BART) combustion controls on 
the plant and the associated costs of such technology, negotiations for 
a new coal supply contract between NGS and Peabody, potential changes 
in the ownership interests of NGS, as well as expected future 
regulations or legislation limiting greenhouse gas (GHG) emissions, 
with the significant associated capital and operating costs for 
compliance associated with such regulation.
EMISSION UPGRADES
    NGS has spent over $650 million on environmental control 
technology, including new Sulfur Dioxide (SO2) limestone 
scrubbers that remove over 90% of the SO2 emissions, 
Electrostatic Precipitators that capture 99% of the fly-ash that is 
recycled for uses as additives in cement or concrete construction 
materials, and Low-NOX burners and Separated Over Fire Air 
Technology that reduce the NOX emissions by 40%. NGS 
complies with all current federal air quality standards and emission 
limitations.
EPA RULE-MAKING FOR BART
    The Navajo Generating Station is subject to regulation under the 
Clean Air Act Regional Haze Rule. The Regional Haze Rule was adopted to 
improve visibility in Federal Class I Areas, such as national parks, 
monuments and recreation areas. NGS is located in close proximity to 16 
Class I Areas.
    The goal of the Regional Haze Rule is to return visibility in 
federal Class I Areas (e.g. the Grand Canyon) to pristine conditions by 
2064. The Rule requires 'reasonable progress' towards this goal. The 
EPA has the responsibility to establish a rate of reasonable progress 
for NGS, and to select appropriate technology to achieve meaningful 
emission reductions to meet the final visibility goal by 2064, rather 
than selecting a technology with exorbitant costs and compliance 
requirements by 2018, and in doing so adversely impacting the Navajo 
Nation and the Navajo people.
    In 2009, the US EPA published an Advanced Notice of Proposed 
Rulemaking addressing preliminary issues in anticipation of the 
agency's determination of emissions controls that would be required as 
BART for NGS and a second coal-fired power plant located on the 
Nation's lands--Four Corners Power Plant. The US EPA is considering 
requiring installation of Selective Catalytic Reduction (SCR) 
technology as BART for NGS and has issued a proposed Federal 
Implementation Plan (FIP) that would require the installation of SCRs 
on all 5 EGUs at Four Corners.
    The exorbitant capital and operating costs of SCR technology, while 
so much other uncertainty is facing NGS, would likely force closure of 
the plant if SCR is adopted as BART. Instead, the Nation supports using 
a phased approach to emission reductions for NGS. As the Nation 
commented to EPA in response to the ANPR, advanced combustion 
controls--Low NOX Burners (LNB) and Separated Over Fire Air 
(SOFA) Technology, and not SCR, are BART for Navajo Generating Station 
at this time.
    Implementing any more stringent technology as BART for NGS in the 
short term could force plant closure, an eventuality that would have 
catastrophic economic impacts on the Navajo Nation. NGS is located on 
Navajo Nation land, it utilizes the Nation's coal, and income from NGS 
and the Kayenta mine contribute substantially to the economy of the 
Navajo Nation, both directly through lease fees and from royalties and 
taxes on the Nation's coal, as well as indirectly through skilled jobs 
and employment for the Navajo people and through economic development 
in the way of service support jobs. Any BART determination for NGS must 
give substantial consideration to the devastating impacts that closure 
of NGS would have on the Navajo Nation and the Navajo people.
    The US EPA must also consider the cumulative effects of the BART 
determination for NGS regionally. Three coal-fired power plants are 
located on or near the Navajo Nation: NGS and Four Corners within the 
Navajo Nation, and the San Juan Generating Station adjacent to the 
Navajo Nation. All three coal fired plants and the coal mines that 
supply them contribute to the tribal economy and regional economic 
dynamics. Current and proposed environmental regulatory actions 
affecting these facilities, as well as the impact of past actions, 
including the closure of the Mojave Generating Station, and their 
potential cumulative economic impacts, should be considered in 
determining the BART for NGS.
OTHER INTERESTS
    The Department of Interior (DOI) is proposing a study to provide 
various generation and emission control strategy options for responding 
to EPA's proposed BART determination for NGS. This study will consider 
the feasibility of transitioning NGS to cleaner energy production to 
improve the regional air quality while maintaining current energy and 
CAP water delivery obligations.
    The National Renewable Energy Laboratory (NREL), the Department of 
Energy (DOE), including the Clean Coal Office (CCO) and the Tribal 
Energy Program (TEP), Sandia National Labs (SNL), Lawrence Livermore 
National Labs (LLNL), the DOI, the Navajo Nation, NGS, and CAP, and 
others, recognize the stake that many parties have in the future of 
NGS, and the power and water delivery obligations of CAP. These parties 
have expressed their intent to work together as a group to consider all 
potential technical options for NGS in light of the many and complex 
interests implicated by a potential closure of NGS.
NAVAJO NATION ENERGY POLICY
    The Navajo Nation has vast reserves of coal and derives a 
substantial amount of its royalties, rent, fees, tax revenue, and jobs 
and salaries from coal mining and production of electricity from coal. 
The Nation's Energy Policy envisions coal production and coal-fired 
generation as key components of the Nation's economy and its ``energy 
mix'' decades into the future. As a resource tribe, the Navajo Nation 
will seek to shape fossil fuel legislation as the Nation continues to 
adapt to the already changing regulatory environment. But coal, along 
with the other leading fossil fuels, i.e. oil and natural gas, will 
remain the dominant energy sources for the world through 2035.
    Down the road, important to using the Nation's coal will be 
development and deployment of clean-coal technologies, including 
sequestration and coal-to-liquid. However, these technologies require 
significant federal support, including governmental funding and 
incentives, before they can be reasonably implemented. In the meantime, 
and without such federal assistance and subsidies, federal 
environmental rule-making and policy must reflect the real world costs 
and realities, including, where applicable, the federal trust 
responsibility to promote and ensure the economic well-being of 
resource based tribes like the Navajo Nation.
    The Navajo Nation supports renewable energy development as part of 
its overall energy portfolio and Energy Policy. The Nation will 
continue to seek to develop a ``cleaner portfolio'' to include such 
renewable sources as wind, solar, and biomass. However, at this time, 
intermittent renewables are not sufficiently reliable to meet the 
Navajo Nation's or the United States' power needs alone. Additionally, 
renewable technologies still have very high capital costs and, in the 
case of both solar and wind, would require large land withdrawals on 
the Navajo Nation. Any such land withdrawals would have socioeconomic 
costs as well, affecting traditional uses of the land by Navajo People 
such as grazing.
    As a government responsible for the health and welfare of its 
people, the Navajo Nation believes that a determination of the future 
of NGS must be made in light of all relevant factors, including the 
environmental and health impacts of the plant. However, the current 
regulatory challenges facing NGS stem not from a health-based 
rulemaking, but one designed to reduce visibility in national parks. 
Before potential health benefits of a visibility-driven rulemaking can 
even be considered, serious work needs to be done to establish a 
baseline for environmental health for the Navajo Nation.
    In the forefront of any discussion of the future of NGS must be 
consideration of the catastrophic economic impacts to the Navajo Nation 
and the Navajo People from any closure of NGS. Such discussions must 
consider the government-to-government relationship of the United States 
with the Navajo Nation, the federal trust responsibility over Navajo 
resources and to the Navajo people, and the critical role that coal 
production and coal-fired generation will continue to have for many, 
many years for the Navajo Nation's economy.
CONCLUSION
    The Navajo Nation's economy depends on development of its energy 
resources. The Navajo Nation, like the rest of the world, also faces 
the challenges associated with energy dependency, including climate 
change, effects on our health and environment, and other impacts from 
energy development, including socioeconomic effects on the Navajo 
People such as changes in traditional land uses. As President of the 
Navajo Nation, I am regularly required to evaluate competing interests 
in making decisions that affect my people. I have given great thought 
to the issues surrounding coal-fired power generation on Navajo lands 
and I have decided that the Nation must work to secure the continued 
operation of both NGS and the Four Corners Power Plant.
    The Navajo Nation is blessed with a wealth of natural fossil fuels 
and renewable energy resources--resources we have the right to develop, 
and which we have the capability to manage. NGS is an essential 
component of the Navajo Nation's economy and our energy portfolio, and 
must remain viable, for the sake of the Nation and our People, for 
years to come. I urge this Committee to take those actions within its 
power to make the viability and future of NGS a reality.
    Ahe'hee. Thank you.
                                 ______
                                 
    Mr. McClintock. Thank you, President Shelly. I now 
recognize The Honorable LeRoy Shingoitewa, Chairman of the Hopi 
Tribal Council, from Kykotsmovi, Arizona, to testify. Welcome, 
Mr. Chairman.

  STATEMENT OF HON. LeROY SHINGOITEWEA, CHAIRMAN, HOPI TRIBAL 
                  COUNCIL, KYKOTSMOVI, ARIZONA

    Mr. Shingoitewa. Thank you, Chairman. My name is LeRoy 
Shingoitewa, Chairman of the Hopi Tribe. I represent 12,000 
members of the Hopi Tribe. I am very happy to be here today to 
speak on the concern that we have in regard to the Navajo 
Generating Station.
    As you know, there will be a ruling coming down from the 
EPA in regard to the Navajo Generating Station, which has a 
real concern for the Hopi people. Presently, 80 percent of our 
budget is the revenues that we generate through the coal mine, 
and that we sell coal and water to the Navajo Generating 
Station.
    Because of this the Hopi Tribe is able to provide the 
infrastructure, services and education, to our Hopi people. 
Today, I sit before you to ask that you will take a strong look 
at what the impacts will be to the Hopi people if the EPA does 
pass a ruling that will be very stringent, the BART ruling.
    It will have a devastating effect to us. As you know, Hopi 
is located in the northern part of the state. We are rural, and 
we are isolated. We are also landlocked, and the Hopis have 
lived in this area in the Black Mesa and the villages since 
1100 A.D.
    Oraibi, which is the oldest continually inhabited village 
in North America, still exists today and part of it deals with 
the fact of the traditions that we have as our Hopi people. The 
nearest community to Hopi that is non-Indian is 80 miles away. 
We do not have the capability of doing economic development on 
our reservation.
    Our resources are very limited. Right now, we have no 
industrial development except for coal. So, coal is the 
essential part of the existence of our Hopi people. Therefore, 
we are asking that the ruling that is going to come down here 
be very carefully looked at.
    For four decades, we have provided coal and water to NGS. 
While the Hopi Tribe is not a formal owner, or operator of the 
NGS plant, our economic stability is dependent upon the revenue 
that is generated by that plant.
    Right now, 50 percent of our people are unemployed. Forty 
percent of our Hopi homes lack running water, or facilities 
that are for sanitary purposes. Yet, many of our Hopi people 
today still must haul water as was previously stated by our 
Congresswoman, and every day, many of our people on a daily 
basis must haul this water.
    The coal resources that we have, we cannot transport any 
other place except to NGS. We have no rail system to transport 
to sell to other people. Yet, when the EPA came out in 2010, we 
asked that it weigh its obligation as a trustee to support us 
and being very careful about their ruling.
    Yet, nowhere in the Federal Register was this ever 
mentioned. They mentioned the owners, and they mentioned the 
plant itself, and they mentioned the rate papers. Yet, Hopi's 
request to be put into the Register as having a dire impact on 
us was never mentioned.
    Therefore, we are asking that the EPA still maintain the 
fact that they are trustees for the Hopi people and for other 
native people. I do agree with the Congressman that it is up to 
us to regulate what we have, and if the Hopi people choose that 
we sell our coal to NGS, then let us do so.
    If the NGS ruling by the EPA is done, I will let you know 
that we will become true wards to this government. Then you 
must be able to live up to your trusteeship to support our 
existence.
    Without the revenue from the Navajo Generating Station, we 
will no longer be able to provide the services that we have, 
the education that we have, taking care of our people, and then 
in the end, we will not be able to maintain our homelands. 
Thank you.
    [The prepared statements of Mr. Shingoitewa follows:]

 Statement of The Honorable LeRoy N. Shingoitewa, Chairman, Hopi Tribe

    My name is LeRoy N. Shingoitewa. I am the Chairman of the Hopi 
Tribe and I represent over 12,000 members of the Hopi Tribe. I am 
honored to have been given the opportunity to speak on behalf of my 
people in expressing the Hopi Tribe's view on the critical issue that 
faces you--balancing issues of tribal sovereignty, protection of the 
environment and the cost of the Nation's energy policies to the people.
    My brief remarks concern the Navajo Generating Station (``NGS'') 
located in Arizona and effect of the Environmental Protection Agency's 
(``EPA'') Best Available Retrofit Technology (``BART'') at the NGS's 
plant facility.
    I have been made recently aware of Mr. Paul Orme's, General Counsel 
to several water districts in Arizona, congressional testimony 
regarding the same subject and I will agree with Mr. Orme on one point 
``EPA's ultimate BART decision will significantly impact the people and 
economies in and around Page, including the Hopi and Navajo 
Reservations. Their stories deserve to be heard. . .'' but not with the 
Mr. Orme's characterization of a ``story'', rather, it is our voice. . 
.the Hopi people and our story is not yet complete.
    In March 2010, the Hopi Tribe submitted written comments on the 
Environmental Protection Agency's Rulemaking regarding Best Available 
Retrofit Technology for Nitrogen Oxide Emission at the Navajo 
Generating Station (Docket Number EPA -R09-OAR-2009-0598). I wish to 
introduce these supporting documents in conjunction with my testimony.
    As background for the sub-committees, the Hopi Reservation is 
isolated, rural and ``landlocked''. The U.S. Census reports that 
approximately 7,000 Hopi people live on the Hopi Reservation. We have 
lived in our villages on the Black Mesa since prehistoric times. Of the 
twelve (12) Hopi villages, Oraibi is referred to by anthropologists as 
the oldest continuously inhabited settlement in North American, dating 
to at least 1100 A.D.
    The Hopi Reservation is ninety miles from any non-Indian community, 
thus limited access to any economic development centers is an 
understatement. The Hopi Tribe has no on-site industrial development 
and, other than coal, the Hopi resource base is extremely limited. In 
addition, the Hopi Tribe has chosen not to follow the path of other 
tribes which have built large gaming institutions to secure their 
economic stability; the voters of the Hopi tribe have rejected in two 
referenda.
    For almost four decades, the Hopi Tribe has provided coal and water 
to NGS. While the Hopi Tribe has not been a formal partner in the 
ownership and operation of the NGS plant, there is no question that the 
Tribe's current economic security is fundamentally tied to the ongoing 
operation of the plant.
    More than eighty percent (80%) of the Hopi Tribe's budget is 
dependent upon NGS derived revenues which in fact directly impact 
nearly every aspect of Hopi life, including the education of Hopi young 
people, health and social service programs, governmental infrastructure 
and many other essential tribal programs.
    We can recite the U.S. Census economic profile for the Hopi Tribe, 
almost 40 percent of the Hopi homes lack complete plumbing facilities, 
and more than 35 percent lack complete kitchen facilities. More than 44 
percent of Hopi families with children under the age of 18 live below 
the national poverty level. The figure rises to more than 50 percent 
below the poverty level for families with children below the age of 5 
years old. I can visually illustrate that the living conditions on the 
Hopi reservation in the context of water consumption. Hopi per capital 
use of water--that is the amount of water used for all household, 
municipal, commercial and industrial development calculated on a per-
person basis is one tenth of the use of a suburban community household. 
Many Hopi people still must haul their daily water supply in barrels in 
the back of their pick-up trucks from community wells.
    The Hopi Tribe's coal resource is distant from rail transportation 
links that it would not be economically feasible to be sold to another 
buyer at this time.
    In 2010, the Hopi Tribe has asked EPA to weigh its obligations to 
the Hopi Tribe as a Trustee, however, in spite of our request, there 
has been no mention by EPA in the Federal Register of the economic 
impact of its decision on the Hopi Tribe. There is discussion 
concerning the economic impacts to utilities and other owners of the 
plant, and there is discussion of the impact on rate payers. In 
contrast, with respect to EPA's Trustee relationship and 
responsibilities to the Hopi Tribe, there was no consideration 
whatsoever to the trustee relationship and the impacts of the decision 
on the Hopi Tribe.
    There is no mention that exercise of EPA's authority would have 
severe and immediate economic impacts on the Hopi Tribe including 
rising unemployment, severe curtailment of social programs, slowing of 
capital advancements, weakened tribal government infrastructure 
programs, and other indirect economic losses. Finally, the 
implementation of the BART decision would undermine the Hopi Tribe's 
ability to maintain its homeland.
                                 ______
                                 
    [A letter submitted for the record by Mr. Shingoitewa 
follows:]






    Mr. McClintock. Thank you, Mr. Chairman. Our final 
witness on the first panel is The Honorable Joseph Manuel, 
Lieutenant Governor of the Gila River Indian Community, in 
Sacaton, Arizona. Welcome.

  STATEMENT OF HON. JOSEPH MANUEL, LIEUTENANT GOVERNOR, GILA 
            RIVER INDIAN COMMUNITY, SACATON, ARIZONA

    Mr. Manuel. My name is Joseph Manual. This is the day that 
the Lord has made. Let us rejoice. Thank you for the 
opportunity to address the Subcommittees today. Mr. Lujan, good 
to see you again, sir, and the great State of New Mexico. My 
eldest son still lives there, a music teacher, and music on the 
weekends. Mrs. Napolitano, good to see you again, Ma'am. Thank 
you. Mr. Gosar, it is good to see you, sir. Mr. Young, thank 
you, sir. Mr. McClintock, thank you, sir. Mr. Markey.
    I am Joseph Manuel, Lieutenant Governor of the Gila River 
Indian Community. We are an Indian Nation of over 20,000 
members located near Phoenix, which is in Central Arizona. The 
community sees the issue before you today from the singular 
vantage point of the largest customer of the Central Arizona 
Project, or CAP Water Project.
    Critical to the community's economy and culture, NGS plays 
an integral role in delivering Colorado River water to Central 
and Southern Arizona through CAP, and meeting Federal trust 
responsibilities under the Community's 2004 water settlement.
    Should the cost of emission controls at NGS make CAP water 
unaffordable the community's water rights would be 
significantly diminished, and it would suffer significant 
economic hardship.
    This result would be especially troubling given the clear 
history of my people, the Akimel O'Otham and the Gila River. 
Akimel O'Otham means the River People in my language. For 
generations the river sustained my people until it was taken 
away from us.
    So for us that history underscores the importance of our 
2004 water settlement, which took over 80 years or so to 
settlement, which ensures the dependability of water supplies 
to our reservation through the allocation of CAP water to the 
community each year.
    It also subsidizes the cost of delivering CAP water to the 
community, and to construct, operate, and maintain the 
facilities necessary to allow us to fully utilize our allocated 
water.
    NGS supplies approximately 95 percent of the power to 
deliver the CAP water to the community, and requiring NGS to 
install and operate costly technology to significantly increase 
the cost of CAP water.
    It would also decrease the future revenue generated for the 
fund created to reduce the community's costs of obtaining and 
using its CAP water. These two impacts alone will substantially 
undermine the benefits that the community especially bargained 
for and relied upon in agreeing to settle our water claims in 
2004.
    The community respectfully, but clearly, insists that the 
EPA uphold its trust obligations to the community under Federal 
law, and that any actions that the EPA may eventually desire to 
take must follow a full and proper study, and a full and proper 
consultation under EPA's May 4th consultation policy, and must 
comport with the legal rights that the community bargained for 
in its water settlement.
    Farming the community's lands is of great importance for 
cultural, and economic, and health reasons. In reliance on the 
availability of affordable and dependable CAP water, the 
community is projecting to bring a hundred-thousand acres of 
community lands back into agricultural production.
    Currently, 40,000 acres are being cultivated. The practical 
impacts of increased costs of water could render the 
community's efforts to reestablish our riparian lifestyle 
unattainable.
    The EPA could also inadvertently negatively impact efforts 
to reduce groundwater pumping and conserve water for Central 
and Southern Arizona. If the use of CAP water becomes too 
expensive, this renewable resource will become unusable, and 
farmers will be forced to use finite groundwater resources.
    Such an outcome would be unsustainable, and would degrade 
groundwater resources, and possibly renew old disputes between 
neighbors. Our water settlement was the culmination of many 
years of tough negotiations among the United States, the 
community, cities, and irrigation districts.
    The settlement was programmatic solution that relied 
heavily upon affordable CAP water, and it most not be 
jeopardized by administrative action that would violate 
significant and enforceable legal obligations to the community.
    Finally, to date, we have not had a full government to 
government consultation under Executive Order 13175. That 
consultation must begin as soon as possible, and must be 
meaningful consultation.
    At the end of the day, we ask that the United States keep 
its word and fully honor our trust responsibilities. Thank you 
for the opportunity to be heard. I am happy to answer any 
questions that you may have.
    [The prepared statements of Mr. Manuel follows:]

    Statement of The Honorable Joseph Manuel, Lieutenant Governor, 
                      Gila River Indian Community

    My name is Joseph Manuel and I am the Lieutenant Governor of the 
Gila River Indian Community, which is an Indian Nation located south of 
Phoenix, Arizona, encompassing 372,000 acres and approximately 20,000 
tribal members. The Community also happens to be the largest single 
customer of Central Arizona Project (CAP) water. On behalf of the 
Community, I want to thank both Subcommittees for their continued 
interest in this issue that could have a very profound effect on all 
water users in the State of Arizona. In particular, I want to thank the 
members of the Arizona delegation for their support and efforts to have 
Congress take an active oversight role to ensure that the detrimental 
effects of the proposed environmental measures for the Navajo 
Generating Station (NGS) are taken into account by the EPA before it 
seeks to implement them.
    As the largest customer of CAP water in the State of Arizona, the 
Community has a significant interest in the outcome of the EPA's NGS 
rulemaking. From our perspective, the EPA's decision must be consistent 
with the legal rights that the Community specifically bargained for and 
that Congress specifically granted under the Arizona Water Settlements 
Act of 2004 (AWSA). The United States, including the EPA, must uphold 
its trust obligation to ensure the Community's access to affordable 
annual deliveries of CAP water because the Community agreed to settle 
its water rights claims based upon the promise that affordable CAP 
water would be available to the Community on a long-term basis.
    The Community does not object to any pragmatic solution EPA may 
propose to ensure visibility in our national parks and wilderness 
areas. In fact, the Community is a leader in Indian country in 
developing its own air quality plan. In January 2011 the EPA approved 
the Community's Tribal Implementation Plan which was lauded by the 
Agency as ``a blueprint of how to achieve improved air quality on the 
Community's lands which will serve as a model for other tribes.'' The 
Community is committed to protecting natural resources and has a 12 
year history with EPA in developing and implementing a Tribal 
Implementation Plan to protect air quality on its land.
    However, the Community is very concerned about the potentially 
catastrophic consequences for Arizona Indian tribes, especially for the 
Community, that could occur if EPA requires Selective Catalytic 
Reduction (SCR) as the Best Available Retrofit Technology (BART) for 
NGS. EPA's BART determination for NGS has the potential--unlike any 
other Clean Air Act determination that we are aware of--to profoundly 
affect the economy and culture of the Community and all other similarly 
situated Arizona tribes with water rights settlements, the United 
States' trust responsibility to these tribes, and rights specifically 
bargained for and granted in Federal legislation. Given that the EPA's 
BART determination presents such grave consequences for the Community 
and other tribes, the Community is also troubled that EPA has not 
undertaken any formal consultation with the Community and other 
affected tribes. Instead the contacts with the Community have been 
limited to low level discussions between EPA and the Community and can 
hardly be considered consultation of the kind that should take place 
when the EPA is considering determinations that could have catastrophic 
implications for tribes in Arizona. To rectify this failure, the 
Community has formally requested that the EPA initiate such 
consultations immediately with all affected tribes in Arizona pursuant 
to the May 4, 2011 EPA Policy on Consultation and Coordination with 
Indian Tribes.
    The Community believes EPA should acknowledge that NGS is unlike 
any other electrical generating facility in the Southwest. In addition 
to providing power to customers in Arizona, California and Nevada, NGS 
has two unique missions. First, NGS is critical to the economies of the 
Navajo Nation and the Hopi Tribe. The concerns of these two Tribes are 
best told by their leaders and I leave it to them to tell their story.
    Second, and critical to the Community's economy and culture, NGS 
plays an integral role in delivering Colorado River water to Central 
and Southern Arizona through the CAP, and in meeting federal trust 
responsibilities under the AWSA and other Arizona Indian water rights 
settlements. Should the cost of emissions controls at NGS render CAP 
water unaffordable, the Community's water rights would be significantly 
diminished and the Community would suffer significant economic 
hardship. It would be comparable to the original wrongs done to the 
Community when non-Indian farmers upstream on the Gila River illegally 
diverted the flows of the River to the point that it stopped running. 
The uniqueness of NGS should give EPA pause if it is considering any 
rulemaking that will undermine the economies of Arizona tribes, 
especially without first undertaking intensive consultation with these 
tribes.
1. The Community's Water Settlement
    From the beginning of time, the Pima Indians' entire lives and 
identities involved the Gila River. We drank from the river, irrigated 
our farms, fished for food and depended on the River for many spiritual 
ceremonies. At the beginning of the 1900's, farmers upstream of the 
Gila River Indian Reservation (Reservation) diverted nearly all the 
water from the Gila River, depriving the Community of water to support 
the Community's agricultural economy, and causing dramatic and 
detrimental changes to our diet, lifestyle, economy, culture and 
spiritual well-being.
    The Community began fighting for its water rights in the early 
1930's, and finally in 2004 Congress approved the Community's 
settlement of its claims to water. This settlement was at the time the 
largest Indian water rights settlement in United States history. The 
Community's settlement was enacted as law in the AWSA. In the 
settlement approved in the AWSA, the Community agreed to waive its 
claims to additional water from the Gila River in exchange for the 
promise of long-term affordable CAP water. The use of CAP water to 
fulfill the entitlements of the Community to Gila River water is an 
essential component its settlement because there is no meaningful way 
to take back the Gila River water that was rightfully theirs.
    The Community's settlement allocates 311,800 acre feet of CAP water 
to the Community each year, making the Community the single largest CAP 
contractor. The Community's settlement, through the AWSA, also provides 
funds to subsidize the costs of delivering CAP water to the Community, 
and to construct, operate and maintain the facilities necessary to 
allow the Community to fully utilize our allocated water. The AWSA's 
funding mechanism is a fund, entitled the Lower Colorado River Basin 
Development Fund (Development Fund), which pays ``annually the fixed 
operation, maintenance, and replacement charges associated with the 
delivery of [CAP] water held under long-term contracts for use by 
Arizona Indian tribes.'' One of the sources of revenue for the 
Development Fund to pay these costs for CAP settling tribes is the sale 
of surplus power generated from NGS.
    NGS supplies approximately 95% of the power to deliver the CAP 
water to the Community and other CAP customers. Requiring NGS to 
install and operate SCR technology as BART will both significantly 
increase the cost of CAP water and decrease the future revenue 
generated for the Development Fund. These two impacts will 
substantially undermine the benefits that the Community specifically 
bargained for and relied upon in agreeing to settle our water claims 
and claims against the United States.
a. Increased Cost of CAP Water
    As the largest CAP contractor the Community will be impacted by the 
increased cost of CAP water more than any other entity in the State. 
Under the AWSA, the Community is entitled to a water budget from all 
sources of water of 653,500 acre feet per year. Of that 653,500 acre 
feet, 311,800 acre feet is CAP water.
    If SCR retrofit technology is required as BART, it could possibly 
increase NGS's capital and O&M costs to the point of either closing the 
power plant or at least substantially increasing power costs, and thus 
the cost of CAP water for the Community. SCR would cost over 15 times 
more than LNB/SOFA--$660 million in capital costs, plus $13 million in 
annual operation and maintenance costs, according to estimates prepared 
by the Salt River Project. This increase translates to a very 
substantial additional cost for CAP water. Such increased costs for CAP 
water could cripple the Community's ability to use this water, 
depriving us of the most significant single source of water confirmed 
by our water settlement.
    Assuming all the capital and O&M costs are passed through to the 
CAP customers on a proportional basis, the Community will bear the 
burden of paying between 20 and 25 percent of all the additional costs 
borne by CAP customers in the State. Imposing this kind of burden on a 
tribe that settled its claims for water on the promise of affordable 
CAP water would be akin to a second taking of the Community's water 
supply, and the Community will not be able to sit idly by without 
taking every action available to it to fight such a breach of promise 
and trust.
b. The Revenue to the Lower Colorado River Basin Development Fund will 
        be Substantially Reduced by the Increased Cost of SCR
    Revenue from the sale of excess NGS power is to be used to 
supplement the Development Fund. A determination by EPA to impose SCR 
as the BART would substantially increase the cost of excess NGS power, 
essentially eating away any potential profit from such sales, thereby 
substantially eroding the revenues that the Community and other CAP 
settling tribes counted on to enable the Development Fund to subsidize 
CAP water delivery on a long-term basis. Not only does this impact the 
Community's settlement, the loss of the revenue from the sale of excess 
NGS power threatens the continued viability of all current Indian water 
rights settlements in Arizona, and jeopardizes the ability of the 
United States to settle with other Tribes in on-going water rights 
settlement negotiations.
    It has been estimated that ``the installation and operation of SCRs 
would reduce revenues to the Development Fund from the sale of surplus 
NGS power by about $9 million per year, or about $175 million, not 
including interest, between the assumed date of their completion in 
2016, and 2036, the end of the assumed 20-year amortization period. The 
operation of SCRs would reduce Development Fund revenues by about $1.2 
million per year thereafter'' (Letter from David V. Modeer, General 
Manager, Central Arizona Project, to Colleen McKaughan, Associate 
Director, Air Division Region IX, Environmental Protection Agency, 
(December 18, 2009), page 8).
    The Development Fund established in the AWSA was one of the main 
points on which the Community based its willingness to agree to a 
resolution of its water rights claims, claims that were the largest in 
the State at the time. The importance of this funding source cannot be 
overstated. During Congress' deliberations on the AWSA, the Community's 
Governor was asked to testify on the importance of the legislation to 
the Community. In response to a question from Senator Bingaman as to 
the importance of the Development Fund in the framework of the 
Community's settlement, Governor Narcia testified:
        The specific process for funding this settlement is absolutely, 
        absolutely fundamental to our settlement. Without it, our 
        settlement simply will not work....[T]he funding mechanism of 
        this bill is the strongest possible affirmation that the 
        Federal Government is serious about reaching a fair and binding 
        settlement with every Arizona Indian Tribe that is willing to 
        negotiate in good faith. For the first time, the United States 
        will be able to negotiate with Indian Tribes in Arizona knowing 
        that if they are able to reach a settlement they will have the 
        revenue, a certain quantity of CAP water, and the resources to 
        guarantee that the operations, maintenance, and the replacement 
        costs associated with that water can be paid for both for this 
        generation and the next generation to come.
    Members of Congress expressly recognized this as well. Congressman 
Grijalva testified:
        In Indian Country today, one of the most difficult hurdles to 
        tribes utilizing their water rights is the high cost of water 
        project development. While the federal government over the 
        years has helped facilitate and pay for non-Indian water 
        projects, Indian Tribes have been left without such assistance. 
        This legislation, however, provides a reliable funding source 
        which will help pay the operation, maintenance and replacement 
        costs associated with each acre foot of water.
    The guarantee of a dependable and affordable water supply and the 
funding for delivery infrastructure were key considerations for the 
Community in deciding to settle the Community's water rights claims and 
its claims against the United States. As Governor Narcia testified to 
Congress at a Joint Hearing before the Subcommittee on Water and Power 
of the Committee on Energy and Natural Resources and the Committee on 
Indian Affairs in the Senate on September 30, 2003: ``While our 
Community and each party to this agreement will make sacrifices to 
fulfill this settlement, we will do so in exchange for dependable 
supplies of renewable water and a more certain economic future.'' 
Congressman Hayworth similarly recognized this, testifying in support 
of the AWSA that the legislation ``is not a handout. It includes 
bargained for exchanges between all of the parties to the settlement.''
2. EPA's Trust Obligation
    The federal government has an express trust responsibility to 
protect the water rights that the AWSA provides to the Community. 
Section 204(a)(2) of the AWSA states: ``the water rights and resources 
described in the Gila River Agreement shall be held in trust by the 
United States on behalf of the Community....'' EPA, as an agency of the 
Federal government, cannot make a BART determination that limits, 
suppresses or otherwise undermines the Community's right to receive and 
use its CAP water allocation guaranteed by the AWSA. Like all federal 
agencies and departments, EPA has a trust responsibility to ensure that 
the Community's water rights, and the other guarantees and benefits 
provided in the AWSA, are preserved and can be implemented.
    EPA cannot, consistent with its trust responsibilities, impose a 
BART requirement that limits the Community's ability to receive and use 
CAP water. Imposing SCR, however, would do just that, because it would 
inhibit and possibly eliminate the Community's right to receive and 
utilize its allocation of CAP water guaranteed by the AWSA. Imposing 
SCR would make it extremely difficult, if not impossible, to pay for 
CAP water and would eviscerate the Development Fund revenue stream that 
subsidizes CAP water costs and pays for operation, maintenance, and 
replacement charges associated with the delivery of CAP water. Even 
more, imposing SCR would limit the Community's ability to farm its 
reservation lands and its future economic development opportunities, 
and would negatively impact the livelihood and health of Community 
members. The implications of imposing SCR simply cannot be squared with 
EPA's fiduciary obligations to the Community.
3. EPA's Obligation to Conduct Government-to-Government Consultation 
        with the Community
    The EPA has not conducted government-to-government consultations 
under Executive Order 13175, a process that the EPA must engage in 
fully with the Community and other affected tribes. As of today, there 
was an initial meeting with EPA in February 2010 and another informal 
discussion with EPA in April 2011. Both meetings were limited in scope 
and are best characterized as information sharing. Moreover, the 
meetings lacked the participation of the Community's elected leadership 
such as the Governor and Council.
    These meetings cannot be construed as consultation under Executive 
Order 13175, because they did not amount to ``meaningful and timely 
government-to-government dialogue with elected duly-appointed officials 
of tribal governments.'' Pursuant to EPA's May 4, 2011 Policy on 
Consultation and Coordination with Indian Tribes, created pursuant to 
the President's November 5, 2009 memorandum directing federal agencies 
to implement Executive Order 13175, we have formally requested that the 
EPA undertake government-to-government consultation with affected 
Arizona tribes in order to discuss the implications to the Community in 
an appropriate forum. A copy of our letter to the EPA requesting this 
consultation is attached to our testimony.
4. Threat to the Community's Culture and Way of Life
    It is the vision of the Community to return to a traditional 
lifestyle of farming. One of the primary uses of CAP water is for 
Community agriculture. Governor Narcia testified to Congress on this 
issue during AWSA deliberations before a Joint Hearing before the 
Subcommittee on Water and Power of the Committee on Energy and Natural 
Resources and the Committee on Indian Affairs on September 30, 2003:
        Together, the Settlement water and distribution infrastructure 
        will enable our community members to farm tribal and allotted 
        lands as well as provide them an opportunity to escape poverty 
        and to participate meaningfully in the economy of the region. 
        While there is little chance that we can recapture the 
        prosperity of our ancestors, the settlement agreement will 
        enable more tribal members to participate in our ancestors' way 
        of life.
    Farming the Community's land is of great importance for cultural, 
economic and health reasons. In reliance on the availability of 
affordable and dependable CAP water, the Community is projecting to 
bring 146,330 acres of the Community's land back into agricultural 
production. Currently, 40,000 acres are being cultivated. The Community 
Farms, corporate farms and individual Indian farmers currently 
cultivate fruits, vegetables, small grains, potatoes, cotton and 
alfalfa. Community members engage in more than 60% of all agribusiness 
activities. The practical impacts of increased costs of water could 
render the Community's efforts to reestablish our agrarian lifestyle 
unattainable.
    In preparation for the increased farming and the water that is 
necessary for it, the Community is developing an expansive 2,400-mile 
irrigation canal system under the Pima-Maricopa Irrigation Project (P-
MIP) to deliver water throughout the Community. P-MIP will not only 
sustain the agricultural economy but also meet the needs of the 
Community's municipal and industrial water users and the establishment 
of riparian and recreational areas. In developing P-MIP, the Community 
has reasonably relied upon the delivery of affordable CAP water that 
was a central aspect of the Community's bargain in settling its water 
claims.
    Finally, the CAP water is important for re-establishing riparian 
areas, where sacred plants can be grown for medicinal and cultural 
uses. Riparian areas will include plants such as cattails, devil's claw 
and arrow-weed, which are used to create the famous and culturally-
significant Akimel O'otham baskets and Pee Posh pottery.
5. Interference with Water Conservation Efforts in Arizona and 
        Agreements Among AWSA Settling Parties
    In its efforts to protect air quality in Northern Arizona, EPA 
could inadvertently negatively impact efforts to reduce groundwater 
pumping and conserve water in Central and Southern Arizona. The 
introduction of CAP water as a renewable water supply to Central 
Arizona has benefited the State of Arizona by assisting agricultural 
users in meeting regulatory objectives to reduce groundwater use, and 
has thus far facilitated the long-term availability of groundwater 
resources as a resource for future drought conditions. Being located in 
Central Arizona the Community is a strong supporter of efforts to 
conserve groundwater resources. If the use of CAP water becomes too 
expensive, this renewable resource will become unusable and farmers 
will be forced to use finite groundwater resources. Such an outcome 
would be unsustainable and would lead to degradation of groundwater 
resources and possibly renew old disputes between the Community and its 
neighbors.
    The AWSA was the culmination of many years of tough negotiations 
among the United States, the Community, cities and irrigation 
districts. It ultimately provided a pragmatic solution for all parties 
involved, but one which relied heavily on affordable CAP water. If CAP 
water becomes unaffordable because the EPA chooses SCR as the BART or 
otherwise issues a rule that shuts down NGS or makes CAP water cost 
prohibitive, the carefully woven water settlement that is the AWSA will 
quickly unravel.
    That the cause of this concern comes from an agency of the United 
States, its trustee and partner in so many successful programs, is not 
only frustrating to the Community but raises the specter of past broken 
promises that the AWSA was intended to remedy. On behalf of the 
Community, I urge the House Water and Power and Indian and Alaskan 
Native Affairs subcommittees to work to prevent the economic and 
cultural damage the EPA's actions will have to my Community and other 
Arizona tribes, as well as the harm to the United States that would 
result from once again breaking its promise and breaching its trust 
responsibility to the tribes it is supposed to support and protect.
                                 ______
                                 
    [A letter submitted for the record by Mr. Manuel follows:]




    Mr. McClintock. Thank you very much, Lieutenant 
Governor. The time has come for questions of the panel. It is 
the Chair's intention to do a single round of questions for the 
members of the first panel, and we will then bring up the 
second panel, and have a second round of questions, and then if 
Members desire, we can do a third round of questions involving 
everyone here.
    Also, we will be limiting each of the Members to five 
minutes as I discussed earlier, and with that, I will begin. 
President Shelly, the Ranking Member on the Natural Resources 
Committee, Mr. Markey, showed pictures of the Grand Canyon, and 
accused the Navajo Generating Station of creating all the haze 
on hazy days.
    I was just wondering what your reaction to that is, and 
specifically, what is the wind direction for the Navajo plant? 
Is that over the canyon or away from it?
    Mr. Shelly. I believe the wind comes along the canyon. It 
goes from west to east in most cases, but the visibility that I 
have seen, I do agree that we have to see the canyon as it is 
when it is a clear day.
    But you can't blame the power plant as a whole. We also 
have California. We have forest fires that accounts for a lot 
of those. As you know, in California, there are a lot of brush 
fires, and all of these are happening, and so you can't just 
blame the whole thing on a power plant, like NGS. That would be 
my answer to that.
    I do agree that we should see a beautiful sight in the 
canyon, but again we can't just blame it all on the power 
plant.
    Mr. McClintock. And what increase can we expect in air 
clarity with the $1 billion of additional costs that the EPA 
contemplates imposing upon the Navajo Station?
    Mr. Shelly. For $1 billion upgrade, what the EPA is asking 
for, and with the cost being as it is, it probably will clean 
it up, but it still is not going to solve the visibility. We 
are still going to have that.
    At the time when that happens, we will probably be saying 
to ourselves that I guess they were right, and that it was not 
the power plant causing the problem. It was something else. But 
again with $1 billion, you are spending a lot of money. With 
that kind of money, what can I say.
    Mr. McClintock. Well, the information that has been 
submitted to the Committee is that after spending $1 billion 
plus on this additional increment of regulation of the Navajo 
plant, the increase in visibility will be so slight that it 
will not be detectable by the human eye. Is that your 
understanding?
    Mr. Shelly. Probably not, because you are going to wind up 
dealing with other sources that will probably come down the 
canyon, and like I said, you probably would. What you see now 
is that it would be clear one day and visible, and at other 
times, it wouldn't be.
    So for some reason, if there is a clear day, visibility was 
clear, even though the plants were going as it is. So again I 
don't know how to answer that, but again it depends on the wind 
and how fast it blows and clears the air, I guess. So the wind, 
the smoke, or the haze, whatever it is, I guess that is what I 
will say.
    Mr. McClintock. The Ranking Member also told us that this 
is simply partisan hysteria, and that these are akin to 
doomsday predictions, and that imposing another billion dollars 
of costs on the plant will have no serious impact on its 
operations, and he says it is just too profitable. What is your 
response to that?
    Mr. Shelly. Doomsday? Well, met just answer it in some 
other way here, is the best way to answer it. We always hear 
this, and that somebody is always coming out with the end of 
the world is coming and for me as an Indian, I know that the 
end of the world will come when you start seeing other animals, 
birds, and stuff disappearing. Then you will know that it is 
coming.
    But again for the doomsday for the plant, it is something 
that we have to really give a thought to. Doomsday will come if 
they close the plant down, and a lot of people are going to 
lose work, their jobs, and the economy and hardship is going to 
happen.
    Mr. McClintock. Chairman Shingoitewa, any thoughts?
    Mr. Shingoitewa. Yes, I just want to say, too, that I agree 
with President Shelly. There are other mitigating factors as to 
why there is haze. My 67 years that I have lived, and I live in 
the Village of Moenkopi on the western side of the Hopi 
Reservation.
    Even prior to the NGS plant being built, a haze began to 
come as automobiles started, and having been to California and 
watching it, haze has developed over all these years. I think 
to blame one component of contributors is very difficult to do.
    So I think that we have to be very careful that as we look 
at what has to be done to fix up emissions, I think 
realistically that you have to look at what is happening. And 
like I said, I think that one of the things that we have to 
look at is that how much will really be cleared up putting all 
the retrofitting in.
    Mr. McClintock. Thank you.
    Mr. Shingoitewa. Throughout the United States, it has been 
an issue not only at NGS, but everywhere else that we have had 
issues with emissions.
    Mr. McClintock. Great. Thank you. Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chairman, and I kind of 
agree with you that in California that there used to be a lot 
of smog, but they have put in mandatory catalytic converters 
way back 30 or 40 years ago. So that is not the issue in 
California as much as it is in other areas.
    But I understand the plant is considered the third west of 
the Mississippi in pollution, the third highest. So there has 
got to be something there that is affecting the health of the 
States in those areas, the tribes, and the environment, et 
cetera.
    There are other things that need to be taken into 
consideration that are real critical. To President Shelly and 
Chairman Shingoitewa, do you think that the Navajo and Hopi 
have to choose between protecting your water rights, improving 
environmental conditions on the reservation, while ensuring 
that water and energy is affordable.
    And by the same token do you believe that there is a way to 
work with the Administration and the Federal agencies so that 
you don't have to choose in protecting those rights?
    Mr. Shelly. You know, Congresswoman, I would like to put it 
in certain ways here. I really don't want to get into the 
subject of water at this point. We are negotiating water rights 
between the two tribes, and I would like to just kind of keep 
it that we always believe as Navajos that our environment is 
very important with our water thing.
    And we do cherish that, as that is part of our tradition 
and culture, and we hope that we will uphold through our 
negotiations, and those will probably be mentioned, and I will 
leave it at that, and try not to go too heavily into talking 
about water. So we are still in negotiations on that.
    Mr. Shingoitewa. Well, the Hopi, it is always our belief 
that we be caretakers of the earth and to the sky, and so in 
this world today, we have had to try to learn to balance the 
environments.
    We have had to learn to live on both sides of the fence. If 
we were to traditionally live our way, we would do away with 
many things. Yet, in today's real world, we have to survive as 
Hopi people. We have to look at the generations to come. How 
will we be able to sustain and maintain a balance so that we 
are able to live in two worlds.
    To me, in this type of issue, as the modern world changes, 
it also brings other things. I have always believed that when 
you take a transition and learning something new, you give up 
something in return.
    So for us natives, we have to learn what is best for us at 
this stage, and as I earlier said, in order for the Hopi people 
to survive, we also must sell natural resources. At this stage, 
we are very limited.
    If we don't do our part to sustain a viable economy, then 
our people would have a hard time surviving in today's world, 
but we do have to do our part.
    Mrs. Napolitano. Thank you for that answer, Mr. Chairman, 
but shouldn't there be no necessity for you to choose, and that 
you should all work together with the Federal agencies?
    Mr. Shingoitewa. Yes, and I think that this is where it was 
talked about consultation.
    Mrs. Napolitano. Right.
    Mr. Shingoitewa. That is a critical portion of it.
    Mrs. Napolitano. Which is my next question to you, is have 
you approached the EPA, and if so, when, about your concerns 
regarding your relation to your water rights settlement?
    Mr. Shingoitewa. Well, we have talked, as far as the Navajo 
Generating Station. We submitted comments in March of 2010. We 
believe that the Hopi Tribe's comments had a bit impact on 
holding back on the final ruling that came down on NGS, because 
at the time, they did not think about the economic impacts that 
it would have on our tribe.
    They were looking at only what would happen if they tried 
to clean up the air.
    Mrs. Napolitano. Well, in that mix, Mr. Chairman, were they 
taking into consideration the amount of time there that they 
are drafting out of your aquifer and the pollution of the water 
bodies that are left behind that may be contaminating your 
rivers, your streams, and your aquifers?
    Mr. Shingoitewa. We are at this stage--well, I could not 
give you a definite answer on that because at that point in 
time, we were not dealing with--and as President Shelly said, 
we were not dealing with the water portion of it. We were 
dealing mainly with the air quality that NGS was supposedly 
causing.
    Mrs. Napolitano. I know, but NGS uses an inordinate amount 
of water to be able to extract the coal, and to make it into 
slurry.
    Mr. Shingoitewa. We don't do slurring anymore. That 
slurring was done in the Mojave plant.
    Mrs. Napolitano. OK.
    Mr. Shingoitewa. Yes, the coal that is done is brought down 
in conveyor belts, and put on to an electric train, and then it 
is taken over to Page.
    Mrs. Napolitano. OK. I will wait for the second round, Mr. 
Chairman. Thank you.
    Mr. McClintock. Mr. Gosar.
    Dr. Gosar. President Shelly and Chairman Shingoitewa, I 
understand that tribal consultation is very important, and it 
goes to health care from the NIHS to the BIA, as well as to the 
EPA. So I want to get something straight for the record.
    The EPA's response to the Minority's questions indicate 
that the agency has initiated a consultation within your 
tribes. Is this true?
    Mr. Shelly. Yes, it is. I would like to say one thing. We 
have met with Region 9 in San Francisco, and it was a very 
positive meeting. It was a tribal consultation. I have my 
Navajo EPA here, Steve Etsitty, and Attorney General Harrison 
Tsosie, and we all went down there and my energy advisor, who 
is here, Samuel Wood, and we had a good consultation.
    The support was there, and we all understand that we need 
to agree that if there are any rule changes, that we should be 
contacted. They need to work with the Navajo EPA and also the 
USEPA, because we are all implementing Federal policy, and they 
should be uniform, as one.
    So the same thing happened with Region 6, which we met in 
Albuquerque, and we talked about the San Juan Power Plant, and 
also in Dallas, through telecommunications, we all talked and 
met with their EPA from up there.
    So the dialogue is starting to happen. I am enjoying it, 
and I would like to continue doing that, and that the USEPA 
should work with the Navajo EPA. And the question about the 
water thing and the environmental issues.
    Our Navajo EPA and our Navajo Clean Water Systems, we do 
have those in place, and so we kind of monitor that ourselves. 
We have that capability, and we monitor it like the USEPA, 
because we have Federal policy that covers that, and we follow 
that.
    Dr. Gosar. Thank you. Mr. Chairman.
    Mr. Shingoitewa. Representative Gosar, we initially made 
our contact in 2010. At the time the new regional director, 
Jackson, had just come into office. She met with us in Phoenix, 
and at that meeting it when we told them as they were coming 
out of the concerns that we had.
    And at that point in time, they extended the time for 
comment. So from that point to this point, they have given more 
time now to analyze the concerns from the Hopi Tribe's side of 
what we had. So that has been a consultation that we have had 
with the EPA.
    In other subjects throughout with clean water, and with 
drinking water, et cetera, there is a continual dialogue on 
other issues that we do deal with on the Hopi reservation.
    Dr. Gosar. Thank you. Lieutenant Governor Manuel, the EPA 
letter states that the Gila River Indian Community submitted a 
consultation request with the EPA. Did the EPA respond with a 
formal consultation with you?
    Mr. Manuel. The Executive Order 13175 initiated by 
President Clinton at the time called for consultation with 
Indian tribes, and the Obama Administration has done a lot of 
consultation with the tribes; the Bureau of Indian Affairs, 
IHS, and a lot of the cabinet, Labor, Health, et cetera, and 
Human Services.
    But we did receive a letter on May 4th, just this month, 
from the EPA referencing that they have a consultation policy, 
and that is good. We did respond to that, and invited them to 
conduct a consultation with regard to the NGS issue, because we 
want to start in this consultation every step of the way until 
the finality of it at some point.
    And then we can discuss all the issues, and put everything 
on the table, and it would be more meaningful in the end, and 
the end result. But there have been no consultation meetings 
with the community.
    Dr. Gosar. Well, late arrivals. That is what I thought. You 
know, the opposition, and I am running short of time, but just 
a yes or no, but the opposition has said that closing the power 
plant, what we can do is use renewables, and that has been a 
problem as well, because we have had the NEPA process being 
delayed over and over again.
    Is it possible in your own mind that we can take away the 
Navajo Generating Station and supplant it with renewables right 
now, or at least in the next 10 years? President Shelly, real 
quickly.
    Mr. Shelly. Yes, Congressman Gosar, let me answer your 
other question about consultation with the EPA.
    Dr. Gosar. I am afraid that I don't have time for that 
question.
    Mr. Shelly. The Navajo Nation asked for time for a 
consultation, and so that what happened. What was the question 
again, Congressman?
    Dr. Gosar. Is wind or solar a viable option? If we shut 
down the Navajo Generating Station can we replace it with 
renewables right now, or in the next 10 or 15 years?
    Mr. Shelly. No. It is a small amount.
    Dr. Gosar. Just yes or no. We are over time.
    Mr. Manuel. No.
    Dr. Gosar. Thank you.
    Mr. McClintock. Thank you. Mr. Grijalva.
    Mr. Grijalva. Thank you very much, and gentlemen, welcome, 
and thank you for the leadership that you provide your 
communities. If I may, Vice Chairman, let me ask a little bit, 
because we all went through that water settlement process.
    It was lengthy, difficult, and the resolution that Congress 
passed in terms of a settlement was a very important milestone 
in settling not only claims, but providing some certainty.
    And as one of the largest, if not one of the largest 
recipients, in terms of allocations on that settlement of the 
Gila River Community, can you talk about what impact that 
settlement has relative to the discussion that we are having 
with the generating station? I don't want to make it an either/
or, but to some extent, they are linked, and maybe you can talk 
about that linkage.
    Mr. Manuel. Well, the health and the future of the tribal 
people depend upon being able to cultivate our lands. We 
traditionally are an agricultural people. When the waters of 
the Gila River were illegally diverted and our tribal members 
had to dramatically change their diets to one of the cheap 
processed foods, this devastated our community and resulting in 
our people developing one of the highest rates of diabetes in 
the world.
    We are still suffering the consequences of the illegal 
taking of our waters, but we are using our settlement water to 
refocus on our way of life back to agriculture and traditional 
foods.
    Our access to affordable CAP water was guaranteed to us in 
the 2004 law, and is critical to the long-term health of my 
people. If we lose access to the affordable CAP water, we won't 
be able to continue to cultivate our lands.
    Mr. Grijalva. And much of the discussion is now and will be 
in the next panel the either/or proposition. Either we have the 
Navajo Generating Station and as it functions now, or you 
don't. So you have worst case scenarios, and I really believe 
in the comment that somebody made that it is not an either/or 
proposition.
    That the vitality of the generating station is vital to the 
region, but at the same time, as all of you indicated, there is 
a responsibility in terms of the environmental cleanup, if 
necessary, and how that gets transitioned, and what appropriate 
accommodations, realistic accommodations, happen.
    I don't think that it is going to be shut down, but I also 
think that the EPA has to do a couple of things in terms of 
Native Nations that are affected by any decision, and that is 
an appropriate and formal consultation, government-to-
government, period.
    And if that has not been done to the letter that it should, 
then it has to be done because there are significant issues of 
sovereignty and trust responsibilities that must be dealt with 
by the Agency.
    And, too, I think that regulations, whether it is this one 
that we are talking about, or whether it is NEPA, the 
Antiquities Act, the environmental assessments and statements, 
they are all a part of the process.
    And for us to say that all of those need to be eliminated 
in order to provide some assurance I think is a dangerous step 
backwards, given the commitment that the nations before us have 
to the environment and to the earth that they inherited, and we 
occupy now.
    So as we go forward, Mr. Chairman, and Ranking Member, I 
think that we need to work with the agency, not in an either/or 
proposition, but in a realistic accommodation that deals with 
all of the factors here that provide certainty and security for 
the Nations that are before us today, and other stakeholders, 
and at the same time doesn't jeopardize both the economy of the 
area, and the long-term environmental protections that have to 
be in place.
    I think that it can be done. If we make it just a simple 
fight between either/or, there is going to be a loser, and in 
this instance, there should not be a loser. So, with that, let 
me yield back, Mr. Chairman, and I appreciate you calling this 
hearing.
    Mr. McClintock. Mr. Quayle.
    Mr. Quayle. Thank you, Mr. Chairman. And thank you all for 
being here. Lieutenant Governor Manuel, I just have a couple of 
questions for you. As you know, the EPA is really charged with 
protecting the human health and the environment for writing and 
enforcing regulations.
    But these regulations have to be based on actual laws that 
have been passed by Congress. Now, the EPA seems to be focused 
on complying with a really broad interpretation of the Clean 
Air Act, but my question is have they yet to acknowledge to the 
community that the 2004 Arizona Water Settlements Act needs to 
be complied with as well?
    Mr. Manuel. No.
    Mr. Quayle. So they have not talked to you at all about 
that in terms of complying with the Water Settlements Act, but 
yet they are going with the broad interpretation of the Clean 
Air Act?
    Mr. Manuel. Correct, and also the community is the only 
nation at this time that has a tribal clean air program that 
was approved by the EPA just last October. So we are all for 
the Clean Air Act as we move forward, because we know in 
Arizona, and in our area, that the PM-10, et cetera, that there 
is pollution in the Phoenix metro area, and the Pinal and 
Maricopa Counties.
    But we just passed this program for the Clean Air Act, and 
so we are all for that. However, I think that because the EPA 
is a regulatory body, they feel that--and I think that they 
feel that they are a regulatory, and they are just going to do 
whatever they want anyway.
    But they shouldn't because in dealing with these specific 
areas of the NGS, that is why it is important that we do this 
consultation process, and that they do it so that it is all on 
the table as we get to that end, whenever that is, and then we 
can have a better logical and reasonable study to come out with 
the best decisions.
    Mr. Quayle. And just keeping in mind that the Water 
Settlement Act was just a mere six or seven years ago, because 
some opponents have really testified that the owners of the 
plant and the CAP are thwarting the tribes.
    Do you think that it is fair to say that the Federal 
Government, and in this case, the EPA, if it took action that 
actually led to the closure of the plant, that the Federal 
Government would be breaking a legal promise that it made to 
you less than 10 years ago?
    Mr. Manuel. Yes. Yes, they would, and as a matter of fact, 
if the EPA actions failed to protect our rights under the 2004 
laws, we would be forced to bring litigation against the United 
States. That is not our desired result, but one that we will be 
forced to take.
    We understand the need to improve air quality, and in fact 
the Committee again has the Tribal Clear Air Program, and with 
the health of our people, and our economic livelihood depend 
upon affordable water.
    It does not make any sense for the EPA to take action that 
exposes the United States to significant and unnecessary 
liability, and the Committee wants to avoid that result. But we 
have to protect our people.
    Mr. Quayle. OK. Thank you very much. I yield back.
    Mr. McClintock. Mr. Lujan.
    Mr. Lujan. Mr. Chairman, thank you very much. To the 
leaders who are here today, does anyone know how much revenue 
is generated from The Navajo Nation's generation facility?
    Mr. Shingoitewa. I just know how much we get, as far as 
revenue for the Hopi Tribe.
    Mr. Lujan. And how much is that, Mr. Chairman?
    Mr. Shingoitewa. We get right now about $13 million in 
revenue.
    Mr. Lujan. And that is from the purchasing of the coal at 
Kayenta?
    Mr. Shingoitewa. Yes, and water, right.
    Mr. Lujan. Do we know how much Peabody makes on the coal 
that is taken out from Kayenta and sold to the generation 
stations?
    Mr. Shingoitewa. I could not answer you on that.
    Mr. Lujan. If I am not mistaken, Mr. Chairman, from some of 
the information that I have, and we don't have a dollar amount 
on how much revenue is generated from the coal taken out, but 
it is 8.1 million tons of coal annually.
    I don't know if maybe the staff later on, Mr. Chairman, 
might be able to help get me a value for what that is. I just 
want to make sure, Mr. Chairman, that as we are talking about 
the future of energy generation, and the viability of the coal, 
because if I am not mistaken, the contract for the coal is for 
as long as the coal lasts, until 2026, or until the coal runs 
out.
    And to make sure that the Hopi are being treated fairly and 
equitably for these resources as well. And, President Shelly, 
because the generation facility is on the land of the Navajo, 
is The Navajo Nation part-owners of The Navajo Nation 
generating facility?
    Mr. Shelly. No. Do you want me to go further on that?
    Mr. Lujan. Please, Mr. President.
    Mr. Shelly. As you know, SRP is the operator, and 24 
percent is what the Bureau of Reclamation owns in that, and 
that is what I have.
    Mr. Lujan. So, Mr. President, the revenue coming to the 
Nation is through the lease of the land; is that correct?
    Mr. Shelly. Yes, sir, and royalty from the coal.
    Mr. Lujan. And royalty from the coal. But it is not 
necessarily tied to the profits being generated from the 
generation facility?
    Mr. Shelly. No. The Navajo Nation workers are employed 
there, and so they do labor wise and they are being helped.
    Mr. Lujan. Very good. And I think it is important because, 
Mr. President, I know that we had a conversation recently about 
the work that needs to be done to be able to get power to the 
homes on the Nation that currently don't have power.
    And even at the opening of the spring session, many of the 
council delegates talked about the importance as well of making 
certain that we got electricity to the many homes of the Nation 
that don't have power today.
    And I would just say, Mr. Chairman, that as we talk again 
about the future of the viability here, that one, that I hope 
we are able to get a witness from Peabody. I know that they are 
not here today on the roster, and to find out the revenues and 
the equitable treatment from the contracts.
    And to make sure that the revenue going to our tribal 
brothers and sisters is one that is fair, and maybe one that we 
can help look at. But also that maybe we can have some 
agreement, Mr. Chairman, between the Members of the Body that 
we also look at Indian rural electrification if you will.
    And in the same way that we saw rural America be able to 
benefit from the distribution of power lines, and to be able to 
get power to rural homes that would have never otherwise gotten 
it, and to have a similar approach in our United States if you 
will for The Navajo Nation.
    So that we can work together to get that power, those 
electrons, whether we talk about whatever generation that we 
are going to be able to move to, because I think there may be a 
disagreement among all of us, Mr. Chairman, on the type of 
generation.
    But I would hope that we could agree that we can work 
together in Arizona, in New Mexico, and in Utah, to be able to 
get power moving into these homes, if there are 18,000 homes 
without electricity now, and 40 percent of the homes without 
water.
    And I know, Mr. Chairman, as we also look at the viability 
of economic opportunity, and again going back to water, because 
as we have seen with our brothers and sisters down in Arizona, 
as well as on The Navajo Nation, I know that the chairman, the 
president, and many others of the Navajo Elders, have shared 
stories with me of when those cattle would run fat, and the 
sheep herds were huge, and you would see that rolling and 
grazing land.
    Not just like we see in Napi right now, Mr. President, but 
all over the nation, and to see what we truly need to do to get 
to that point. And it is going to mean being able to get the 
power so that they can pull the water out of the ground with 
the wells.
    Because until then, we are going to still be up against the 
wall, Mr. Chairman, and so again I appreciate the conversation, 
and I hope that we can get to some agreement here. Thank you.
    Mr. McClintock. Thank you. Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman, very much. So the EPA 
in their letter of May 20th says that the EPA has not proposed 
to close the Navajo Generating Station. EPA's goal is to 
conduct a thorough analysis to determine on a case by case 
basis the appropriate level of control so that they can work 
with all of the concerned parties in order to ensure that the 
right solution is reached.
    So here is the interesting kind of context to put this in. 
By 2014 the EPA projects that 83 percent of all coal plants in 
the United States will have low NOx burners, and 
over-fire air will be installed in 83 percent of the capacity 
of the United States plants, and selective catalytic reduction 
will be installed in 47 percent of the installed capacity. That 
is by 2014.
    So they are heading toward having all of the facilities in 
the country be covered. So what they say here in the letter is 
that they intend on ensuring that these three power plants are 
treated no differently than any other power plant in the United 
States, and that they want to work to create a process to make 
sure that the same environmental technologies are installed 
here as they are going to mandate over the next several years 
to every power plant in the country.
    So do you have any problems with ensuring that these 
technologies are installed as they are in all other power 
plants as long as they use a process that ensures that they are 
negotiating to ensure that it is done in a way that is 
compatible with your interests, Mr. President?
    Mr. Shelly. Yes, and this is the first time that I heard 
that the EPA gave you some option. We have not been getting 
that. The Navajo Nation is in support of low NOx and 
sulfur, and that is why we are in support of that.
    But now I understand where you are being told that it can 
go from low NOx, and based, and supported in 
phrases. I think my reports here, and my talking point was that 
a phase-in approach is what we support.
    And there are numbers of years where compliance will come, 
and we have been talking about that with the nation, and The 
Navajo Nation does support low NOx.
    Mr. Markey. It says, too, that the EPA did not discuss any 
scenarios in our announced proposed rulemaking that involves 
the closing of any of the boilers at the Navajo Generating 
Station because it is not the EPA's intention to require a 
shutdown, directly or indirectly, of any of the boilers at NGS.
    So their goal clearly is to work with you because they are 
going to require every other power plant in the United States 
as well. It is just part of a national standard. So assuming 
that is the case do you have a problem with working with the 
EPA toward achieving that goal so that you are in compliance, 
along with every other power plant in the United States?
    Mr. Shingoitewa. Well, Congressman, I guess if I had 
received that letter, then I would have understood it, but we 
have not received it.
    Mr. Markey. OK.
    Mr. Shingoitewa. And I think in answer to that also is that 
unlike the President, low NOx burners are those 
things that we have to work with, and we do support that 
concept. But again like I said, I think that if the EPA had 
told us this, then this would have helped us to ease some of 
our questions.
    Mr. Markey. Well, we are going to get you a copy of the 
letter so that you each can see it, but I think it should be 
reassuring to you that the EPA is making it clear that their 
goal is not to shut down any boilers, but to work with you to 
accomplish the goal. And, Lieutenant Governor, do you have a 
comment?
    Mr. Manuel. Yes. Mr. Chairman, and Mr. Markey, with regard 
to that letter, dated May 20th, and I guess that is Friday, and 
of course we were here Sunday, but that is good, and then what 
the EPA is saying is that they will go through a consultation 
policy process, and that is good.
    But I just want to reiterate that the committee would 
support any pragmatic solution to the concerns of the EPA and 
others about NGS so long as it protects the rights of the 
community, and doesn't jeopardize its water settlement.
    Mr. Markey. Yes, but you are not looking to avoid 
compliance. You just want to make sure that it is done in a way 
that the boilers are not shut down. Is that the key?
    Mr. Shelly. Excess costs will shut down the plant. That is 
in my report.
    Mr. Markey. Yes, but you are not looking for a special 
exemption from the way that all the other power plants in the 
country are being viewed?
    Mr. Shelly. No.
    Mr. Markey. OK. Thank you.
    Mr. McClintock. We will have a third round of questions 
involving both panels if there is interest in the Committee. I 
would like to thank this panel for its testimony, and would ask 
you if you can to stick around for the third round of 
questions. I would like to bring up the second panel now. Thank 
you again for joining us.
    I have been informed that we are going to have votes 
sometime between 4:15 and 4:30. So if we are lucky, we maybe 
able to get through all of the witness statements before we 
have to recess again.
    [Recess.]
    Mr. McClintock. Thank you. We will now hear from our second 
panel of witnesses. I would like to begin by recognizing Mr. 
William Justice, the former Mayor and Member of the Page 
Planning and Zoning Commission, from Page, Arizona, to testify. 
Welcome, Mr. Justice.

STATEMENT OF WILLIAM JUSTICE, FORMER MAYOR AND MEMBER PRO TEM, 
       PAGE PLANNING AND ZONING COMMISSION, PAGE, ARIZONA

    Mr. Justice. Thank you very much. Mr. Chairman, and Members 
of both Committees, thank you for the opportunity to address 
the Committees regarding the concerns of our community, Page, 
Arizona.
    The Navajo Generating Station is located just outside our 
city limits of Page, a remote Southwestern United States town, 
with about 7,500 people. We provide the housing and support 
services for a majority of the employees of NGS, Peabody 
Energy, and the support services of these companies, as well as 
the retail ability for nearly all employees of NGS, as well as 
a majority of the coal miners who work on the Black Mesa of The 
Navajo Nation, and the joint use area of the Hopi Tribe.
    The Page economy is based on two items, tourism and power 
generation, and as a resident of Page, you either service 
tourism or power for employment. Our view of the environmental 
efforts installed and planned by the Salt River Project and the 
other owners of NGS are sufficient in meeting the environmental 
needs of our area of the United States.
    We feel that the undue costs of systems that would provide 
a negligible result in pollutants would lead to a catastrophic 
consequence to our part of the region by the closure of NGS.
    Our view on the short and long-term effects on Page, 
Arizona, The Navajo Nation, the Hopi Tribe, Coconino County, 
and the State of Arizona, would leaves a devastating 
destruction on the economic, and educational, and the overall 
pursuit of the American dream, and would deny the inhabitants 
of this isolated area the ability to recover our livelihood, 
and where visitors enjoy their vacations when they come there.
    Having been a witness to the dire results of the closure of 
the Mojave Generating Station in Laughlin, Nevada, and the loss 
of jobs to the coal miners in our area, resulted in the 
destruction of families by parents being uprooted to meet the 
financial responsibilities of their families, as well as the 
undermined ability for children to pursue their educational 
desires, and further provide for an area in great need of 
individuals to bring us into the 21st century.
    Personally, my Navajo wife and I both lost our jobs because 
of this. We went from a family earning about $140,000 a year to 
a family earning nothing, a dilemma that was felt many times by 
many families.
    In an area where the unemployment rate far exceeds the 
national averages, the obvious result on our economy would be 
tremendous. Our school system would lose a significant tax 
base, and a large portion of our general population would most 
likely become wards of the State and of the United States.
    Not only will this affect Page, but the surrounding 
reservation communities of LeChee, Kaibeto, Kayenta, 
Coppermine, Bitter Springs, and Cedar Ridge, and many more. How 
could such a great public/private partnership that provides 
such a valuable resource and base of employment be shut down 
due to negligible aesthetic concerns?
    There are no such health issue gains to be accomplished. 
Who has the capital investment to replace this power within the 
next 10 years? This just does not appear to make good health or 
economic sense.
    We truly hope the results of these Committees' hearings 
will lead to an economical continuation of NGS, therefore 
ensuring a financially successful existence of the inhabitants 
of our community and surrounding area. Thank you for your time.
    [The prepared statement of Mr. Justice follows:]

 Statement of The Honorable William S. Justice, Former Mayor of Page, 
   Member Pro Tem of the Page Planning and Zoning Commission, Page, 
                                Arizona

    Mr. Chairmen and Members of both Committees. Thank you for the 
opportunity to address the committees regarding the concerns of our 
community, Page, Arizona.
    Navajo Generating Station is located just outside the city limits 
of Page, Arizona, a remote Southwestern United States town with about 
7,500 people. We provide the housing and support services for a 
majority of the employee's of NGS, Peabody Energy, and the support 
services of these companies; as well as the retail ability for nearly 
all employees of NGS; as well as, a majority of the coal miners who 
work on the Black Mesa of the Navajo Nation and the joint use area of 
the Hopi Tribe. The Page economy is based on two items, tourism and 
power generation. As a resident of Page, you either service tourism or 
power for employment.
    Our view of the environmental efforts installed and planned by Salt 
River Project and the other owners of NGS are sufficient in meeting the 
environmental needs of our area of the United States. We feel the undue 
cost of systems that would provide a negligible result in pollutants 
would lead to a catastrophic consequence to our part of the region by 
the closure of NGS. Our view on the short and long-term effects to 
Page, AZ, The Navajo Nation, The Hopi Tribe, Coconino County, and the 
State of Arizona, would leave a devastating destruction on the 
economic, educational, and the over all pursuit of the American Dream 
and would deny the inhabitants of this isolated area the ability to 
recover their livelihood or visitors enjoy their vacation.
    Having been a witness to the dire results of the closure of the 
Mohave Generating Station at Laughlin, NV, the loss of jobs to the coal 
miners in our area resulted in the disruption of families by parents 
being uprooted to meet the financial responsibilities of their families 
as well as the undermined ability for children to pursue their 
educational desires to further provide for an area in great need of 
individuals to bring us into the 21st Century. Personally, my Navajo 
wife and I both lost our jobs because of this. We went from a family 
earning about $140,000 a year to a family earning nothing. A dilemma 
that was felt many times by many families.
    In an area where the unemployment rate exceeds national averages, 
the obvious result on our economy would be tremendous. Our school 
system would lose a significant tax base, and a large portion of our 
general population would most likely become wards of the State and the 
United States. Not only will this effect Page but the surrounding 
reservation communities of LeChee, Kaibeto, Kayenta, Coppermine, Bitter 
Springs and Cedar Ridge.
    How could such a great public/private partnership that provides 
such a valuable resource and base of employment be shut down due to 
negligible aesthetic concerns? There is no health issue gains to be 
accomplished. Who has the capital investment to replace this power; 
within the next 10 years? This just does not appear to make good health 
or economic sense!
    We truly hope the results of these Committee hearings will lead to 
an economical continuation of NGS, therefore, insuring a financially 
successful existence of the inhabitants of our community and 
surrounding area. Thank you for your time.
                                 ______
                                 
    Mr. McClintock. Thank you very much. Our next witness is 
Mr. Richard Silverman, General Manager of the Salt River 
Project, from Phoenix, Arizona. Welcome.

STATEMENT OF RICHARD H. SILVERMAN, GENERAL MANAGER, SALT RIVER 
                   PROJECT, PHOENIX, ARIZONA

    Mr. Silverman. Chairman McClintock, Ranking Member 
Napolitano, Committee Members, I am Richard Silverman, general 
manager of the Salt River Project. I thank you for the 
opportunity to be here today to testify concerning the Navajo 
Generating Station.
    I also want to thank Congressmen Gosar and Grijalva for 
their leadership and the tribal leaders who were on the first 
panel for their comments and continued partnership on this 
issue. The plant as you have heard is located on the Navajo 
Reservation near Page, Arizona.
    It is in fact a 2,250 megawatt coal fired generating 
station that provides around the clock energy service to more 
than 3 million electric customers in Arizona, California, and 
Nevada.
    NGS is not only an important baseload resource for the 
region, but it is also the primary energy source that moves 
water 336 miles for the Central Arizona Project to deliver this 
vital resource to millions of people in Arizona, including 10 
of Arizona's Native American communities.
    The Navajo Project is an important economic driver for 
Northern Arizona. NGS employs more than 500 people, 80 percent 
of whom are Navajos, and between NGS and the Kayenta Mine, we 
have a combined annual operating budget of approximately $700 
million, including more than $140 million to the Navajo and 
Hopi Tribes through coal royalty payments, permit and lease 
fees, scholarships, and direct payroll for nearly 1,000 
employees.
    SRP operates NGS on behalf of the participants, and as you 
have heard that includes the United States Bureau of 
Reclamation, the Los Angeles Department of Water and Power, the 
Arizona Public Service Company, Nevada Energy, and Tucson 
Electric Power Company, and the Salt River Project.
    NGS participants are and have always been committed to 
environmental protection and responsible environmental 
stewardship. This commitment began during construction nearly 
40 years ago, when electrostatic precipitators known as ESPs 
were installed at NGS to remove 99.5 percent of fly ash 
particulates.
    Later in response to visibility issues in the region, and 
in agreement with the EPA and other environmental groups, NGS 
participants once again worked proactively to address 
visibility concerns by installing scrubbers on all three units 
at the plant to eliminate over 90 percent of sulfur dioxide 
emissions.
    This project placed NGS as a top performer in its class in 
reducing sulfur dioxide. Recently and voluntarily, NGS 
participants installed low NOx burners with over-
fire air on all three units.
    The new burners are expected to reduce nitrogen oxide 
emissions by at least 40 percent. For more than four decades 
NGS participants have worked in partnership with the public 
elected officials, Federal, Tribal, and State agencies, and 
other concerned parties, and have invested more than one-half 
billion dollars in technological improvement projects at NGS.
    Despite the history of environmental performance, which has 
kept NGS in full compliance with all provisions of the Clean 
Air Act, the current ongoing EPA BART process could require 
installation of selective catalytic reduction technology, SCRs, 
to further reduce NOx.
    This requirement carries a potential price tag in our 
judgment of over $1 billion if bag houses are also required. 
Studies have shown that such technology does not improve 
visibility noticeable to the human eye, and this investment 
would come at time when the plant faces many uncertainties, and 
could put continued operation in jeopardy.
    Mr. Chairman and Subcommittee Members, thank you for the 
opportunity to appear before you today.
    [The prepared statement of Mr. Silverman follows:]

          Statement of Richard H. Silverman, General Manager, 
     Salt River Project Agricultural Improvement and Power District

    Chairmen McClintock and Young, Ranking Members Napolitano and 
Boren, and Members of the Subcommittees on Water and Power and on 
Indian and Alaska Native Affairs, thank you for the opportunity to 
submit testimony today on Protecting Long-Term Tribal Energy Jobs and 
Keeping Arizona Water and Power Costs Affordable: The Current and 
Future Role of the Navajo Generating Station (NGS). I also would like 
to thank Representatives Franks, Gosar and Grijalva for their interest 
and involvement with the Committee on this important issue.
    My name is Richard H. Silverman. I am the General Manager of the 
Salt River Project Agricultural Improvement and Power District (Salt 
River Project), a political subdivision of the State of Arizona that 
provides retail electric service to 950,000 residential, commercial, 
industrial, agricultural and mining customers in Arizona. Salt River 
Project operates or participates in a broad portfolio of generating 
resources, including nuclear, coal, natural gas, hydroelectric and 
renewable facilities. Salt River Project also operates a water delivery 
system providing the primary water supply for an area of approximately 
250,000 acres that includes major portions of the Arizona cities of 
Phoenix, Glendale, Mesa, Tempe, Chandler, Gilbert, Peoria, Scottsdale, 
and Tolleson. I am here today to provide an overview of the history of 
NGS, explain its importance to the southwest, provide an overview of 
the ongoing federal Environmental Protection Agency's (EPA) Best 
Available Retrofit Technology (BART) process, and describe the 
extensive and complex issues the participants in the plant are facing 
at this time.
    NGS is a coal-fired generating station consisting of three units, 
each capable of producing approximately 750 megawatts (MW) of electric 
power, for a total plant rated output of 2,250 MW. Salt River Project 
is the operating agent for itself and the five other participants in 
NGS: the United States Bureau of Reclamation, Arizona Public Service 
Company, Los Angeles Department of Water and Power, NV Energy, and 
Tucson Electric Power Company. The plant, which is located on the 
Navajo Reservation near Page, Arizona, is an important energy provider 
for all of its participants. NGS provides critical baseload energy to 
meet each utility's customer needs year round (but especially during 
the peak summer months), and plays a key role in Central Arizona Water 
Conservation District's (CAWCD) delivery of water to Native American 
communities, farmers, and cities in Arizona. Yet, the participants in 
NGS currently are faced with a set of complex issues that, when viewed 
in light of the potential EPA requirement for significant capital 
expenditures for emission controls that would result in imperceptible 
visibility improvement, threaten the long-term viability of the plant. 
Those issues include the need for lease extension and rights-of-way 
renewals, and the negotiation of key agreements for coal and water. 
Despite these challenges, however, we remain committed to working 
closely with the Native American, water and other stakeholders, and 
greatly appreciate our continued relationship with them and their 
continued engagement in issues affecting NGS.
United States' Interest in NGS
    It is important to understand how the United States came to become 
the largest individual participant in NGS. In the 1960s, several 
southwest utilities, including Salt River Project, were jointly 
evaluating the construction of a series of plants that would make use 
of the quality low-sulfur coal resources located on the Navajo and Hopi 
Reservations. The utilities were planning the construction of several 
such plants--NGS Units 1-3, the addition of three more units at the 
Four Corners Generating Station, and another facility known at the time 
as Kaiparowits. All of the facilities required significant federal 
involvement for approval of tribal leases, issuance of federal rights-
of-way, coal leases and permits, and execution of water service 
contracts. Only NGS subsequently was constructed and put into 
operation.
    At the same time the utilities were considering the plants, a 
parallel process was underway for the development of the Central 
Arizona Project (CAP) under the Colorado River Basin Project Act of 
1968. As the CAP initially was conceived, the power needed to pump 
Colorado River water into central and southern Arizona would be 
supplied through the construction of two additional hydrogeneration 
facilities on the Colorado River at Bridge Canyon and Marble Canyon. 
Objections raised by environmental organizations to the construction of 
new dams on the Colorado River led then-Secretary of the Interior, 
Stewart Udall, to broker a compromise that resulted in the foregoing of 
the construction of these two Colorado River dams in exchange for 
Congress authorizing the United States, through the U.S. Bureau of 
Reclamation, to acquire the right to output from a thermal electric 
power plant, NGS, for purposes of providing pumping power, and to 
provide a source of revenue to repay the federal debt incurred for CAP 
construction. As a result of the environmental compromise, the United 
States acquired a 24.3% entitlement to the output from NGS and became 
the plant's single largest participant.
Economic Importance of NGS
    Today, in addition to providing the power to pump CAP water to the 
major metropolitan areas of Arizona, NGS provides energy to more than 3 
million customers in Arizona, California and Nevada through its utility 
participants. As a baseload resource that produces energy on a 24x7 
basis, NGS could not be easily replaced by other types of resources, 
including renewables. NGS plays a critical role in providing cost-
efficient baseload power to the southwest, helping the utilities 
control energy costs, especially important in these economic times.
    Both NGS and the Kayenta mine that provides coal to the plant are 
vital economic drivers for the Navajo Nation, Hopi Tribe, the Town of 
Page, Coconino County, Arizona, the State of Arizona and 10 Native 
American Communities. NGS provides high-paying jobs for 540 skilled 
workers, of which more than 80 percent are Navajo.\1\ During annual 
overhauls, NGS and its contractors employ more than 1,000 temporary 
skilled workers, contributing significantly to the Page economy during 
the tourism off-season. The Kayenta Coal Mine, operated by Peabody 
Western Coal Company and located on the Navajo and Hopi Reservations, 
supplies the coal for NGS via a dedicated 78 mile rail line and employs 
an additional 420 or so skilled workers, primarily members of the 
Navajo Nation and Hopi Tribe. NGS is the only remaining purchaser of 
coal from the Kayenta mine and there currently is no means to transport 
coal from the mine to any other purchaser. The high-paying jobs at NGS 
and the mine support many other jobs in Page and the surrounding area, 
and NGS tax payments benefit local schools and other governmental 
functions.
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    \1\ The average NGS wage with benefits is approximately $105,000 
compared to an average of $48,000 for Coconino County.
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    NGS and the mine have a combined annual operating budget of 
approximately $700 million. This includes more than $140 million in 
direct payroll for almost 1,000 employees, employee benefits, coal 
royalty payments to the Navajo Nation and Hopi Tribe, permits, lease 
fees and scholarships. The amount paid to the Navajo Nation is expected 
to increase if the lease is extended beyond 2019 and the rights-of-way 
for NGS are renewed. Coal royalties, which also can be expected to 
increase some over time, currently provide about $14 million annually 
to the Hopi Tribe, which represents 88 percent of the Hopi Tribal 
government's annual revenue.
    NGS also is a key component for the United States in meeting its 
federal trust responsibilities under the 2004 Arizona Water Settlements 
Act (AWSA), Public Law 108-451, and other Arizona Indian water rights 
settlements. Revenues generated by the sale of surplus power from NGS 
help fund repayment of the federal debt for the CAP and, as a 
consequence of the AWSA, underwrite the cost of delivering CAP water to 
Arizona's Indian tribes, fund the construction of CAP water delivery 
facilities for these tribes, and provide a settlement fund for future 
Arizona Indian water settlements. Without these NGS-generated revenues, 
Arizona's tribes could not afford to use their CAP water entitlements 
for re-establishing their agricultural economies on their reservation 
lands, and none of the other benefits accruing to Arizona tribes under 
the AWSA would materialize. Allowing these critical revenues to fade 
away through closure of NGS would turn the benefits provided to the 
tribes under the AWSA into another unfulfilled promise.
Environmental Controls at NGS
    The participants in NGS have consistently ensured that the plant 
complies with applicable environmental regulations. Even prior to the 
passage by Congress of two key environmental regulations at issue 
here--the Clean Air Act and the National Environmental Policy Act 
(NEPA)--the NGS participants agreed in the lease with the Navajo Nation 
to install emissions control equipment to address particulate matter. 
During the 1970s' construction of NGS, the participants installed $200 
million in environmental control equipment, including hot side 
electrostatic precipitators (ESPs) with a design efficiency to remove 
99.5 percent of particulate matter. The ESPs capture fly ash, which is 
then available for use in concrete, cement and other construction 
materials.
    In 1977, Congress amended the Clean Air Act, adding a new Section 
169A that established as a national visibility goal ``the prevention of 
any future, and the remedying of any existing, impairment of visibility 
in mandatory class I Federal areas which impairment results from man-
made air pollution.'' CAA Sec. 169A(a)(1). Section 169A directed EPA to 
develop appropriate regulations to make ``reasonable progress'' toward 
that visibility goal. Congress did not set a deadline to attain the 
goal in 1977, but it required EPA to balance the cost of emission 
controls and resulting visibility improvement in determining 
``reasonable progress.'' In response, EPA issued its ``Phase I'' 
visibility regulations to deal with visibility impairment caused by 
large, individual sources, designated ``Plume Blight'' or ``Reasonably 
Attributable Visibility Impairment'' (``RAVI''), but deferred adopting 
``Phase II'' rules to deal with regional haze caused by a multitude of 
sources, pending advances in the science of visibility impairment.
    In the late 1990s, pursuant to an earlier evaluation process under 
Section 169A, the NGS participants installed wet limestone scrubbers on 
all three units to address visibility issues at a cost of approximately 
$420 million pursuant to a 1991 agreement with environmental groups and 
the EPA. The scrubbers eliminate more than 90 percent of sulfur dioxide 
(SO2) from plant emissions and, in conjunction with the 
plant's use of low-sulfur coal, resulted in NGS becoming a top 
performer in its class in reducing SO2 emissions.
    In the 1990 Amendments to the Clean Air Act, Congress added a new 
Section 169B, which directed EPA to undertake a comprehensive, five-
year visibility research program and issue Phase II regulations to deal 
with regional haze. Although that program did not materialize due to a 
lack of funding, Section 169B also established the Grand Canyon 
Visibility Transport Commission (``GCVTC'') and charged it with the 
responsibility of assessing existing visibility conditions and 
recommending measures to improve visibility in 16 Class I areas on the 
Colorado Plateau, including the Grand Canyon. After extensive technical 
studies and a stakeholder process conducted over a five-year period, 
the GCVTC issued its final report in 1996. Salt River Project and the 
other utility participants of NGS all were active participants in the 
process.
    According to the GCVTC's final report, visibility impairment in 
Class I areas on the Colorado Plateau is caused almost exclusively by 
three types of air pollutants in roughly equal proportions: dust 
particles, sulfates, and elemental and organic carbon. On average, 
nitrate particles are only minor contributors to visibility impairment 
on the Colorado Plateau. Sulfate and nitrate particles are formed in 
the atmosphere from emissions of SO2 and NOX 
resulting from fossil fuel combustion, including coal-fired power 
plants. Dust and carbon particles originate from both natural and man-
made sources such as forest fires, soil erosion, mobile sources, and 
emissions from various small and large industrial sources.
    EPA promulgated its regional haze rules in 1999, incorporating many 
of the recommendations of the GCVTC. EPA issued revised rules in 2005 
(the ``BART Rules''). The BART Rules establish a starting point for 
States to develop their own ``reasonable progress'' state 
implementation plans (SIPs) to achieve the national visibility goal in 
Class I areas by 2064. 40 C.F.R. Sec. 51.308(d)(1). Under the BART 
Rules, each state is given the flexibility to determine emission 
limitations that represent BART for certain stationary sources within 
the State. Under the Tribal Authority Rule (``TAR''), EPA asserts the 
authority to promulgate a federal implementation plan (FIP) for sources 
like NGS that are located on an Indian reservation, if EPA determines 
such regulations are ``necessary or appropriate to protect air 
quality'' and the tribe has not submitted a Tribal Implementation Plan 
(``TIP''). 40 C.F.R. Sec. 49.11(a). The Navajo Nation has not submitted 
a regional haze TIP applicable to NGS.\2\ In its Advanced Notice of 
Proposed Rulemaking, EPA determined that it has the authority to 
promulgate a FIP to establish BART requirements for NGS. 74 Fed. Reg. 
44313, 44315 (Aug. 28, 2009). EPA thus has undertaken a task that 
typically would be performed by a State or a tribe. By stepping into 
this role, EPA is obligated to comply with the criteria and process 
established in the Clean Air Act and its own regulations for 
determining BART.
---------------------------------------------------------------------------
    \2\ Under the lease agreement between the Navajo Nation and the 
participants in NGS, the Navajo Nation agreed that it ``will not 
directly or indirectly regulate or attempt to regulate the Lessees in 
the construction, maintenance or operation of the Navajo Generating 
Station and transmission systems of the Lessees, the construction, 
maintenance or operation of the fuel transportation system of the 
Lessees or the Fuel Transporter.''
---------------------------------------------------------------------------
    NGS is one of only two ``BART-eligible'' sources on the Navajo 
Reservation.\3\ BART-eligible sources, generally, are the class of 
large stationary sources that were put in operation between August 7, 
1962 and August 7, 1977, and that fall within one of several listed 
source categories. 42 U.S.C. Sec. 7491(b)(2)(A); 40 C.F.R. Sec. 51.301. 
BART applies to such sources whose emissions, as determined by the 
State, ``may reasonably be anticipated to cause or contribute to any 
impairment of visibility in any mandatory Class I Federal area.'' 42 
U.S.C. Sec. 7491(b)(2)(A); 40 C.F.R. Sec. 51.308(e)(1)(ii).
---------------------------------------------------------------------------
    \3\ The other is the Four Corners Power Plant. Salt River Project 
also has an ownership interest in that plant.
---------------------------------------------------------------------------
    The BART determination now being considered by EPA for NGS is being 
done pursuant to the regional haze program, which is intended to 
address visibility. While Congress granted EPA broad authority under 
the Clean Air Act to address visibility in Class I areas, Section 169A 
of the Clean Air Act also made clear that decisions by states--or in 
this case EPA--regarding ``reasonable progress'' and what constitutes 
BART must take into consideration ``the costs of compliance, the energy 
and nonair quality environmental impacts of compliance, any existing 
pollution control technology in use at the source, the remaining useful 
life of the source, and the degree of improvement in visibility which 
may reasonably be anticipated to result from the use of such 
technology.'' 42 U.S.C. Sec. 7491(g)(2); 40 C.F.R. Sec. 51.301.. Thus, 
just as EPA designed the BART Rules to give the states maximum 
flexibility in meeting the visibility goal, EPA also should exercise 
that flexibility. Such an approach would be consistent with President 
Obama's January 18, 2011 Executive Order on Improving Regulation and 
Regulatory Review, which is premised on the principle that:
        Our regulatory system must protect public health, welfare, 
        safety, and our environment while promoting economic growth, 
        innovation, competitiveness, and job creation. It must be based 
        on the best available science. It must allow for public 
        participation and an open exchange of ideas. It must promote 
        predictability and reduce uncertainty. It must identify and use 
        the best, most innovative, and least burdensome tools for 
        achieving regulatory ends. It must take into account benefits 
        and costs, both quantitative and qualitative. It must ensure 
        that regulations are accessible, consistent, written in plain 
        language, and easy to understand. It must measure, and seek to 
        improve, the actual results of regulatory requirements.
    For NOX emissions from coal-fired electric generating 
units (EGUs), the BART Rules specifically established presumptive BART 
limits through notice-and-comment rulemaking. The presumptive 
NOX emissions limits for coal-fired EGUs vary according to 
individual source characteristics and type of fuel burned (bituminous, 
sub-bituminous, lignite, etc.). The presumptive BART limit applicable 
to the EGUs present at NGS is based intentionally and expressly on 
combustion controls such as low-NOX burners with separated 
over-fire air (LNB/SOFA) only; the presumptive BART limit is not based 
on post-combustion controls such as selective catalytic reduction 
(SCR). 70 Fed. Reg. 39104, 39172 (July 6, 2005). With the installation 
of LNB/SOFA, NGS meets or exceeds the presumptive BART limits 
established by EPA.
BART for NGS
    Pursuant to the BART Rules, Salt River Project completed a BART 
analysis and submitted it to EPA in December 2008. That analysis 
concluded that BART for NGS could be satisfied by installing LNB/SOFA, 
and the NGS participants decided to proceed proactively with that 
installation ahead of a final determination by EPA. Even after Salt 
River Project completed additional analyses at EPA's request, the 
conclusion remained that BART for NGS is LNB/SOFA. Salt River Project's 
analyses took into account all five factors set out in EPA's BART Rules 
and Salt River Project continues to believe that BART for NGS can be 
satisfied by LNB/SOFA, especially in light of the unique role that the 
plant plays in the southwest.
    The NGS participants recently completed the installation of LNB/
SOFA on all three units at a combined cost of approximately $45 
million. Those advanced combustion controls change the way fuel and air 
combust in the furnace, reducing NOX emissions by about 40 
percent, or 13,000 tons per year.
    The primary alternative to reducing NOX emissions would 
be the installation of SCR. Utilizing a catalyst, this technology 
promotes a chemical reaction between the NOX and ammonia, 
resulting in the elimination of NOX and ammonia and the 
formation of nitrogen and water. While SCRs could offer some additional 
reduction of NOX emissions over LNB/SOFA, factoring in all 
related equipment associated with SCRs, including the possible added 
requirement of new particulate matter controls due to likely increases 
in sulfuric acid mist emissions, the cost to retrofit NGS beyond LNB/
SOFA could reach over $1 billion and the incremental improvement in 
Class I areas would be imperceptible to the human eye. This results 
because, as discussed above, NOX emissions are responsible 
for only a small fraction of the regional haze sometimes observed in 
Class I areas within the Colorado Plateau, and because power plant 
emissions only account for a fraction of the NOX emissions 
in the region.
    An order to install SCR during the current rulemaking process, 
especially before the lease and rights-of-way are renewed, could leave 
the viability of NGS in jeopardy. At a minimum, economic studies done 
by CAP indicate that costs for water delivery to its customers would 
increase significantly.
Current Challenges Faced by NGS Participants
    As indicated above, the participants in NGS face a number of 
uncertainties in addition to the ongoing BART process at this time. The 
initial term of the plant site lease with the Navajo Nation and the 
existing right-of-way for the plant site expire in 2019. Additional 
rights-of-way for the associated transmission lines, and for the 
railroad, which brings the coal to the plant from the Kayenta mine, 
expire over the following few years. Other agreements for the coal and 
water supplies for the plant also will need to be extended or 
negotiated.
    Salt River Project is engaged on behalf of the participants in 
discussions with the Navajo Nation over the terms of the lease 
extension. After those discussions are completed, the Navajo Nation 
will submit the lease to the U.S. Department of Interior Bureau of 
Indian Affairs for review and approval, and Salt River Project will 
submit applications to renew the rights-of-way. Both of those actions 
are anticipated to trigger the need for NEPA compliance, which will 
take several years to complete and the outcome of that process is 
difficult to predict at this time.
    Although the NGS participants are committed to negotiating a lease 
extension with the Navajo Nation and successfully completing the NEPA 
process to secure the necessary renewals for the continued operation of 
NGS, it would be difficult for the participants to justify an 
investment of potentially more than $1 billion at NGS for emission 
controls with the uncertainties that the plant currently faces. When 
combined with the other costs the plant participants could expect to 
incur for other environmental regulations (such as EPA's proposed rules 
on hazardous air pollutants (the EGU MACT rule), coal combustion 
residuals and cooling water intake structures), the uncertainty only 
increases. For this reason, the NGS participants initiated a 
stakeholder process to look at options and encourage the development of 
creative alternatives. That process has been important to get all of 
the issues on to the table and discuss points of agreement, but final 
principles of agreement have not yet been reached.
Summary
    In summary I would like to emphasize the following points:
          NGS is a crucial electric generating facility that 
        provides round-the-clock service to millions of people 
        throughout Arizona, California and Nevada.
          NGS is the primary energy source for the CAP, a vital 
        provider of water for millions of people in Arizona and 10 
        Native American communities.
          As the plant's largest participant, the United States 
        has an important stake in the ongoing operation and future of 
        NGS.
          The economic welfare of the Navajo Nation and the 
        Hopi Tribe are dependent upon the continued operation of NGS.
          The continued operation of NGS is central to the 
        ability of the United States to meet various Indian water 
        rights settlement obligations.
          The BART determination now being considered by EPA 
        for NGS is being done pursuant to the regional haze program, 
        which is intended to address visibility.
          According to the GCVTC's final report, nitrate 
        particles are only minor contributors to visibility impairment 
        on the Colorado Plateau.
          Based upon the results from a BART analysis performed 
        by Salt River Project in 2008 in accordance with the BART 
        Rules, BART for NGS should be the installation of LNB/SOFA.
          In advance of an EPA determination, the NGS 
        participants voluntarily invested $45 million in LNB/SOFA 
        technology. Installation was completed on all three units in 
        April 2011.
          The estimated cost of an SCR installation at NGS 
        would exceed $1 billion. Given prevailing uncertainties related 
        to continued NGS operation beyond 2019, if the EPA renders a 
        determination that SCR is required at NGS, then the 
        participants may be unable to justify continued operation.
          Scientific studies have demonstrated that the human 
        eye cannot detect visibility distinctions between a $45 million 
        LNB/SOFA technology investment and a $1+ billion SCR technology 
        investment.
          SRP believes that the LNB/SOFA technology choice is 
        the appropriate BART determination for NGS.
    Chairmen McClintock and Young and Members of the subcommittees, 
thank you again for the opportunity to testify before you today on this 
important issue. I would be happy to answer any questions.
                                 ______
                                 
    Mr. McClintock. Thank you, Mr. Silverman. Our next witness 
is Mr. Vernon Masayesva, Executive Director of the Black Mesa 
Trust, from Flagstaff, Arizona, to testify. Welcome.

 STATEMENT OF VERNON MASAYESVA, EXECUTIVE DIRECTOR, BLACK MESA 
                   TRUST, FLAGSTAFF, ARIZONA

    Mr. Masayesva. I have a very long last name which is very 
hard to pronounce, and so by the time that I introduce myself, 
I lost a minute. We are here because of the threat of the 
Navajo Generating Station closing, and there is a warning sign 
out there that if this happens, there is going to be an 
economic meltdown on the Hopi Reservation where I live.
    Unfortunately, the issue is framed purely as an economic 
issue. The cultural values, traditions, is absent from the 
discussion. So it is not a balanced debate. It is very 
important to understand that the Black Mesa coal is the 
footstool of the Central Arizona Project, and in order to 
understand that, we have to have a good understanding of how 
the Hopis got into this mess, and who got us into this mess.
    And it begins from the early 1900s, when there were water 
wars fought between the seven states. Black Mesa coal came into 
the picture in the 1960s when efforts to generate hydroelectric 
power to move a man-made river by damming up the Grand Canyon 
had failed.
    The idea of using coal to generate power was conceived in 
the United States Department of the Interior, but before the 
Navajo Generating Station could be built, two things had to 
happen.
    The Navajo Nation had to waive its claim to 50,000 acre-
feet of Arizona's share of the Upper Basin River. Incidentally, 
that resolution is expiring in 2019, and that to me is a big 
issue before you.
    The Hopi and Navajo had to be convinced to open up their 
land for coal mining. Both objectives were achieved with a 
letter secured by a lawyer for the Hopi Tribe named John 
Boyden, who single-handedly negotiated a sweetheart deal with 
Central Royalty, a Peabody subsidiary.
    Under the terms of the lease, which was amended a number of 
times, Peabody secured rights to 670 million tons of coal on 
68,000 acres of Hopi and Navajo Reservation. The Hopi Council 
did not know at the time that Mr. Boyden was billing Peabody 
for expenses during the lease negotiations.
    The lease gave Peabody unlimited access to ancient waters 
stored below the ground in an aquifer for a price of $1.67 per 
acre-foot. Around 1985, the price went up to $150 per acre-
foot, which is still a bargain price.
    That slurry ended on December 31, 2005, but not until 45 
billion gallons of pristine water was wasted, enough water to 
sustain 10,000 Hopis for over 300 years, gone in just 35 years, 
all to preserve and protect aquifers under Central Arizona.
    Now 40 years later the Hopi and Navajo Nation people are 
finally waking up and what they see is appalling. Slowly, they 
are beginning to understand the magnitude of the damage caused 
by the world's largest strip mining under the watchful eyes of 
the Secretary of the Interior.
    What is the damage that concerns us? Thousands of Hopi 
ancestral villages and burial sites have now been destroyed by 
strip mining. Failure of the government to protect the Navajo 
aquifer and the cultural resources of the Hopi-Navajo.
    The Federal Government has never required Peabody to impose 
a groundwater reclamation plan and bond by the way, and then 
there are the health impacts on Black Mesa from Peabody's 
blasting and coal dust.
    A grassroots movement is building among the Hopi and Navajo 
to shut the mining down, and to begin a transition into clean 
energy sources. As you can see the debate over the best way to 
eliminate nitrogen pollution is not the only issue facing NGS 
owners, CAP operators, and Peabody.
    Important regulations control toxic mercury, coal, and ash, 
and global warming is just around the corner. Then there is the 
matter of the conflict between the Department of the Interior, 
and the Bureau of Reclamation is playing in this whole 
scenario. They are the hundred percent owners----
    Mr. McClintock. Mr. Masayesva, I am going to have to 
interrupt. We are out of time, but we will come back to you 
during questioning.
    Mr. Masayesva. Thank you.
    [The prepared statement of Mr. Masayesva follows:]

 Statement of Vernon Masayesva, Hopi Tribal Member, Kykotsmovi, Arizona

    Hello, my name is Vernon Masayesva, a Coyote clan member of the 
Hopi Tribe. I am here to speak in my behalf as a concerned citizen.
    Black Mesa coal and Glen Canyon Dam are the footstools of Central 
Arizona Project.
    The initial plan to dam up the Grand Canyon to create hydroelectric 
power needed to push water up-hill to Phoenix and Tucson through CAP 
canal failed.
    So a plan was conceived in the Office of Secretary of Interior to 
build Navajo Generating Station using coal from Hopi and Navajo lands, 
and water stored in the Dam called Lake Powell.
    Before the project could move forward, two things needed to happen:
        1.  The Navajo Nation had to give up their claim to Arizona's 
        share of Upper Basin Colorado River.
        2.  Navajo and Hopi Tribe had to open up their lands to coal 
        mining
    So, the Secretary sent his envoy carrying a resolution to the 
Navajo capitol. The purpose of the resolution was to waive Navajo water 
claim to Arizona's Colorado River share of the Upper Basin in return 
for job preference and economic benefits.
    The Navajo Council reluctantly passed the resolution suspending 
their claim to 50,000 acre-feet of water for 50 years.
    Suspension will end in 2019 along with land leased to NGS owners 
and a right-of-way to deliver coal to NGS.
    A former lawyer for the Hopi Tribal, John Boyden, now deceased, 
joined the circle of architects. His mission was to persuade the Hopi 
Tribal Council to open the door to mining.
    John Boyden convinced the Council to give Sentry Royalty, a 
subsidiary of Peabody Coal Co, exclusive rights to explore and develop 
coal on Black Mesa and delivered to NGS and Mohave Generating Station 
located in Nevada.
    Coal would be delivered to NGS by rail. As 273 mile slurry line 
would provide to MGS. The Hopi Tribal Council initially turned down the 
slurry operation, but changed their minds when confronted by Boyden.
    Peabody currently has rights to about 620 million tons of coal on a 
68,000 acre leasehold.
    The Hopi, like the Navajo, were drawn into the triangle of deceit, 
not to get rich, but to subsidize owners and operators of generating 
station, mining company and CAP.
    Hopi was also promised economic prosperity and jobs. Today only 
about a dozen work at the mine. I am not aware of any Hopi who works at 
NGS.
    In 1970, mining started. Coal was transported 273 miles via coal 
slurry pipeline to MGS across state line.
    4000 acre-feet of ancient pristine fossil water from a 15,000 to 
35,000 year old aquifer was used annually to operate the slurry.
    The price of water approved by Secretary Udall in his capacity as 
trustee of Indian Tribes' natural resources, was $1.67 for each acre-
feet of water (325,000 gallons equal an acre-feet). Coal was sold at 
3.33% of the market value.
    The slurry was forced to close in 2005 but not before over 45 
billion gallons of sole-source drinking water was lost, enough water to 
serve 10,000 Hopis for at least 300 years at the present use, which is 
about 350 acre-feet per year.
    Six years later, NGS began generating power to run 14 pumping 
stations bringing water to Phoenix, Arizona from the mighty Colorado.
    Now, 40 years later, the grassroots are realizing the magnitude of 
destruction caused by the world's largest strip mining on Black Mesa 
and they are shocked and angry. Here are some examples:
          Over-drafting of non-renewable water stored in Navajo 
        aquifer and failure of US Office of Surface Mining Reclamation 
        and Enforcement to require Peabody to post groundwater 
        reclamation plan and bond.
          Waters from Black Mesa basin that used to water Hopi 
        corn fields in Moencopi shut down by construction of over 160 
        impoundment ponds
          Evidence of contamination of pristine fossil water 
        stored in the N-aquifer, waters which was put into the ground 
        during the last ice-age.
          Destruction of unknown number of Hopi ancestral 
        villages and burial sites, which the elders call a ``living 
        museum, a cathedral and an academy of our oral traditions.''
    In a 20 year survey, starting in 1968, an archaeological field 
school hired by Peabody, found 1,026 historic and 1,596 pre-historic 
sites, of which only 168 sites were excavated. Only 178 burial sites 
were found.
    What happened to the rest of the remains of Hopi ancestors and the 
ancestral villages has yet to be revealed.
    For me, this is like tearing pages from our history book, like 
tearing pages from the Torah, Koran, and the Bible. It is so because 
Black Mesa is a shrine, a temple we call Tuuwansavi, Earth Center, a 
safe homeland, a sacred land.
    Last year the Hopi people pleaded with President Obama to end the 
destruction. They have yet to receive a response. I will leave a copy 
of the letter for the record.
    The controversy EPA's proposal to require NGS owners to install 
Selective Catalytic Reducers in their plants to reduce nitrogen oxide 
has brought us here.
    Owners are saying that if EPA's proposal prevails, NGS will be shut 
down. This will cause a domino effect. Mining will end. Hopi economy 
will be devastated. Hundreds of jobs will be lost.
    The price of water delivered to Phoenix and Tucson and other 
Southern Indian Tribes will rise astronomically along with the cost of 
power to millions of rate-payers, businesses and farmers.
    The debate over BART to improve visibility is just one issue. Next 
to come are regulations to limit mercury, and carbon dioxide.
    And there are many controversial issues facing Peabody Coal Co. The 
cost of resolving these issues will have a direct economic impact on 
NGS because the two are Siamese twins. Once cannot survive without the 
other.
    The other issue is the conflicted role of the Bureau of Reclamation 
(BOR). BOR owns CAP, a majority share of NGS. BOR buys coal from 
Peabody, co-regulate the mine and is responsible for 24.3% of 
pollution.
    Black Mesa Trust's mission, of which I am the director was founded 
in 1998, is to preserve waters and land on Black Mesa using ancient 
wisdom and modern science, has prepared a proposal to bring multiple 
solutions to multiple issues.
    For example BMT proposes that NGS transition away from coal to 
clean and cleaner fuel sources, specifically solar and natural gas in 
10 years.
    In the process of transitioning, create alternative sources of 
revenue and jobs for the Hopi and Navajo nations with the help of NGS 
owners and managers of CAP.
    This includes building a 1000 plus MW solar plant on Hopi and 
another one on Navajo. A construction of 550 KV transmission line 
alongside the existing El Dorado line which runs from Cameron, near 
Flagstaff, to the Four Corners power plant through Hopi and Navajo 
lands.
    This will open up a bottle neck and bring green power to market.
    These projects can be done in partnership with NGS owners. Solar 
powered plants can be used to help meet Arizona Corporation 
Commissions' mandate that a percentage of power come from renewable 
energy.
    Unfortunately, the debate over nitrogen pollution is being used to 
create further conflict and alarm. It has pitted Navajo against Navajo 
and could very well pit Hopi against Hopi, and Hopi against Navajo!
    This is morally and ethically wrong especially when it is so 
unnecessary.
    Together we can save NGS and guarantee that customers of CAP and 
customers of NGS will continue receiving water and electricity at 
reasonable cost.
    Together, we can finally bring economic justice to Hopi and Navajo, 
create economic prosperity and hundreds of jobs to Arizonans including 
Hopi and Navajo people, who are experiencing the highest unemployment 
rate, 85% on Hopi.
    Together we can establish an international clean energy showcase on 
the Colorado Plateau which some Hopis call a ``Learning Plaza''.
    Instead of putting our energy and money fighting over EPA's 
proposal, we need to turn the negative energy into positive energy and 
bring about a win-win resolution for everyone.
    Kwaq kwa, Thank you.
                                 ______
                                 
    Mr. McClintock. Thank you for joining us, and our next 
witness is Mr. Marshall Johnson, a member of The Navajo Nation 
from Kykotsmovi, Arizona. Welcome.

 STATEMENT OF MARSHALL JOHNSON, NAVAJO INDIVIDUAL, KYKOTSMOVI, 
                            ARIZONA

    Mr. Johnson. Thank you. Mr. Chairman, and Members of the 
Committees, thank you for the opportunity to speak here before 
you. My name is Marshall Johnson, and I am from Black Mesa, 
Arizona, and originally from Forest Lake.
    I am the founder and director of To Nizhoni Ani, a 
grassroots organization whose mission is to preserve and 
protect the environment of Black Mesa. To begin, I want to say 
that the work that the EPA is doing is important for people 
everywhere, not just indigenous people.
    We must get a handle on our emissions, and the degradation 
of our air is a direct violation of human rights, the right to 
breathe clean air. That said, I would like to express the 
vision of the people of Black Mesa everywhere they support our 
work.
    One, CAP, the Central Arizona Project, must become self-
sufficient. Navajos can no longer carry the burden of the most 
expensive water project in the world. The time is now for CAP 
to become self-sufficient.
    Two, the site of the Navajo Generating Station just begin 
transitioning to the renewable energy generation site. It must 
be fully operational within five years. It will replace the 
energy generating loss when lost coal resources are depleted. 
We are not saying shutting down NGS.
    Three, there are 40,000 acres of ground fills available on 
Black Mesa, just as legislators and predominant Arizonans 
rallied and lobbied for CAP to be built, I want to see your 
support for such a renewable energy generation project such as 
solar on Black Mesa.
    Now, let me turn to the issues of the Navajo Generating 
Stating operation, and the agency who helped set this entire 
operation into motion decades ago for the Navajo people, the 
Bureau of Reclamation, the Department of the Interior.
    The Navajo Nation was lobbied to waiver their water rights 
to the Navajo Generating Station operation in the amount of 
50,000 acre-feet, and approved the site of the Navajo 
Generating Station Power Plant, and provide coal source for the 
NGS operation.
    In short, the Navajos have been carrying the burden of the 
operation of NGS and CAP. The coal used to power NGS comes from 
an operation on Black Mesa. Peabody Energy recently has its 
lava permit remanded. Peabody's operation is responsible for 
depleting, depressurizing, and contaminating, and damaging, our 
only drinking water for Black Mesa residents, including the 
Hopis.
    There is no bond in place for the water, and to this day 
Peabody has not returned the water in quality and in quantity. 
The Navajo coal is a source of power for NGS, and NGS emits 
toxic pollutants into our air; nitrogen oxide, mercury, 
arsenic, carbon dioxide.
    According to the recent study on health disparities on The 
Navajo Nation, asthma was rarely seen in The Navajo Nation in 
1970. Today, 6 out of 10 Navajo surveyed indicate having asthma 
or some other respiratory problem.
    Navajo water is another source of the operation at NGS. 
Navajo waived 50,000 acre-feet of water for the operation for 
NGS, and this is Navajo water, free of charge to the NGS 
operation.
    It has been more than 10 years since subsidence was first 
documented in sink holes on Black Mesa, but today we continue 
to feel the impacts of over-draft of the only water source. 
There is no benefit to the Navajo people for the entire 
operation. We are still in extreme poverty and experiencing 
extreme health impacts.
    [The prepared statement of Mr. Johnson follows:]

           Statement of Marshall Johnson, Kykotsmovi, Arizona

Transition Plan of To Nizhoni Ani regarding Navajo Generating Station 
        and related operations and resources
Summary:
    For over fifty years, the Navajo Nation has been largely dependent 
on a coal-based industrial economy. While revenues from development of 
coal resources account for a substantial portion of tribal budgets, 
coal development has had a substantial, and some would say irreparable, 
impact on tribal health, culture, land, air, and water. Further, the 
impacts are not limited to tribal lands as the effects of hazardous air 
and green-house gas emissions, toxic water borne pollution, massive 
depredation of aquifers used for drinking water, and contamination of 
soil, air and water from toxic coal combustion waste (CCW) disposal has 
dispersed into adjacent non-indigenous communities.
    Situated in the Four Corners region of New Mexico and Arizona, the 
Dine homelands encompass an existing, sprawling coal-industrial 
complex. The Navajo Mine operated by BHP Billiton serves the Four 
Corners Power Plant (FCPP) in Fruitland, New Mexico; Kayenta and Black 
Mesa mines operated by Peabody Energy serves Navajo Generating Station 
(NGS) in Page, Arizona. The construction and operation of these 
facilities have been central in the economies of the Navajo Nation. 
Energy is exported from these facilities to Southern California, Texas, 
Southern Arizona, and Nevada.
    The Power Plants at NGS and FCPP will not sustain the Dine in 
perpetuity. Once the fossil fuel supplied by the tribes is extracted, 
the powerful utility companies will be looking for other locations to 
continue their operations. The Dine will have no leverage to level the 
playing field and no plan in place to sustain tribal governance as it 
currently exists.
    After decades of exploitation by mining and energy companies, a 
combination of factors make now the ideal time for the Navajo Nations 
to transition to a more sustainable clean-energy economy.
Best Available Retrofit Technology:
    Under the federal Clean Air Act (CAA), the Four Corners and Navajo 
power plants are subject to requirements for Best Available Retrofit 
Technology (BART) in order to comply with federal regional haze 
requirements. The proposed BART determination for the FCPP, which was 
issued by EPA Region 9 in October 2010, will likely require the 
installation of Selective Catalytic Reduction (SCR) at all five units. 
Estimated cost for the FCPP to install SCR is $717 million for all five 
units.
    The owners of the rapidly aging FCPP and NGS are faced with 
significant decisions about whether to commit financing to pollution-
control technology upgrades for the facilities, or retire them and 
replace their output with modern, clean energy sources. EPA has 
determined it is necessary for the owners of the FCPP to upgrade 
pollution controls to reduce haze in the region. The ruling proposal 
calls for the likely installation of selective catalytic reduction 
controls (SCR), which could cost hundreds of millions of dollars.
    Rather than incur such costly upgrades for plants that will 
eventually be phased out anyway, the Navajo and Hopi would benefit 
instead from a move toward newer, cleaner and more sustainable energy 
sources of which economic equity should be included.
    With significant investment to bring these plants into compliance 
with required regulatory protections, it is entirely possible that the 
owners will determine that the FCPP and NGS have exhausted their 
economically useful lives and that continuing to operate them would be 
unprofitable. Utilities around the country are having the same internal 
debates, and several major owners of FCPP and NGS have already made a 
decision to abandon their stakes in the projects.
    According the EPA website, asthma disproportionately affects 
children, families with lower incomes, and minorities. ``While asthma 
was a rare diagnosis in many HIS areas before 1975, asthma prevalence 
and hospitalizations increased dramatically among AI/AN populations 
during the 1980s.'' (IHS 2006). Between 1972-74 and 1996-98, Navajo 
Area age-adjusted death rates for cancer have increased from 43.7 to 
87.5 deaths per 100,000 populations (IHS 2006).
    In addition, TNA has engaged community members across the northwest 
and central region of the Navajo Nation (in the area of NGS) in a 
survey that is meant to assess the need for a more comprehensive health 
study primarily focused on respiratory and heart disease and may 
include cancer. 141 surveys were returned by adult community members 
from 13 communities in the Northwest region of the Navajo Nation 
(Kaibeto, Chilchinbito, Pinon, Navajo Mt. Coppermine, Lechee, 
Dennehotso, Kitsillie/Black Mesa, Tonalea, Tuba City, Bittersprings, 
CedarRidge, and Shonto). The survey was conducted from March to May, 
2011. The survey asks community members to assess the number of family 
members with asthma and respiratory problems and to identify the number 
of members with respiratory problems over the age of 25 years and under 
the age of 25 years. It also asks community members to identify 
distance to nearest hospital facilities and what other kinds of ways 
they address these problems besides modern methods.




Coal Mining a Legacy of Non-Compliance:
    Part of the transition strategy is to compel meaningful and timely 
reclamation, closure, and clean-up of the tens-of-thousands of acres of 
mine lands used for coal-fired power plants. Actual clean-up and 
reclamation of mined lands (which could take decades) not only creates 
jobs and a transitional revenue stream, but in some instances may 
present important renewable energy site and location opportunities on 
mined-lands (i.e. brown fields).
    Peabody's Kayenta Mining Operation covers approximately 44,000 
acres and has produced approximately 8.5 million tons of coal per year. 
Peabody's 44,073 acre Kayenta Mine mining operation continues to supply 
coal exclusively to the Navajo Generation station and has done so since 
1973. NGS became operational in 1971 and was based in part on a 
resolution from Navajo Nation which waived claims of 50,000 acre feet 
of Navajo water in the upper Colorado River basin for 50 years or the 
life of Navajo Generating Station.
    Tens of millions of tons of coal combustion waste (CCW), the toxic 
by-product of burning coal in power plants, has been disposed of in 
insufficiently regulated landfills and dumped back into the mines or 
on-site on the Navajo Nation. This CCW contains toxic pollutants such 
as mercury, cadmium, barium, and arsenic, which cause cancer and 
various other serious health effects. These contaminants can leach into 
groundwater from the landfills and mines where they are dumped, and can 
migrate to drinking water sources, posing significant public health 
concerns.
    Peabody's 18,000 acre Black Mesa mining operation supplied coal to 
the Mohave Generating Station from 1970 to December 2005. The Black 
Mesa mine became non-operational in 2005 after closure of Mohave in 
2005 due to the Station's inability to comply with the Clean Air Act.
    In addition to the coal mining at the Black Mesa Mine, Peabody has 
also pumped an average of 4000-6000 acre-feet per year. That is more 
than 1.3 billion gallons of potable water annually from the Navajo 
Aquifer (N-Aquifer) between 1969 to 2005 a span of 35 years. This water 
was used to transport pulverized coal in a pipeline (Black Mesa 
Pipeline) 273 miles to the Laughlin, NV, and the location of the Mohave 
Generating Station.
    The N-aquifer is the primary source of water for municipal users 
and tribal members within the 5,400 square mile Black Mesa area. All of 
the Hopi and many of the Navajo who live in the region take their 
water, which they use for drinking, subsistence farming and for 
religious purposes, from the same source. Since Peabody began using N-
aquifer water for its coal slurry operations, water levels have 
decreased by more than 100 feet in some wells and discharge has 
slackened by more than 50 percent in majority of monitored springs. 
There are reports that washes along the mesa's southern cliffs are 
losing outflow. There are also signs that the aquifer is being 
contaminated in places by low-quality water from overlying basins, 
which leaks down in response to the stress caused by pumping. Peabody's 
ongoing groundwater pumping, which is not covered by a reclamation 
bond, undercuts the sustainability of North America's oldest cultures, 
and continues to have a significant impact on tribal communities 
throughout the region.
    In 2010, an independent scientist at the University of Arizona 
completed a study investigating both Peabody's mine and the tribal 
communities' impact on the N-aquifer. This study demonstrated the 
following mine-related impacts and OSM's (coincidental) discretionary 
decisions and actions:
1.  In 1989, OSM set a damage-threshold for spring discharge at a 10% 
        reduction to discharge caused by the mine.
    As of 2009, Moenkopi Spring (sixty miles southwest of the mine) had 
declined by more than 26%. OSM maintains, however, that the decline is 
caused by tribal pumping or recent drought conditions.
    The University of Arizona study demonstrated that the declining 
rate of discharge from Moenkopi Spring expresses a strong, 
statistically significant relationship with the rate of Peabody's 
increasing withdrawals. Further, the spring has no statistically 
significant relationship with either local municipal withdrawals or 
local rates of precipitation.
    In 2008, OSM concluded that ``there have been and will be no 
impacts to these springs attributable to mining'' (OSM-CHIA 2008: 86). 
Subsequently, OSM removed the oversight of Moenkopi Spring from its 
regulatory purview.eee
2.  In 1989, OSM determined that water level decline at the community 
        of Kayenta (20 miles north of the mine) would be caused almost 
        entirely by Kayenta's groundwater pumping.
    As of 2009, the water level at Kayenta had dropped more than 106 
feet; the aquifer's structural stability is currently at risk of 
compaction at Kayenta.
    The University of Arizona study demonstrated a statistically 
significant relationship between Kayenta's declining water level and 
Peabody's increasing withdrawals. Further, there is no statistically 
significant relationship between this decline and Kayenta's 
withdrawals. In fact, the rate of Kayenta's withdrawals expresses a 
slightly decreasing trend since 1984 although the water level has 
continued to fall.
    In 2008, OSM concluded that the mine had not adversely affected the 
N-aquifer and completely removed structural stability from its 
regulatory purview.
3.  In 2008, OSM implemented Peabody's $3 million groundwater model for 
        regulatory purposes.
    According to the model report, ``a regional scale model cannot 
currently be developed for the basin that will accurately predict the 
impacts of pumping on individual springs'' (HSIGeoTrans & WEHE 1999: 5-
23). Similarly, the model cannot accurately simulate groundwater 
discharge to streams.
    Nonetheless, in 2008, OSM determined that, rather than using actual 
groundwater monitoring data, it will use the simulation results from 
Peabody's groundwater model for its annual evaluation of the mine's 
impact on springs and streams.
    Water is scarce in the desert Southwest, and large volumes of water 
derived from local watersheds serve the needs of the mines and cool the 
coal plants, drawing down aquifers, degrading river water quality and 
depleting one of the region's most valuable and scarce resources. 
Fallout from smokestack pollution and the vast quantities of CCW that 
have been dumped into mines over the past 45-50 years have degraded the 
quality of the remaining water supplies. Health advisories have been 
issued for most streams, rivers and lakes in the Four Corners, warning 
the public against neurological and cardiovascular damage from 
consuming local fish due to mercury contamination (in part due to 
mercury emissions from FCPP and NGS). The true costs associated with 
these environmental and public health impacts have never been 
internalized by the operators of the coal complex.
    The following table illustrates only one example of the gap in 
water prices among Dine living on the Reservation and those living off 
the reservation. Dine in Pinon, Az. (central Navajo Reservation) pay at 
least 20 times more per gallon than do residents in Glendale, Az 
(Phoenix area).




Transition the Navajo Nation for the sustainability of all Nations:
    The Navajo Nation is the size of Scotland. It is blessed with an 
abundance of resources that could provide the foundation necessary for 
a transition to renewable energy development. The Navajo Nation 
encompasses regions with ample wind, solar, and geothermal resources, 
along with vast expanses of land, including large reclaimed coal-mining 
tracts that are ideal for locating renewable energy facilities. The 
region's solar potential is some of the best in the world and certain 
portions of reservation lands have wind resource ratings capable of 
supporting utility-scale projects. Additionally, as a result of all 
three power plants' extensive interconnections to the electric grid 
there is a network of power lines whose capacity would be freed up for 
an expansion of renewable energy by phasing out the three coal-burning 
plants.
    Utility-scale development of either wind or solar energy resources 
alone has potential to offset job and revenue losses from the phase-out 
of the existing coal plants. An analysis by the US Department of Energy 
(DOE), for example, determined that constructing a wind energy project 
in Navajo County could generate up to 140 construction and operations 
jobs and more than $14 million in economic activity.
    If the Dine are to see their existence into the future they must 
develop clean energy economies instead continuing to advance a steadily 
declining coal-based economy.
    Beyond the tangible benefits, a transition away from the 
unfulfilling history of coal and toward clean energy aligns more 
closely to Dine fundamental laws and values.
    Building a new clean energy economy, one in which the viability of 
the Navajo Nation is included must be based on the following:
          Acknowledging the real value associated with land, 
        water, air and other natural resources on Dine lands.
          Acknowledging the significant adverse environmental 
        and health impacts of a coal based economy and the reliance on 
        the FCPP and NGS and related mine operations.
          Acknowledging that benefits from the sale of Dine raw 
        resources is directly disproportionate to the profits of the 
        sale or the recipient of cheap electricity.
          Creating legislation that would provide the Navajo 
        Nation the financial, political and regulatory means to pursue 
        real solutions in transitioning from fossil fuel electricity
          Developing privately-owned and tribal-owned clean 
        energy generation resources on Dine lands, such as wind and 
        solar; and,
          Subsidizing clean energy facilities rather than 
        fossil fuel facilities;
    The biggest question Dine face along with the rest of the world is, 
what happens after all the fossil fuel is gone. We have no choice but 
to embrace the renewable technology available and move forward with it.
Position of To Nizhoni Ani:
        1.  It is the position of To Nizhoni Ani that a decision by EPA 
        that would require the Best Available Retrofit Technology 
        otherwise known as BART that requires at minimum SCR for the 
        FCPP and NGS would be the most beneficial in terms of the 
        issues of the regional haze and visibility. More importantly, a 
        BART decision would also reduce the health impacts from the 
        pollutants for Navajos living in the region.
        2.  In lieu of declining coal resources, the Navajo Nation must 
        work towards incorporating into recent expired leases, a plan 
        to transition these areas into a solar generation facility and 
        to target brownfields instead of undeveloped lands. The purpose 
        of this plan is 1) to ensure continued revenues and jobs for 
        the Navajo Nation and 2) to eliminate health impacts to the 
        people.
        3.  The Navajo Nation must begin incorporating a plan for 
        continued revenues and jobs in place of the declining coal 
        mined at Kayenta and the Navajo Mine. Currently the development 
        of a Solar Energy Generation Facility on brown fields, is being 
        explored by grassroots groups, Black Mesa Water Coalition and 
        To Nizhoni Ani. At least 6,000 aces of mined lands is available 
        at this time. This alone is enough for more than 1000 MW of 
        power. A total of 68,000 acres of land is held in lease by 
        Peabody Western Coal Company. While some mining on hundreds of 
        acres of lease land has been complete for more than 15 years, 
        reclamation has not been completed by Peabody and none of the 
        lands have been transferred back to the Navajo Nation, to be 
        given back to the local residents for use.

           Currently the Black Mesa Water Coalition and To Nizhoni Ani 
        has completed a Solar Potential Study, conducted dozens of 
        community meetings to residents in the mine lease area as well 
        as residents in communities throughout Black Mesa. The purpose 
        of these community meetings is to educate for the purpose of 
        mobilizing the community.
        4.  Installation of Solar facilities on the CAP canals to 
        provide additional power to power the pumps that push the water 
        to Phoenix and Tucson or other power users. This would help 
        eliminate the evaporation of 75,000 acre feet of water 
        annually.
        5.  Make CAP self-sufficient.
                                 ______
                                 
    Mr. McClintock. Thank you very much for your testimony. Our 
next witness is Mr. David Modeer, General Manager of the 
Central Arizona Project, from Phoenix, Arizona. Welcome.

  STATEMENT OF DAVID MODEER, GENERAL MANAGER, CENTRAL ARIZONA 
                   PROJECT, PHOENIX, ARIZONA

    Mr. Modeer. Thank you, Chairs of the Committees, and 
Ranking Members, and Members of the Arizona Delegation, for 
allowing us to be here to discuss this issue with you today. I 
would first like to recognize our board president, Pamela 
Pickard, who represents the leadership of our board of 
directors, who is so engaged in trying to resolve this 
difficult issue.
    I think that it is important to understand a little bit 
about the history of this Central Arizona Project. It has a 
long history, and it is a very successful one, but it did not 
come without a number of compromises required by the State of 
Arizona.
    Two major compromises were needed in order to receive the 
authorization and funding by the Congress of the United States, 
the first being that Arizona would have to be become junior 
priority user of Colorado River Water, a significant 
concession.
    The second was the manner in which power would be generated 
to move water from the Colorado River, 336 miles, 3,000 feet 
uphill. The original concept was to construct hydropower 
facilities along the Grand Canyon, and not in the Grand Canyon, 
but coming closely on the heels of the finish of the completion 
of the Grand Canyon Dam, and was not viewed very favorably.
    Therefore, Secretary of the Interior Stewart Udall at that 
time brokered an environmental compromise that would allow the 
Federal Government, through the Bureau of Reclamation, to 
participate in the construction of the Navajo Generating 
Station.
    As a result of that decision the Bureau of Reclamation owns 
24.3 percent of the Navajo Generating Station to the benefit of 
the Central Arizona Project. For years the operators of the 
Navajo Generating Station have provided low cost reliable 
power, and have been attentive to the environment.
    In the 1990s, over $500 million was invested to deal with 
sulfur dioxide emissions. More recently the owners have 
voluntarily installed low NOx burners separated on 
over-fire air at a cost of $46 million.
    The Central Arizona Project uses water that results in a 
one percent increase. However, in 2009 the EPA has indicated 
that the installation of no NOx burners would 
probably not be sufficient and they would require selective 
catalytic reduction installations at a cost of over $500 
million.
    That results in a 17 percent increase in energy price to 
our users of Central Arizona Project water. With the 
installation of SCRs, it may require a bag house, which would 
control downstream particulate emissions from the plant.
    That results in a 33 percent increase in energy rates to 
our customers. That is a significant impact on our 
municipalities, our industry, but more importantly has a 
devastating impact on agricultural use in Central and Southern 
Arizona that depends on Central Arizona Project water.
    Such an increase would likely move Indian agriculture and 
non-Indian agriculture away from the ability to use Central 
Arizona Project water and drive them back to the unsustainable 
over-pumping of groundwater, the very thing that the Central 
Arizona Project was constructed to bring renewable water 
supplies into Central and Southern Arizona and prevent.
    The uncertainties that have been mentioned here today 
regarding the future of the Navajo Generating Station and the 
agreements that go along with it, create the very specter that 
the decision made by the owners could result in the closure of 
the Navajo Generating Station.
    That would be catastrophic for the Central Arizona Project 
and its users. For the Central Arizona Project, it would 
require us to move to the open market to find energy. That 
would result in a 50 to 300 percent increase over our current 
costs of energy.
    It would also remove the ability of the Central Arizona 
Project to market the excess power to provide for revenue for 
the repayment obligations that the State of Arizona has for the 
construction of the Central Arizona Project canal, and it would 
prevent the ability for those same revenues to be used to 
effect Indian water rights settlements.
    This is a devastating potential result for us. While 
looking at renewables and other types of energy far out into 
the future, there is no alternative to the Navajo Generating 
Station for the operation of a Central Arizona Project at this 
time, and there is no prospect for any immediate replacement of 
baseload power for the Central Arizona Project.
    Renewables do not provide baseload power, and would not 
allow for the continued operation of the Central Arizona 
Project. Thank you for the opportunity to be here today.
    [The prepared statement of Mr. Modeer follows:]

  Statement of David Modeer, General Manager, Central Arizona Project

    As General Manager of the Central Arizona Water Conservation 
District (CAWCD), I thank Chairman McClintock and Chairman Young, 
Ranking Member Napolitano and Ranking Member Boren of the 
Subcommittees, and other members of the two Subcommittees for the 
opportunity to testify today in this Oversight Hearing on ``Protecting 
Long-term Tribal Energy, Jobs and Keeping Arizona Water and Power Costs 
Affordable: The Current and Future Role of the Navajo Generating 
Station.''
    CAWCD, commonly referred to as the Central Arizona Project (CAP), 
was established in 1971 as the state agency that manages and operates 
the CAP system, collects revenues from ratepayers and, since 
substantial project completion in 1993, repays the federal government 
for the reimbursable costs of construction. Our goal at CAP is to 
provide an affordable, reliable and sustainable supply of Colorado 
River water to cities, industries, farms, and Tribal communities in a 
service area that includes more than 80 percent of Arizona's 
population. We have successfully achieved this goal for the past 25 
years.
Background
    Central Arizona Project, constructed by the Bureau of Reclamation 
(BOR) for the State of Arizona, is a multi-purpose water resource 
development and management project that delivers Colorado River water 
into central and southern Arizona. The largest supplier of renewable 
water in Arizona, CAP delivers an average of over 1.5 million acre-foot 
of Arizona's 2.8 million acre-foot Colorado River entitlement each year 
to municipal and industrial users, agricultural irrigation districts, 
and Indian communities (see attached map). CAP meets approximately 50 
percent of municipal demand within its service area, including 45 
percent of the City of Phoenix's total water demand and more than 50 
percent of the City of Tucson's water demand. In addition, 47 percent 
of the long-term CAP entitlement is dedicated to Indian Tribal use, 
while 41 percent of current CAP deliveries support non-Indian 
agricultural production.
    These renewable water supplies are critical to Arizona's economy 
and to the economies of Native American communities throughout the 
state. Nearly 90% of economic activity in the State of Arizona occurs 
within CAP's service area. CAP also helps the State of Arizona meet its 
water management and regulatory objectives of reducing groundwater use 
and ensuring availability of groundwater as a supplemental water supply 
during future droughts. Achieving and maintaining these water 
management objectives is critical to the long-term sustainability of a 
state as arid as Arizona.
    CAP infrastructure includes a 336-mile-long delivery system that 
moves water 3,000 feet uphill from the Colorado River. The system 
entails 14 pumping plants and one combination pumping/generating 
facility; 10 siphons that carry water under riverbeds and washes; three 
tunnels; more than 45 turnouts that connect the CAP aqueduct with 
customers' water delivery systems; a large storage reservoir; and a 
state-of-the-art control center. A large and reliable supply of 
baseload power is essential to operating CAP infrastructure and 
delivering water to its customers, including potable water treatment 
plants that must supply drinking water to millions of Arizona residents 
every day.
    CAP construction necessitated the development of new power 
generation facilities to provide a dedicated energy source for the 
operation of the system. The Colorado River Basin Project Act allowed 
the federal government to participate in the non-federal Navajo 
Generating Station (NGS), near Page, Arizona, to provide power for 
pumping CAP water as an alternative to building additional dams along 
the Colorado River. Construction of NGS was the result of an 
environmental compromise brokered by then-Secretary of the Interior 
Stewart Udall. NGS also was intended to help maintain and improve the 
economies of the Navajo Nation and the Hopi Tribe by providing revenues 
for the Tribal governments and high-paying jobs for Tribal members.
    NGS was constructed by the Salt River Project Agricultural 
Improvement and Power District of Arizona, now part of the Salt River 
Project (SRP). In addition to BOR and SRP, other participants in NGS 
are NVEnergy (formerly Nevada Power Co.), Tucson Electric Power Co., 
and Los Angeles Department of Water and Power. In addition to providing 
CAP pumping energy, NGS also provides electricity to retail customers 
in Arizona, Nevada and California. BOR's share of NGS's annual output 
is 24.3 percent, or 546,750 kilowatts per year for the benefit of CAP.
    CAP maintains an ongoing, constructive dialogue with BOR and other 
federal agencies, including the Environmental Protection Agency, to 
discuss issues of mutual interest and concern. CAP also works closely 
with its customers regarding their needs and concerns. Our ongoing 
focus includes collaborative efforts to:
          Manage water resources sustainably in partnership 
        with CAP customers, BOR, the Colorado River states, and other 
        stakeholders to assure long-term, affordable supplies of water;
          Maintain access to critical energy supplies, 
        including working collaboratively with the NGS participants to 
        reduce plant air emissions and to explore clean-energy options 
        for the future;
          Work with Tribes and other State and Federal parties, 
        as appropriate, to fulfill provisions of Indian water rights 
        settlements; and
          Collaborate with other agencies on data--and 
        information-sharing on water quality issues facing the Lower 
        Colorado River.
    In addition, CAP is currently evaluating and adopting management 
practices focused on energy conservation including the ``maintenance 
excellence program'' which strives to maximize efficiency of the 
pumping and operating systems; an extensive waste management recycling 
system; ``Green Fridays,'' a modified work schedule that limits the use 
of the facility one day a week to reduce energy costs.
Navajo Generating Station--Decisions that Impact Water and Power Costs
    Regulatory Issues: NGS is near numerous national parks, monuments, 
and wilderness areas, and controlling plant emissions has been and 
still remains a priority for CAP and the NGS participants. Pursuing 
that commitment, in the1990's NGS participants invested more than $400 
million in scrubbers to reduce sulfur dioxide emissions. In 2008, the 
plant began voluntary installation of additional environmental controls 
to reduce smog-forming nitrogen oxide (NOx). Installation of 
those emissions controls is now complete. The low-NOx 
burners with separated over-fire air (LNB/SOFA) cost approximately $46 
million for installation on all three units at NGS. This price tag 
translates into expected increases in CAP energy rates of about 1 
percent.
    Despite these ongoing investments in air quality improvements, NGS 
is now the focus of additional proposed regulatory requirements. The 
U.S. Environmental Protection Agency (EPA) is in the process of setting 
new rules to control NOx emissions at coal-burning power 
plants, including NGS, under the Regional Haze Rule of the Clean Air 
Act. CAP has been doing its part to support improvements in air quality 
and visibility associated with NGS. It is important to note, however, 
that the Clean Air Act identifies factors such as compliance costs, the 
remaining useful life of a facility, the degree of visibility 
improvements that might reasonably be anticipated from the use of 
existing technology, and other considerations in determining the 
appropriate technology to achieve improved visibility. CAP urges full 
consideration of these factors by the EPA in their regulatory decision 
making regarding the NGS.
    Potential Regulatory Impacts: While EPA is looking at low-
NOx burners such as those now installed at NGS, the agency 
is also considering a different control system known as Selective 
Catalytic Reduction (SCR). In comparison to the cost impact of low-
NOx technology, SCR units alone would result in a 17% cost 
increase in CAP energy rates. The SCR system, combined with baghouses 
(which may be needed for downstream particulate control), has a 
potential price tag of more than $1 billion, as much as 20 times the 
cost of low-NOx burners. If the SCR/baghouse option is 
required at NGS, CAP energy rates could climb 33 percent higher than 
2010 rates (or even higher if financing of less than 20 years is 
required). In both instances, these higher energy costs would affect 
water rates for the majority of Arizona's population. Agricultural 
water users, both Indian and non-Indian, would be particularly hurt by 
these higher rates.
    Impacts from such regulatory requirements extend beyond the 
increased costs for energy and water. As authorized by Congress, NGS 
power not used for CAP pumping is sold to help repay CAP construction 
costs and to help fund Arizona Indian water rights settlements. These 
amounts are not trivial. Revenues from the sale of surplus NGS power 
now contribute about $22 million per year toward the $57 million in 
annual repayment obligations for the CAP. In the future, new contracts 
for the sale of surplus NGS power are expected to contribute $50 
million or more per year toward CAP repayments and toward Indian water 
rights settlements, including those approved by Congress in the 2004 
Arizona Water Settlements Act.
    The extremely high costs of the SCR/baghouse option could 
jeopardize continued operation of the NGS facility, with severe 
economic impacts to CAP users and to the Navajo Nation and the Hopi 
Tribe. Because a number of critical uncertainties face the Navajo 
plant, including the renewal of land and water leases and future 
federal air quality regulations, a near-term requirement to install SCR 
at Navajo raises a risk of plant closure. The NGS partners operate the 
Navajo plant as a revenue-generating business. Rather than risk a huge 
and potentially unrecoverable investment in retrofitting the plant with 
SCR technology prior to the resolution of these uncertainties, NGS 
participants have indicated they may pursue the path of closing the 
plant and meeting their energy needs through other means. As a consumer 
of NGS power rather than a retail marketer of power, CAP would be 
catastrophically impacted by closure of NGS, as would a number of 
Arizona Indian tribes.
          Should the NGS facility cease operations, CAP would 
        have to acquire a substitute source of pumping power at market 
        rates. Using several forecasts, CAWCD estimates that CAP 
        pumping energy costs could increase by 50 to 300 percent 
        (rising from $65 per acre foot to $95--$180 per acre foot) by 
        2017.
          NGS employs 545 full-time employees, nearly 80 
        percent of whom are Navajo. The Kayenta Mine, which supplies 
        coal to the plant, employs another 422 Tribal members. In 2010, 
        the power plant and mining operations contributed $137 million 
        in revenue and wages to the Navajo Nation and its Tribal 
        members and $12 million annually (88 percent of the Tribe's 
        annual operating budget) to the Hopi Tribe.
          Indian Tribes would lose access to millions of 
        dollars from the sale of surplus NGS power that otherwise could 
        be available to assist with implementing their water rights 
        settlements.
          Agricultural users of CAP water could find the use of 
        CAP water uneconomical. Non-Indian agricultural users could be 
        forced to return to unsustainable groundwater pumping. Tribal 
        users, having accepted delivery of CAP water in lieu of 
        pursuing their claims to other water rights including 
        groundwater, could find their newly-developed agricultural 
        enterprises to be worthless investments.
    Collaboration and Information: CAP, along with other interested 
stakeholders, has participated since January 2011 in a series of 
collaborative dialogues to identify reasonable solutions that would: 1) 
meet the energy needs of CAP so that the project can fulfill its 
mission of providing affordable and reliable water supplies to Arizona 
and Tribal communities; 2) result in continued reductions in regional 
haze; 3) uphold provisions of the 2004 Arizona Water Settlements Act; 
and 4) expand clean energy opportunities, including use of renewable 
energy. To date, these discussions continue but have not resulted in a 
consensus solution.
    In addition, the Department of the Interior, working with the 
Department of Energy and the National Renewable Energy Laboratory, is 
drafting a proposal to undertake a study of energy infrastructure 
development within the Colorado Plateau region of the Hopi and Navajo 
reservations. CAP supports initiation of this study. Pumping of CAP 
water requires large amounts of baseload power to meet the project's 
24/7 operational requirements. No options exist now or in the immediate 
future of sufficient scale to supply the baseload power needs of the 
energy supply for CAP at a reasonable cost. This proposed study could 
provide critical information and analysis to assist CAP in evaluating 
and planning for future energy needs.
    In conclusion, CAP's mission to provide reliable, renewable and 
affordable water supplies to its municipal, industrial and Indian and 
non-Indian agricultural customers is a multi-faceted and highly 
collaborative effort. Continued access to consistent and reasonably-
priced energy supplies is critical to the operation of the CAP system. 
Until renewable energy alternatives mature to the point where they can 
provide continuous baseload supplies, the NGS will remain essential to 
the CAP and its customers. I welcome the opportunity to discuss these 
issues with you, and I extend an invitation to all members of the 
Subcommittees to visit the Central Arizona Project at an appropriate 
time.



                                 
    Mr. McClintock. Thank you for your testimony. Our final 
witness is Mr. Dan Thelander, a Partner in Tempe Farming 
Company, from Maricopa, Arizona. Welcome.

             STATEMENT OF DAN THELANDER, PARTNER, 
            TEMPE FARMING COMPANY, MARICOPA, ARIZONA

    Mr. Thelander. Thank you, Chairman McClintock, and Members 
of the Subcommittees. My name is Dan Thelander, and I am a 
partner in our family farm, Tempe Farming Company. We farm 
cotton, wheat, alfalfa, on about 2,500 acres in Pinal County, 
which is about 40 miles south of Phoenix, Arizona.
    Maricopa Stanfield Irrigation and Drainage District, MSIDD, 
provides our irrigation water. MSIDD covers about 70,000 acres 
and every year delivers about 110,000 acre-feet of groundwater, 
and 160,000 acre-feet from the Central Arizona Project.
    As you have heard, the CAP gets its power from the Navajo 
Generating Station. MSIDD, the Family Farm Alliance, and many 
others from Arizona, have been working to raise public 
awareness of the huge impact that this EPA decision could have 
on our livelihoods.
    With the already completed installation of low 
NOx burners at a cost of about $45 million, the 
increased cost to the power customers will raise the cost of 
CAP water in the range of about 50 cents per acre-foot. On my 
farm, we use about 6,700 acre-feet of CAP water per year, which 
will equate to an increased annual cost of about $3,300.
    Unfortunately, with the EPA considering the second option, 
the SCR will bag houses, that billion-dollar cost at NGS 
translates into an increase of water rates to our district and 
my farm to the tune of at least $16 per acre-foot.
    So for the 6,700 acre-feet of CAP water that our farm buys, 
that equals $107,000 every year. Power companies will have the 
luxury of passing along their increased costs to their 
hundreds-of-thousands of customers.
    Can Tempe Farming pass along its $107,000 cost increase? 
The answer is no. Our cotton and wheat is sold on the world 
market, and there is no way that I can just raise my prices 
just because my costs go up.
    Local dairies that buy our alfalfa won't be able to raise 
their milk prices to pay for a huge increase in feed costs. 
MSIDD pays about $41 per acre-foot of CAP water. A $16 increase 
will be devastating to the farmers in my county.
    The bottom line is that we will not be able to afford the 
water. MSIDD would have to turn to increased groundwater 
pumping, but the district cannot physically pump an additional 
160,000 acre-feet to replace the CAP water.
    So what happens then? Here is my prediction. As much as 
one-third of the district may go out of production for lack of 
water. A lot of farmers go out of business, and the lack of 
farming will hurt the entire community because farmers will buy 
less tractors, less fertilizer, less labor will be needed, 
which equals higher unemployment.
    What would be gained by forcing NGS to do the expensive 
SCRs? The additions of SCRs is not for health reasons. It is 
for visibility only, but the gain will be so slight that the 
human eye won't even be able to detect the difference.
    Why would the EPA do this and cause so much economic 
hardship on all of us? An April 3 Time Magazine interview with 
EPA Administrator Lisa Jackson gives some insight into the 
mindset of the EPA.
    Time asked her the question, ``Can the United States 
balance environmental protection and job creation?'' She 
answered and I quote, ``They have been balanced in this country 
for 40 years as long as there has been an EPA. We have done it 
while our country has prospered.''
    I can tell you that if the EPA requires the additional SCRs 
that these goals will not be balanced in my community. Far from 
prospering, our farmers and businesses will struggle to make 
ends meet, and we will have more unemployment.
    I submit to you that sometimes there is a limit to what 
businesses can absorb in increased costs by government 
regulations, and this is one of those times. Pinal County 
agriculture cannot absorb the huge increase in water costs that 
the SCRs would cause.
    Chairman McClintock, and Young, and Members of the 
Subcommittees, please do whatever you can do to deter the EPA 
from forcing the expensive SCRs on the Navajo Generation 
Station. Thank you for inviting me here today.
    [The prepared statement of Dan Thelander follows:]

      Statement of Dan Thelander, Partner, Tempe Farming Co., and 
 Vice President of the Board of Maricopa Stanfield Irrigation District

    Chairman McClintock, Chairman Young, and Members of the 
Subcommittees,
    My name is Dan Thelander. I am a partner in our family farm, Tempe 
Farming Co. We farm in Pinal County, which is about 40 miles south of 
Phoenix, Arizona. We produce cotton, durum wheat, barley, and alfalfa 
on about 2500 acres.
    We are water customers of Maricopa Stanfield Irrigation and 
Drainage District, (MSIDD) and I serve on the Board of Directors. MSIDD 
serves about 70,000 acres and every year delivers about 110,000 acre 
feet of ground water and 160,000 acre feet from the Central Arizona 
Project. All together, our district and 3 other large irrigation 
districts in Pinal County utilize about 60% of the agricultural water 
that the CAP delivers annually, or about 400,000 acre feet per year to 
about 200,000 acres.
    Most of you are aware that the Bureau of Reclamation is a part 
owner of the Navajo Generating Station and that the CAP uses its power 
to pump water from the Colorado River into the CAP Aqueduct, which in 
turn runs to our district. MSIDD, the Family Farm Alliance, and many 
others from Arizona have been working to raise public awareness of the 
huge impact that an EPA decision could have on our livelihoods.
    Navajo Generating Station is a fairly new plant and very clean, but 
the EPA is debating the possibility of requiring Salt River Project, 
the operator of NGS, to install additional equipment to improve 
visibility near the plant.
    Salt River Project, part owner and operator of NGS, has already 
completed installation of low NOx burners at a cost of about 
$46,000,000. This, in turn, will be passed along to the power customers 
and will raise the cost of CAP water in the range of $.50 per acre 
foot. On my farm, we use about 6700 acre feet of CAP water per year 
which will equate to an annual cost of about $3300.
    Unfortunately, the EPA is considering a second option. It is 
selective catalytic reduction (SCR) with bag houses. This would cost 
something north of $1 billion dollars! This billion dollar cost at NGS 
translates into an increase of water rates to our district to the tune 
of at least $16 per acre foot. When you do the math on that for 6700 
acre feet of water that our farm buys, it equals $107,000 every year.
    Power companies will have the luxury of passing along the increase 
in costs to their hundreds of thousands of customers. Can Tempe Farming 
Co. pass along a $107,000 cost increase to our customers? The answer is 
NO. Our cotton and wheat is sold on a world market, and there is no way 
that I can just raise my prices just because my costs go up. Local 
dairies that buy our alfalfa won't be able to raise their milk prices 
to pay for a huge increase in feed costs.
    MSIDD currently pays about $41 per acre foot for CAP water. A $16 
increase will be devastating to the farmers in my county. The bottom 
line is we will not be able to afford the water. The CAP was supposed 
to reduce groundwater pumping in Central Arizona, but if farmers can't 
afford the water, MSIDD would have to turn to increased groundwater 
pumping, which. Although groundwater pumping will be much less costly 
than the CAP water, the district cannot physically pump an additional 
160,000 acre feet to replace the CAP water. So, what happens then?
    Here is my prediction:
        1)  many acres don't get farmed, possibly as much as 1/3 of the 
        district may go out of production for lack of water (This 
        happened in the 1980's prior to CAP water for our area. Farmers 
        had relied totally on groundwater, and as the water table 
        dropped, many thousands of acres were fallow)
        2)  a lot of farmers go out of business
        3)  those farmers that hang on make less money
        4)  the lack of farming hurts the entire community because the 
        economic ripple effect means less money to buy tractors, 
        fertilizer, seeds, and, yes, less labor needed, which all 
        equals higher unemployement
    Apart from the straight economics involved, one of the major 
reasons for the creation of the CAP was to preserve groundwater for 
future generations and for drought purposes. Since 1987, when the CAP 
was started, MSIDD has delivered 3.8 million acre feet of renewable CAP 
water, which has essentially preserved that same amount of water in 
underground aquifers. Prior to the CAP, groundwater levels were 
declining yearly.
    Another resulting problem from excessive pumping was land 
subsidence, which was occurring regularly. If farmers cannot afford the 
CAP water and deliveries cease, we can expect this overdraft of 
groundwater and the subsidence problems to begin again. Through time, 
the dropping groundwater levels will increase pumping costs, which will 
continue to pressure farmer's ability to survive.
    This is doubly frustrating because in the Arizona Water Settlements 
Act of 2004, farmers provided their allocation of CAP water which was 
used to settle claims of the Gila River Indian Community. In return for 
giving up their long range allocation, agriculture was promised 
adequate and affordable CAP water through the year 2030. Now, the same 
government that we struck a deal with in good faith is considering 
artificially driving up the cost of that water to unaffordable levels.
    What would be gained by forcing NGS to do the expensive SCRs 
instead of the lower cost low nox burners? Less lung cancer cases or 
heart attacks? No, remember, the reasons cited for the additions of 
SCRS is not for health issues. It is for visibility reasons only, and 
the air will be ever so slightly clearer, so slight that the human eye 
couldn't even detect the difference.
    Why would EPA do this, and cause so much economic hardship on all 
of us?
    An April 3rd Time Magazine interview with EPA Administrator Lisa 
Jackson gives insight into the mindset at EPA. Time asked her the 
question, ``Can the U.S. balance environmental protection and job 
creation?''
    She answered, and I quote '' They have been balanced in this 
country for 40 years, as long as there's been an EPA. We've done it 
while our country has prospered'' End quote.
    If the EPA requires the additional SCRs, I can tell you that those 
goals won't be balanced in my community.
    Far from prospering, our farmers, workers, and businesses will 
struggle to make ends meet.
    I submit to you, that some times there is a limit to what business 
can absorb in increased costs of government regulations, and this is 
one of those times. Pinal County agriculture cannot absorb the huge 
increase in water cost that the SCRs would cause.
    Chairman McClintock, Chairman Young, and Members of the 
Subcommittees, please do what ever you can to deter the EPA from 
forcing the expensive SCRs on Navajo Generating Station.
    Thank you for inviting me here today.
                                 ______
                                 
    Mr. McClintock. Thank you very much. We will now move to 
questions, and I would begin with Mr. Silverman. I want to nail 
this down right away. We are told, oh, the EPA doesn't intend 
to close the Navajo Generating Station. What is the impact of 
imposing a billion dollars of new requirements on that station?
    Mr. Silverman. Well, as stated in my testimony, we are in a 
very unique position at NGS. The participants are in the 
beginning stages of negotiating an extension of the life of the 
project.
    Currently, it expires, the resource documents, the lease on 
the plant site, the grants of right-of-way for transmission and 
the railroad that brings coal from the Black Mesa, all of these 
expire in 2019 and later.
    And so we are busily trying to extend that life, but we are 
not there yet. Once we have reached agreement on those 
documents, they must be submitted to the Department of the 
Interior, at which point a NEPA process begins, which we have 
estimated could take as long as six years to complete.
    The participants would have no way of knowing the outcome 
and whether or not the plant could continue at that point. 
Meanwhile, the EPA might have imposed the installation of SCRs 
and possibly bag houses.
    You could not amortize the costs, the one billion plus 
costs, within that few years, and so the participants would be 
faced--and not because the EPA has mandated it, but because 
they would have to make that economic determination whether to 
close the plant.
    Mr. McClintock. So the EPA doesn't close the plant. The EPA 
simply imposes such enormous additional costs on the plant that 
it sinks it. Is that accurate?
    Mr. Silverman. I might argue with your choice of words, but 
the outcome is the same.
    Mr. McClintock. So by imposing the costs, they end up 
closing the plant?
    Mr. Silverman. Yes, sir.
    Mr. McClintock. This is the kind of semantics that we are 
used to dealing with from the environmental left, and it is 
infuriating. You mentioned how much of the proceeds of the 
economic activities of the Navajo Generating Station are going 
to The Navajo Nation?
    Mr. Silverman. The total, I believe--the total that I 
mentioned was $140 million.
    Mr. McClintock. So, $140 million a year going The Navajo 
Nation as royalties and as fees. So if the Navajo Generating 
Station is forced to close because of the imposition of these 
regulations, what happens to that $140 million going to The 
Navajo Nation?
    Mr. Silverman. It goes away.
    Mr. McClintock. We have been told, well, the Navajo 
Generating Station is one of the biggest sources of emissions 
among power plants in the West. Is it not also one of the 
biggest generators of electricity in the West?
    Mr. Silverman. Yes, sir, it is, and that is a dilemma in 
describing, for example, NOx emissions, which may 
because it is so big be the third largest, but if you look at 
it on a basis of kilowatt hours produced, actually 297th.
    Mr. McClintock. And the obvious intention by the Minority 
is to mislead folks into believing that this is a source of 
monumentally reckless emissions. In fact, have you not made 
enormous investments in emissions control?
    Mr. Silverman. Mr. Chairman, we absolutely have. It is well 
in excess of a half-a-billion dollars for initially the 
particulate control at 99-1/2 percent, and the SO2 control 
scrubbers in the 90 percent removal, and most recently as you 
have heard today, the over-fire air at $46 million.
    Mr. McClintock. And am I correct that the new EPA 
considerations of the regulations is not over health related 
issues, but over view shed issues?
    Mr. Silverman. It is. In fact, a regional haze is an issue. 
It is a visibility issue and not a health issue.
    Mr. McClintock. And the assumption obviously is that it is 
the power plant rather than everything from forest fires to 
atmospheric conditions that is contributing to the haze in the 
area. Is it correct that once those billion dollars of 
regulatory costs are imposed in a theoretical occasion that the 
plant could actually remain open under that whole burden, would 
there be any difference visible to the naked eye in haze over 
the Grand Canyon?
    Mr. Silverman. Mr. Chairman, we have contracted with an 
independent consultant to perform visibility modeling based on 
the results, and which used EPA's only models to determine the 
assumptions, and we concluded that NOx reduction 
from installation of SCRs resulted in imperceptible visibility 
improvements.
    Mr. McClintock. We also have been told of the conditions of 
poverty still suffered by many in The Navajo Nation. What would 
the impact of the closure of the Navajo Station be to poverty 
rates in The Navajo Nation?
    Mr. Silverman. Well, as has been testified to today, I 
don't know about the poverty rate, but certainly a loss of a 
thousand permanent jobs, and during the course of a year, a 
thousand temporary jobs.
    Mr. McClintock. Thank you very much. The Chair would also 
add that we have been joined by Congressman Schweikert of 
Arizona, and I would ask for unanimous consent that he be 
allowed to sit with the Subcommittees and participate in the 
hearing. Hearing no objection, so ordered. And now I yield to 
the Ranking Member, Ms. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair, and just as a little 
bit of a--not housekeeping, but rather to Mr. Thelander from 
the Tempe Farming, is the County of Pinal one of four to 
receive USDA subsidies?
    Mr. Thelander. I am sorry, Ma'am, but I could not hear your 
question.
    Mrs. Napolitano. I am sorry. The county, Pinal County, does 
it not receive USDA subsidies for farming?
    Mr. Thelander. Yes, our farming company does participate in 
government farm programs, yes, Ma'am.
    Mrs. Napolitano. OK. Because the USDA website indicates 
that it received $443 million from 1995 to 2009, and $38 
million in 2009 alone, and Pinal County, $668,000. So there is 
help in that area?
    Mr. Thelander. Yes, Ma'am, the farmers in our area have 
participated in government farm programs, just as they have all 
across the United States.
    Mrs. Napolitano. OK. And to Mr. Modeer and Mr. Silverman, 
not in percentage, but in pennies per kilowatt per hour, can 
you provide the following information? What is the current cost 
of power produced at NGS in cents per kilowatt, and the cost of 
power produced if SCR technology is installed? And then the 
cost amortized over 20 years, and what alternatives do you have 
for replacement power, and how does the costs compare in cents 
per kilowatt hour? Usually it is in percentages. I want it in 
cents, and if you can break it down.
    Mr. Silverman. Well, the current number, the production 
costs are 3-1/2 to 3.8 cents per kilowatt hour. I would have to 
provide you for the record and will do that based on your other 
assumptions.
    Mrs. Napolitano. If you would, please.
    Mr. Silverman. In terms of replacements, currently of 
course coal-fired generation would not be a replacement for the 
Navajo. The most likely replacement would be gas-fired 
generation.
    Renewables. There just are not enough renewables to replace 
2,250 megawatts anywhere near a reasonable period of time.
    Mrs. Napolitano. OK. To Mr. Masayesva, how has the strip 
mining impacted the Hopi Tribes' groundwater supply?
    Mr. Masayesva. The coal slurry operation consumed over 45 
billion gallons of water before the slurry line was forced to 
shut down at the end of the December of 2005, and that amount 
of water as I have stated in my testimony would have sustained 
the entire Hopi Nation for over 300 years.
    Mrs. Napolitano. Thank you, and Mr. Johnson, can you put 
the cost of water in perspective from the Navajo aquifer, how 
much does the Navajo pay, and how does that compare to that of 
Peabody?
    Mr. Johnson. I thank you for the question. There is an 
acre-foot of water, and there are 325,851 gallons. Now, if you 
add and price that with a penny, that is $3,258. That is what 
my community is paying, and Peabody is paying at an industrial 
rate of $900 per acre-foot for their mining operation.
    Mrs. Napolitano. That is a very stark comparison. And to 
Mr. Silverman and Mr. Modeer, it has been 12 years since the 
EPA established the Regional Haze Rule in 1999 to control 
pollution in a Class One area.
    In the preliminary BART ruling which is due out late this 
summer, and the final ruling due in 2012, the owners would have 
to install technology within five years, or by 2017. Is this 
really a surprise at all after almost two decades since the 
Haze Rule was made that compliance would be required?
    Mr. Silverman. It is not a surprise, Congresswoman, but it 
is a dilemma as I have outlined previously with respect to the 
timing of the renewal of the resource documents necessary to 
keep the life of the Navajo Generating Station after 2019.
    Mr. Modeer. Well, the Regional Haze Rule that will be made 
by the EPA, a preliminary ruling sometime this summer, and a 
final ruling sometime after that, has a significant impact.
    And as I testified on the Central Arizona Project, it is 
our single source of power. We are the largest power consumer 
in Arizona, and has 95 percent of the power supply, and it has 
a substantial impact on the cost of our operation, and the cost 
of water to our areas customers who use and depend upon the 
reliability, and sustainability of the Central Arizona Project 
water.
    Mrs. Napolitano. Thank you.
    Mr. McClintock. Thank you very much. Mr. Gosar.
    Dr. Gosar. Mr. Silverman, and Mr. Masayesva, in your 
testimony, you directly stated that Native Americans have been 
exploited by the operators of the generating station. I was 
wondering if you could repeat what percentages of employees at 
the Navajo Generating Station are Native Americans again?
    Mr. Silverman. Currently, over 80 percent of NGS employees 
are Navajo, which equates to over 450 Navajo people.
    Dr. Gosar. And what is the average salary for these 
employees?
    Mr. Silverman. With benefits, $105,000 a year, well above 
the average for the area.
    Dr. Gosar. So I am in Coconino County, and so am I am not 
mistaken, the average in Coconino County for the jobs that are 
available is about $48,000 is it not?
    Mr. Silverman. That sounds consistent with our 
understanding.
    Dr. Gosar. Are there any other jobs on The Navajo Nation or 
Hopi villages that pay over a hundred-and-some-thousand dollars 
that you are aware of?
    Mr. Silverman. Not that I am aware of.
    Dr. Gosar. OK. Mr. Justice, do you happen to know what an 
average job in the Page area pays, excluding the plant?
    Mr. Justice. It would be a service entry job in the tourism 
industry, and I would say it would be very, very low, right at 
the poverty level.
    Dr. Gosar. So probably about $20,000 or less, with no 
benefits?
    Mr. Justice. I would say so, yes, because of the jobs are 
part-time jobs and are seasonal.
    Dr. Gosar. And in your testimony, you testified that the 
owners and contractors employ more than a thousand temporary 
skilled workers during the annual overhauls. What happens when 
it coincides with the area's tourism off-season? Any idea on 
the average on how many Native Americans get those jobs, Mr. 
Silverman?
    Mr. Silverman. During the annual outage period, the 
percentage of workers at the NGS, both SRP employees and 
contractors, increases to around 90 percent.
    Dr. Gosar. And can you give me for those couple of months 
in doing that what kind of pay do those jobs provide?
    Mr. Silverman. On average, $25,000 for the two months.
    Dr. Gosar. Really? Wow. And the other side keeps talking 
about jobs. Interesting. Now, there is another problem as I 
understand about renewables, is that not only are they not 
available, but there are also the same impediments that you are 
facing with the NEPA processes, because I know that the Navajo 
community has been trying to put up some wind generators that 
have been held back by the Environmental Protection Agency with 
regard to actually being put on-line. Are you aware of some of 
those same implications to you?
    Mr. Silverman. We are aware.
    Dr. Gosar. And there is no way--I mean, I would like an all 
of the above type of a policy, and so there is no way that we 
could actually put renewables at this stage in your judgment to 
facilitate that power, right?
    Mr. Silverman. No, sir.
    Dr. Gosar. From Mr. Modeer, how do you feel about that?
    Mr. Modeer. Well, the Central Arizona Project has to have 
baseload power. We operate 24 hours a day, 7 days a week, and 
most of our pumping is done during the nighttime hours to 
reflect economies of electrical use.
    The replacement of that kind of power with renewables 
simply does not work. I could be employed as we are studying 
internally to use for peaking powers at some point in time in 
the future, but it simply does not provide baseload power, and 
it would not be something that would be sufficient for the 
pumping of electrical needs of the Central Arizona Project.
    Dr. Gosar. Mr. Thelander, I know that Arizona has this 
history of ranchers and farmers giving up their water in heroic 
aspects. I mean, the Teddy Roosevelt Dam was one of those, in 
which everybody benefitted for the whole area.
    And CAP water and Lake Powell are the same way. Isn't there 
an implied or actually an explicit contract with those farmers 
and ranchers, particularly in the Pinal area in regard to this 
water?
    Mr. Thelander. Yes, we heard earlier about the large water 
settlement that was done to settle Indian water rights, and the 
farmers in my area gave up our long-term right to buy CAP water 
in return for affordable CAP water.
    And so we are supposed to have affordable water until the 
year 2030, but if the CAP raises the cost of water $16 a foot, 
it will not be affordable, and in my opinion that is breaking 
the promise that was given to us when we went into this big 
water settlement.
    Dr. Gosar. Mr. Thelander, if we were to put the businesses 
in the southern part of Arizona out of business, particularly 
the farmers, are we able to feed ourselves in this country?
    Mr. Thelander. Well, I guess the answer would be that we 
can put the farmers in Pinal County out of business, and the 
country is not going to go hungry, but overall these things are 
accumulative around the country, and if we put the farmers out 
of business in Pinal County, there goes the alfalfa production, 
the corn production, that goes to dairies that provide milk 
products for the Phoenix area, the Arizona area.
    And so, yes, it is going to make an impact, and these types 
of things around the country that have an impact, they all add 
up.
    Dr. Gosar. All right. Thank you very much.
    Mr. McClintock. Mr. Grijalva.
    Mr. Grijalva. Thank you, Mr. Chairman, and I want to thank 
the community members from the Hopi and The Navajo Nation for 
providing the Committee and the Members with the very important 
and necessary historic perspective on this discussion.
    I fully realize and appreciate the economic realities that 
The Navajo Nation and the Hopi Nation face with regard to the 
generating station, and I say that because I think that we have 
a water settlement, an Indian water settlement, in Arizona 
because of past abuses and exploitation of a very valuable and 
necessary resource, which is water.
    I would suggest to my good friends on the Committee that 
the exploitation and abuse of resources with regard to Indian 
country in Arizona was not limited to water, and it was 
extended to all extractions, including the one that we are 
talking about today.
    Nevertheless, we are in this time now, and we have to deal 
with the immediate, and I was going to ask Mr. Modeer that part 
of the discussion today had to do partially with increasing the 
portfolio of energy sources.
    Can you talk about that a bit, and then for both yourself 
and I think Mr. Silverman, to the next question, which would 
have to do with the alternatives to whatever rulemaking or 
decision making recommendation that comes out from the EPA.
    We are assuming that this is going to be something that 
will break the bank and cause this economic collapse that we 
have been talking about most of the day. I don't think that is 
going to happen, but that is why we are here.
    Discussions of alternatives that begin to reach that 
reasonable accommodation that we spoke of earlier, have those 
gone on and are all the stakeholders willing to work, and 
working on alternatives? So if we could begin with you, Mr. 
Modeer.
    Mr. Modeer. For the Central Arizona Project, we have been 
internally doing a considerable amount of study and research on 
the manner in which renewables might fit into our energy 
portfolio for the future.
    As I said earlier, I think right now we are looking at them 
in terms of a source for peaking power, but certainly we 
recognize that at some point in the future that the Navajo 
Generating Station may very well run out of its useful life.
    So looking at the various types of energy, whether it is 
renewable types of energy, or whether it is modular or nuclear, 
or participating in other energy projects that may be 
constructed in the future, and something that is prudent for us 
to study at this point in time because it takes a significant 
period of time to develop those energy alternatives.
    Mr. Grijalva. OK. There is a finite to the extraction, the 
coal. There is a finite point, and as you talk about a 
transition to the more environmentally clean technology, and we 
are debating which is better, and does it suffice, and you have 
mentioned that in your testimony, we are also talking about a 
transition potentially to alternative energy sources given the 
finite situation with the coal. Is that what you have 
mentioned?
    Mr. Modeer. We are. I think that we have been engaged with 
a number of stakeholders since January of 2011 to look at what 
is an acceptable pathway to resolve the issues that we are in 
conflict with over here.
    Part of that discussion involves the potential of a study 
by the Department of the Interior and the Department of Energy, 
and the National Renewable Lab is to look at how different 
forms of energy generation can be developed in both the Navajo 
and the Hopi lands, and in other parts of Arizona, to resolve 
some of these issues and the transition----
    Mr. Grijalva. Do you see parallel lines that we are talking 
about, the potential conversation to other sources, and the 
potential transition to different technology? Are they parallel 
or are they in conflict?
    Mr. Modeer. I think that is the intent that the majority of 
the stakeholders would like to see this process moving in 
parallel to provide us the information needed to make a very 
thoughtful decision about where to go for the future.
    Mr. Grijalva. We appreciate that.
    Mr. Silverman. I don't know that I can add to what General 
Manager Modeer has said. The negotiations amongst stakeholders 
are not concluded, and it is not clear what the outcome will 
be.
    Mr. Grijalva. OK. But the process is ongoing?
    Mr. Silverman. The process is underway, and it is being 
done in good faith by all parties.
    Mr. Grijalva. All right. Thank you, Mr. Chairman.
    Mr. McClintock. Mr. Schweikert.
    Mr. Schweikert. Thank you, Mr. Chairman, and thank you for 
letting a financial services person come and visit your 
Committee. Being someone who also spends a lot of time up in 
Indian lands, and this is a really big deal to our state, and 
has a real impact, and to Mr. Modeer, help educate me a bit. 
The baseload for the CAP is what?
    Mr. Modeer. Baseload power refers to the fact that the 
power is constant, and it is always available to us. It is not 
intermittent due to weather or nighttime, which is for solar 
and for when the wind doesn't blow, you don't have wind energy.
    So baseload power means a constant source of power that is 
there 24 hours a day.
    Mr. Schweikert. How big is the baseload that you all use 
now?
    Mr. Modeer. We use almost 500 megawatts of power on an 
annual basis, the largest user in Arizona.
    Mr. Schweikert. And you mentioned before, Mr. Modeer, that 
it was in the evenings that you did much of your pumping?
    Mr. Modeer. That is correct. We do a majority of our 
pumping in the nighttime hours because it is more efficient 
energy wise to move water during that period of time, and 
certainly toward the end of the year lessens our need to go to 
the open market for power when we have run through our amount 
of the Navajo Generating Station.
    Mr. Schweikert. So what do you peak at in total usage?
    Mr. Modeer. We deliver a maximum of about 3,700 feet per 
second out of the Mark Wilmer Pumping Plant
    Mr. Schweikert. But you were just addressing that you were 
at 500?
    Mr. Modeer. 500 megawatts of power, the total for the CAP 
on an annual basis.
    Mr. Schweikert. And do you ever use more than that?
    Mr. Modeer. And our peak pumping comes out of the Mark 
Wilmer Station and off the Colorado River, where we have six 
60,000 horsepower pumps. It consumes a tremendous amount of 
energy.
    Mr. Schweikert. And this is for anyone in the room. If you 
have never gone and see the siphons and the lifts, it is 
stunning, the scale of it. OK. Let us say right now that, let 
us say, tomorrow, that we are going to move to an environment 
where tomorrow you have to move to alternative energies, and 
you need 500 megawatts.
    What would it take to get there? I mean, is that even 
practically possible even in the near term, let alone in the 
long term?
    Mr. Modeer. My personal opinion is that I don't believe it 
is practical that you could replace that much. It would take a 
tremendous amount of a renewable energy footprint to replace 
that type of power.
    And again it would be intermittent power. It would not 
provide the needed power for the continuation of the operation 
of the Central Arizona Project. I think that probably the Salt 
River Project could address what the footprint would be, but it 
is multiple times renewable energy times baseload energy, out 
of such as Navajo that would be needed to be produced to 
generate the same energy, and not necessary at the appropriate 
periods of time.
    Mr. Schweikert. And this may be even a flip side question 
that maybe Mr. Silverman would know. If suddenly our CAP water 
costs went up dramatically, and this is for whoever can answer 
it, what does that do to a number of our water agreements and 
our water compacts if now all of a sudden the cost structure 
changes?
    Mr. Modeer. Congressman, the increase in power costs for 
the installation of SCRs is about 17 percent, or about $8.33 on 
the existing price of $49 per acre-foot, a substantial 
increase.
    If bag houses are required, then it is a 33 percent 
increase, about $16.30, added on to the current price, and so 
for agriculture use, it is a significant expense, and it 
probably drives them off the CAP water.
    If we lose the plant entirely, then you are looking at 
somewhere between a 50 and 300 percent increase, depending on 
the price of natural gas, for us to go to the open market and 
buy power, not counting the fact that we would lose the 
opportunity to sell excess power, which generates about $55 
million in revenue.
    Mr. Schweikert. But Mr. Chairman and Mr. Modeer, if you 
then were now buying in the open market, now you are completely 
subject to the whims of the market. So, today these contract 
prices can be dramatically different than in a couple of years 
from now, and vice versa?
    Mr. Modeer. Congressman, that is correct. If you look at 
the history of power costs based upon natural gas prices, they 
go up and down.
    Mr. Schweikert. And I am down to my last 30 seconds. The 
Navajo Generating Station, does anyone have a guess on what the 
economic life is? How much time does it have left?
    Mr. Silverman. Our goal is to extend the life to 2044.
    Mr. Schweikert. OK. And the process for that extension?
    Mr. Silverman. The negotiation of several agreements, plant 
site lease with the Navajo Tribe, and the issuance of what are 
called 323 grants for the plant site, transmission that 
supports the plant, and the railroad, to be issued by the 
Department of the Interior, and a water service contract 
extension from the Bureau of Reclamation, and of the Department 
of the Interior, and negotiations with Peabody Coal Company, or 
the Peabody Energy Company, for coal fuel to produce 
electricity.
    Mr. Schweikert. OK. Mr. Chairman, I have no other questions 
and I am over my time, and I appreciate it, but even that 
renegotiation as you heard is going to have a lot of eyes 
looking at this facility, and making sure that they are in 
compliance and doing good things. Thank you, Mr. Chairman.
    Mr. McClintock. Thank you. In consultation with the Ranking 
Member of the Subcommittee, we have determined that we won't 
need a third round. Ms. Napolitano, you have a motion?
    Mrs. Napolitano. Yes, Mr. Chairman. I have a letter, or 
actually it is a report by Public Opinion Strategies by 
Fairbank, Maslin, Maullin, Metz and Associates. It has key 
findings from a survey of Arizona voters regarding the 
increased use of renewable sources for electricity production, 
dated March 23, indicating that out of 600 Arizonans surveyed, 
87 percent believe that energy is affordable, and is important, 
but 63 percent agree that having more affordable electricity is 
not worth the pollution from coal burning power.
    Mr. McClintock. All right. Without objection, so ordered.
    [NOTE: The report has been retained in the Committee's 
official files.]
    Mr. McClintock. And with that, I would like to thank this 
panel of witnesses for their valuable testimony. Members of the 
Subcommittees may have additional questions for witnesses. We 
would ask that you respond to these in writing. The hearing 
record will be open for 10 business days to receive these 
responses.
    And the Chair would also like to thank Dr. Gosar again for 
his persistence in directing the Subcommittees to this matter, 
and if there is no further business, and without objection, the 
Subcommittees stand adjourned.
    [Whereupon, at 4:59 p.m., the Subcommittees were 
adjourned.]

    [Additional material submitted for the record follows:]

    [A list of documents retained in the Committee's official 
files follows:]
      Hopi Tribe, Comments on EPA's Advanced Notice of 
Proposed Rulemaking for Nitrogen Oxide Emissions at the Navajo 
Generating Station dated March 1, 2010
      Public Opinion Strategies, Memorandum to 
Interested Parties dated March 23, 2011, regarding ``Key 
Findings from a Survey of Arizona Voters Regarding Increasing 
the Use of Renewable Sources for Electricity Production'' 
submitted by the Honorable Grace Napolitano
                                ------                                

    [A letter submitted for the record by the Arizna Westside 
Irrigation & Electrical Districts Association follows:]







    [A statement submitted for the record by G. Brad Brown, 
Senior Vice President for Southwest Operations, on behalf of 
Peabody Energy, follows:]

   Statement submitted for the record by G. Brad Brown, Senior Vice 
    President for Southwest Operations, on Behalf of Peabody Energy

    Mr. Chairman and distinguished members of the Committee, my name is 
Brad Brown, and I am Senior Vice President for Peabody's Southwest 
operations.
    I want to thank the Committee for providing Peabody this 
opportunity to offer written testimony to address the crucial subject 
of protecting long-term tribal energy jobs and the role of the Navajo 
Generating Station.
    By way of brief introduction, I am responsible for safety, 
engineering, environmental and financial activities associated with the 
Kayenta Mine in Arizona in addition to our Lee Ranch and El Segundo 
operations in New Mexico. I have been engaged in a variety of Southwest 
operations assignments throughout my 35-year tenure with Peabody.
    I grew up on the reservation, and have been honored to live and 
work with the Navajo and Hopi people. This gives me unique perspective 
into the importance of balancing stakeholder needs to maintain the 
vital value chain of assets--the Kayenta Mine, Navajo Generating 
Station and Central Arizona Project--that together deliver life-giving 
energy and water as part of an enormous Southwest economic growth 
engine.
    Peabody is the world's largest private-sector coal company \1\ and 
a global leader in clean coal solutions. Our operations fuel 10 percent 
of U.S. electricity and 2 percent of global power. We ship nearly a 
quarter billion tons of coal to customers in more than 25 countries on 
six continents each year \2\--nearly 75 pounds of coal for every man, 
woman and child in the world.\3\
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    \1\ SEC filings and Peabody analysis (values on a short-ton basis).
    \2\ Peabody Form 10-K for the Fiscal Year Ended Dec. 31, 2010.
    \3\ SEC filings and Peabody analysis (values on a short-ton basis).
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    Our reach extends to nations representing more than half the 
world's population, and we have access to some of the most rapidly 
growing markets for electricity, steel and coal conversion projects. We 
employ 7,200 workers, and our operations contributed more than $16 
billion in direct and implied economic benefits this past year, which 
includes nearly $370 million in Arizona alone.
    Around the world, Peabody continues to demonstrate financial and 
industry leadership: We are a member of the Standard and Poor's 500 
Index, a Fortune 500 company, and ranked 21 on the Forbes 2010 listing 
of America's Best Big Companies. Peabody is named on the BusinessWeek 
50 list of best large U.S. companies and in 2010 achieved Coaltrans 
honors as the world's leading coal company for the past 30 years.
    This past year was the safest in Peabody's history, and our 
credentials in the area of corporate and social responsibility continue 
to be recognized. Peabody was honored by the U.S. Foreign Policy 
Association for international corporate and social responsibility, and 
earned Communitas honors for ethical and environmental responsibility 
in 2011. Dual honors also were earned for directing the first land 
restoration project in Mongolia's history, capping more than 30 major 
awards for safety, financial, environmental excellence and corporate 
responsibility in 2010.
    There are four areas that I will address in this testimony:
          The role Kayenta Mine plays in delivering electricity 
        and water to the Southwest while creating jobs and enormous 
        economic growth;
          Kayenta Mine's record of excellence in operations, 
        compliance, and environmental and community stewardship;
          Energy alternatives for the Navajo Generating 
        Station; and
          Balanced regulation that puts people and technology 
        first.
    I'll address each of these one at a time.
Kayenta Mine: Delivering Electricity and Water to the Southwest
    More than a half century ago, leaders from the Navajo Nation, the 
Hopi Tribe, Peabody Energy, Salt River Project and the federal 
government came together with a bold and unprecedented plan to deliver 
electricity and water to the Southwest.
    The vision included development of a large coal mine to fuel a 
major 2,250 megawatt power plant that would deliver electricity to 
Arizona, California and Nevada. Importantly, the plant also would 
provide power to move 1.5 million acre-feet of water each year from the 
Colorado River to cities, tribal communities, and agricultural 
districts in the central and southern region of Arizona through a 
complex system of aqueducts. These projects were contemplated when the 
need for electricity was doubling each decade and sparsely populated 
Sunbelt states were experiencing large population increases.\4\
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    \4\ `Peabody Energy Celebrating 125 Years,' copyright Peabody 
Energy.
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    In the Spring of 1961, Peabody acquired its first prospecting 
permit from the Navajo Nation, which paved the way for drilling and 
evaluation of the coal resources on Black Mesa in Northeast Arizona.
    As was the practice at that time for Indian coal leases, the 
permits included a form of lease agreement with financial terms pre-
established by the U.S. Department of the Interior's Bureau of Indian 
Affairs in consultation with the Tribe. The permit and lease provisions 
were prescribed by the Bureau of Indian Affairs and terms were largely 
non-negotiable.
    A second drilling and exploration permit was signed with both the 
Navajo and Hopi in the summer of 1964 for coal that was jointly owned 
by the tribes. Here, too, the form of lease to be executed with the 
tribes was predetermined by the Bureau of Indian Affairs with the input 
of tribal officials and was largely non-negotiable.
    At the time, the royalty provisions included in these leases were 
more lucrative for the tribes than the prevailing royalty rates for 
federal and Indian coal leases in the Western United States, including 
the federal coal leases that the U.S. Department of the Interior was 
issuing at the same time in the vast Powder River Basin.\5\
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    \5\ U.S. Department of the Interior, MMS, Reports of the Division 
of Minerals Revenue Management: American Indian Coal Royalties Calendar 
Years 1928-2000; http://www.onrr.gov/stats/pdfdocs/comm_inc.pdf; 
Mineral Revenues 1995, Table 46 (General Federal and Indian Mineral 
Lease Terms).
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    The Colorado River Basin Project Act of 1968 authorized the United 
States to participate as an owner in the Navajo Generating Station to 
provide power for the water delivery through what is called the Central 
Arizona Project. The project provides renewable water to 80 percent of 
the state's population, and was negotiated and approved by then U.S. 
Secretary of the Interior Stewart Udall. The Central Arizona Project is 
Arizona's largest electricity user, and transports water from the 
Colorado River to Phoenix and Tucson through a 336-mile system of 
canals.
    Peabody signed a letter of intent with Salt River Project in 1968 
and executed a coal supply agreement in the summer of 1970. Kayenta 
Mine was the sister operation to the Black Mesa Mine, which also is 
located in Peabody's lease area on the Navajo and Hopi reservations. 
The Black Mesa Mine was developed three years before Kayenta Mine to 
fuel the Mohave Generating Station in Laughlin, Nev., operated by 
Southern California Edison. Together these projects were among the most 
complex greenfield energy developments in the history of the Southwest.
    In those early days, the Black Mesa was extremely remote. There 
were few roads and little infrastructure. Tribal families cooked over 
wood fires, heated their hogans with wood or coal and hauled water from 
local springs. Many young fathers were forced to leave the reservation 
in search of work in larger cities far away, and children were 
frequently sent to Bureau of Indian Affairs boarding schools, a 
combination that eroded the important family structure.
    Development of the Black Mesa Complex required creating 150 miles 
of roads, bringing power to the top of the mesa and building water 
wells for mining and domestic needs. A massive, sustained training 
program was implemented for hundreds of workers that literally trained 
shepherds to operate multi-million dollar draglines and other high-tech 
mining equipment. Tens of thousands of hours were tracked annually in 
those early days of training.
    The Black Mesa Mine operated from 1970 to 2005, shipping 
approximately 5 million tons of coal annually to the Mohave Station. 
Mine operations were suspended after the power plant owners elected to 
close the facility. Discussions continue with both tribes to resume 
Black Mesa Mine's operations to fuel electricity generation or other 
coal-related projects.
    The Kayenta Mine began operating in 1970 as the sole supplier of 
coal to the Navajo Generating Station near Page, Ariz. Today the mine 
produces approximately 8 million tons of low-sulfur coal each year that 
is transported to the plant via an 83-mile closed loop rail. Coal 
reserves are available within the existing Peabody lease area to fuel 
the Navajo Station for another 30 years. Peabody's lease agreements 
with the Navajo and Hopi remain in effect as long as the mine operates.
    Kayenta Mine employs more than 400 workers and about 90 percent of 
the workforce is Native American. Employees are well compensated, and 
jobs at the Kayenta Mine are highly sought after: Wages and benefits 
average $80,000 annually for represented workers, which is four times 
the median household income on the Navajo reservation.\6\
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    \6\ Dine' Development Corporation, Window Rock, Ariz.
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    Since many employees support their extended families, the benefits 
of employment are far-reaching. Excellent career opportunities provide 
personal and professional satisfaction, and importantly, keep families 
together living and working on their traditional homeland and 
preserving longstanding cultural ways.
    Mining is a powerful economic force in the region, annually 
generating nearly $370 million in direct and indirect economic 
benefits.\7\ This includes $92 million in direct economic impacts each 
year through wages and benefits, tribal royalty and business payments, 
water fees, Navajo Transmission Utility Authority revenues and 
scholarships. The operations also generate nearly $24 million annually 
in property taxes and state sales tax. All told, mining on Black Mesa 
has delivered more than $3.1 billion in direct economic benefits to 
tribal and regional communities since the operations began.
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    \7\ Peabody historical analysis of employee wages and benefits, 
tribal payments, NTUA revenue, water fees and scholarships.
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Excellence in Operations, Compliance, and Environmental and Community 
        Stewardship
    There is a well known Navajo saying that, ``We do not inherit the 
land from our ancestors, we borrow it from our children.''
    Similarly, Peabody recognizes that it operates as a guest on 
reservation lands, temporarily using the land for social and economic 
benefit prescribed by the tribes. Mined lands are restored for 
productive, sustainable use.
    Kayenta Mine is perennially recognized among the safest large 
surface operations in the nation. For example, workers achieved more 
than 1 million operating hours without a lost-time incident during 
2009, and the mine's 2010 safety rate was 0.42 incidents per 200,000 
hours worked, which is 89 percent lower than the U.S. industry 
average.\8\ Best practices are used for engineering and mine planning, 
reclamation planning and environmental monitoring, and all of these 
activities are carried out with respect for traditional ways.
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    \8\ U.S. Mine Safety and Health Administration data, 2011.
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    Even before the U.S. Surface Mine Control and Reclamation Act was 
put in place in 1977, Peabody pledged to restore mined lands to a 
condition that would be equal to or better than before mining occurred. 
Through careful consultation with the tribes, traditional healers, 
herbalists and range experts, Peabody created an award-winning 
restoration program that is globally recognized.
    Based on the wishes of the tribes, lands are restored for livestock 
grazing, cultural plant use and wildlife habitat. A first-of-its-kind 
cultural plant program restores herbs, shrubs and trees used for 
medicinal and ceremonial purposes, and the program has earned numerous 
awards, including several honors from the U.S. Department of the 
Interior.
    Reclaimed lands are carefully monitored for a minimum period of 10 
years before being permanently released back to the tribes. Restored 
lands are as much as 20 times more productive for grazing than native 
range. The quality of the land is crucial for traditional people 
residing on Black Mesa, who make their livelihood through sheep and 
cattle ranching.
    Peabody has reclaimed nearly 330 acres of cultural plant sites 
through the complex and restored more than 10,000 acres of hardy 
rangeland at Kayenta Mine to date. The company also has created an 
award-winning managed grazing program that offers range management 
education for lease area residents and access to restored lands under 
Peabody's control. The program was developed through broad consultation 
with Black Mesa residents, the Navajo Nation, the Hopi Tribe, the U.S. 
Office of Surface Mining and the Bureau of Indian Affairs.
Archaeological Study
    As Peabody has advanced best practices in land restoration, it also 
has advanced a much deeper understanding of the Anasazi people. Over a 
period of three decades, the company conducted what became known as the 
largest continuous archaeological investigation in North America.
    The project, known as the Black Mesa Archaeology Project, was led 
by Southern Illinois University's Center for Archaeological 
Investigations. It began in 1967 and involved researchers from a dozen 
universities.
    The entire lease area of 65,000 acres was surveyed by 700 scholars 
and scientists, and researchers identified approximately 2,500 sites of 
interest. These included small pottery sites with surface features and 
larger sites with multiple family dwellings. Ultimately 220 sites were 
excavated, and 1 million artifacts were identified and remain the 
property of the Navajo and Hopi. These activities carefully followed 
federal and tribal regulatory requirements to protect historic sites. 
The archaeological project is recognized as an industry model by the 
U.S. Department of the Interior and is the subject of more than 300 
publications.
    According to Dr. George J. Gumerman, Southern Illinois University's 
past Director for the Center for Archaeological Investigations who led 
the investigation:
    ``The unusual aspect of the Black Mesa Archaeological Project is 
that Peabody went beyond the letter of the law in exploring and 
collecting the artifacts of the extinct people of Black Mesa. Peabody 
helped us discover how people really lived, and it changed the way we 
look at the people of pre-historic Southwest. . .This project gave us a 
social history of how the average people lived back then and helped to 
understand their day-to-day lives.''
    Elsewhere in the lease area, the company also has developed a 
number of programs to improve the quality of life for some 200 Navajo 
families residing within the lease area. Basic services such as potable 
water, road grading and maintenance and free coal for home heating are 
offered. The company also assists residents during inclement weather 
with snow plowing and delivery of water and hay for livestock.
    Peabody has further assisted the Navajo Tribal Utility Authority 
with an electricity project that brought electricity access to 
residents on and adjacent to the east side of the lease area by 
providing a right of way, route clearing and road building. Additional 
water delivery programs for lease area residents are being discussed 
with the Navajo Nation.
    Peabody's collection of socially responsible practices on Black 
Mesa, including training and employment practices, land restoration, 
archaeological and cultural preservation and range management, is 
recognized globally. Peabody was the only mining company in the world 
recognized for sustainable practices at the Energy Globe Awards in 
Brussels among nearly 100 nations.
Environmental Compliance
    Demonstrating corporate responsibility means achieving good 
stewardship. Strong environmental compliance is well documented at the 
Kayenta Mine through multiple examinations involving a broad group of 
federal and tribal regulatory authorities. The most recent example can 
be found in the U.S. Department of the Interior's stakeholder process 
that resulted in development of an Environmental Impact Statement (EIS) 
on renewal of the Kayenta Mine operations permit that was published in 
December 2008.
    The EIS represented an extensive four-year public stakeholder 
process with the U.S. Department of the Interior, the U.S. 
Environmental Protection Agency, the Navajo and Hopi, numerous other 
consulting agencies, and the public.
    Many other multi-year, multi-media examinations have reviewed 
Peabody's environmental compliance on Black Mesa in conjunction with 
rigorous monthly, quarterly and annual environmental monitoring and 
reporting. A multi-media monitoring system on site continues to provide 
air, water, vegetation, soils, overburden and cultural resources data 
for constant benchmarking.
Water Use
    A minimal amount of water is used at the Kayenta Mine for dust 
suppression and potable uses. Based on its lease agreements, Peabody 
pays the tribes more than $1.1 million annually to use approximately 
1,200 acre-feet of water each year. This represents a 70 percent 
reduction in annual water use following the suspension of activities at 
the Black Mesa Mine at the end of 2005.
    Water is sourced from the Navajo Aquifer, an enormous resource 
spanning 7,500 square miles in the Four Corners region that is 
naturally replenished through the hydrologic cycle. The Navajo Aquifer 
holds 400 million acre-feet of water, which is some 17 times the size 
of Lake Powell at full pool. Studies demonstrate that mining will use 
less than one-tenth of one percent of the volume of water stored in the 
aquifer over the life of the operations and that the aquifer will 
recharge rapidly.
    Since the suspension of mining activities at Black Mesa Mine, the 
Navajo Aquifer has recovered nearly 200 feet beneath the Kayenta Mine 
permit area in the confined area of the aquifer demonstrating rapid 
recovery of the resource. Studies show that any drawdown by Peabody has 
not adversely impacted community water sources, including those at the 
nearby Forest Lake Chapter.
    The latest reports from the U.S. Office of Surface Mining and the 
U.S. Geological Survey also continue to conclude that the Navajo 
Aquifer is healthy and robust and water quality is excellent.\9\
---------------------------------------------------------------------------
    \9\ Macy, J.P., Groundwater, Surface-Water, and Water-Chemistry 
Data, Black Mesa Area, Northeastern Arizona--2008-2009: U.S. Geological 
Survey Open File Report 2010-1038, 43 p., published in 2010. U.S. 
Office of Surface Mining ``Report on Its Review and Analysis of Peabody 
Western Coal Company's 2009 Annual Hydrological Data Report and The 
U.S. Geological Survey's Ground Water, Surface Water, and Water-
Chemistry Data, Black Mesa Area, Northeastern Arizona--2008-2009,'' 
published August, 2010.
---------------------------------------------------------------------------
    There are no significant trends indicating adverse impacts to 
domestic water supplies, spring flow or stream flow. These findings cap 
50 years of well documented government, tribal and private study of the 
Navajo Aquifer to assess its relationship to shallow wells and surface 
water flows and to ensure tribal water resources are protected.
    Importantly, the lease agreements specify that if at any time the 
U.S. Department of the Interior determines the aquifer has been damaged 
due to water use from mining, Peabody must fund development of a 
replacement water source for the tribes.
Energy Alternatives for the Navajo Station
    The Navajo Generating Station delivers 2,250 megawatts of power to 
customers in Arizona, California and Nevada. A plant of this size can 
create electricity for more than 2 million families.
    The Navajo Station owners are considering a variety of options to 
update the plant to achieve Best Available Retrofit Technology (BART) 
requirements under the Clean Air Act. Among them: integrating solar 
power into the coal plant, using stand alone renewable generation or 
distributed generation including solar or wind that could help service 
the electric load for the existing water pumps within the Central 
Arizona Project.
    Peabody believes that all forms of energy are needed to meet long-
term energy needs of the Southwest, and that society does not face a 
choice between coal, wind or solar power. We must, however, recognize 
both the advantages and limitations of each.
    Renewables do not offer baseload power of the scale needed to 
replace the Navajo Station. Because renewable power cannot be stored, 
it requires baseload backup when the sun is clouded over or winds are 
calm.
    Even if solar were used to replace a portion of Navajo Station's 
capacity, the state's best solar profile is near Phoenix, which is 
hundreds of miles south of the reservation.\10\
---------------------------------------------------------------------------
    \10\ Photovoltaic Solar Resources, Billy Roberts, October 2008; 
National Renewable Energy Laboratory, U.S. Department of Energy.
---------------------------------------------------------------------------
    The sheer scale of the Navajo Station far exceeds the capacity of 
proven renewable sources, making it unrealistic to suggest that 
renewables could take the place of the plant's baseload power. 
Replacing the three 750-megawatt coal units for the plant with solar 
panels, for instance, would require some 1.3 million solar panels 
covering nearly 25,000 acres or nearly 40 square miles, which is more 
than 83 times the footprint of the Navajo Station.\11\ Each solar panel 
is estimated at approximately 8 square feet in size.
---------------------------------------------------------------------------
    \11\ Based on calculations using Solaripedia data; http://
www.solaripedia.com/13/303/3431/sarnia_solar_farm_photovoltaics.html.
---------------------------------------------------------------------------
    Prematurely ending power plant operations also would result in 
enormous loss of jobs, revenues, and economic benefits to the Navajo 
and Hopi and the Southwest region. The vast majority of jobs created 
for solar energy would be for laborers who would be needed to wash 
solar panels versus the skilled positions needed for the mine and power 
plant operations.
    Solar power fuels less than one percent of U.S. electricity \12\ 
whereas coal fuels nearly half of U.S. electricity and is by far, the 
affordable energy alternative at scale, fueling the lowest cost 
electricity in the United States: The 10 states that use the highest 
percentage of coal have electricity rates that average less than half 
of the cost of other states that rely on more expensive fuels like 
natural gas.\13\ And this past decade, the cost of natural gas averaged 
nearly four times the delivered cost of coal.\14\
---------------------------------------------------------------------------
    \12\ U.S. Energy Information Administration; Electricity in the 
United States, 2009.
    \13\ U.S. Energy Information Administration, March 2011.
    \14\ Ventyx, Monthly Plant Fuel Purchase Price.
---------------------------------------------------------------------------
    Only 39 percent of Arizona's electricity is fueled by coal, and the 
state pays on average 9.7 cents per kilowatt hour. This compares to 
other western states like Wyoming, where 89 percent of the state's 
electricity is fueled by coal and consumers enjoy costs that are 36 
percent lower.\15\ In California, where just 1 percent of electricity 
is fueled by coal, energy costs are even more punishing, with consumers 
facing the second-highest electricity prices in the nation. Their costs 
average 13.8 cents per kilowatt hour.
---------------------------------------------------------------------------
    \15\ U.S. Energy Information Administration, March 2011.
---------------------------------------------------------------------------
Balanced Regulation that Puts People and Technology First
    Peabody believes that technology is the solution for continuous 
environmental improvement to address both regulated emissions and 
carbon dioxide (CO2). Technology has enabled U.S. coal-
fueled generation to achieve a strong and improving environmental track 
record driven by tens of billions of dollars invested in clean coal 
technologies by the nation's utilities.
    U.S. coal use and gross domestic product have tripled since 1970, 
as emissions of sulfur dioxide, nitrogen oxides and particulates per 
megawatt hour have been reduced more than 80 percent.\16\ The next 
generation of supercritical, gasification and carbon capture and 
storage technologies will continue to build on this progress.
---------------------------------------------------------------------------
    \16\ U.S. Energy Information Administration, Annual Energy Review, 
June 2009; Peabody analysis of U.S. Environmental Protection Agency Air 
Emissions Trend Data for sulfur dioxide, nitrogen oxides and 
particulates.
---------------------------------------------------------------------------
    The BART process for Navajo Station means that the technology must 
be available, affordable and deployable. Salt River Project has just 
completed a $45 million retrofit of low-nitrogen oxide (NOX) 
burners on each of its 750 megawatt units that reduce NOX 
emissions by at least 40 percent. For the station owners to invest 
another $1.1 billion in retrofit technologies, they must be given the 
time needed to extend their plant site lease and renew rights of way to 
ensure long-term operating certainty.
    The U.S. Environmental Protection Agency (EPA) must move carefully 
and within a reasonable timeframe to balance the human and societal 
costs with meaningful environmental improvement mandated by additional 
emission controls. Premature shutdown of Navajo Station would in turn, 
cause closure of the Kayenta Mine, which has no access to any other 
coal customer. It is unclear what replacement source could power the 
Central Arizona Project.
    Moving regulations forward too fast, and without proper 
consideration of people and economies is the reason why a bipartisan 
group of 22 attorneys general across the country have sent a letter to 
EPA Administrator Lisa Jackson, calling on EPA to defer rapid 
implementation of carbon regulations to avoid the so-called `regulatory 
train wreck.' The attorneys general want to ensure Congress has the 
opportunity to evaluate the need and timing for these rules. EPA also 
has come under pressure from 23 state legislative chambers in 15 states 
adopting formal resolutions to block a regulatory disaster.
    We cannot allow a similar train wreck in the Southwest. Forcing the 
Navajo Station to close prematurely will shut out hundreds of 
reservation jobs and billions of dollars in revenues in coming decades. 
These assets and benefits will never be replaced at this scale because 
there are no viable energy alternatives on reservation lands that come 
close to the value of coal. Coal is the sustainable resource providing 
vital power and water that enables Southwest families to live in the 
arid desert.
    At a time when unemployment in reservation communities is hovering 
at 50 percent, and Arizona's fragile economy is still recovering from 
the economic recession, it is crucial to maintain the value chain of 
assets associated with the Navajo Generating Station.
    Thank you for the opportunity to testify on one of the most crucial 
energy issues faced in the Southwest.
                                 ______
                                 
    [A letter submitted for the record by Leisa B. Brug, 
Director, Energy Policy Advisor to Governor Janice K. Brewer, 
State of Arizona, follows:]






    [A letter submitted for the record by Anna Frazier, 
Coordinator, Dine' Citizens Against Ruining Our Environment, 
follows:]

Statement submitted for the record by Anna Frazier, Coordinator, Dine' 
Citizens Against Ruining our Environment (Dine' CARE), Winslow, Arizona

WATER IS LIFE
    According to our earliest teachings, water is the blood of the 
land, carrying life and nourishment to the rest of natural creation. 
Flowing in beauty, there are female and male waters. Where they touch 
is a sacred place for reproduction and generation of new life. Their 
merger symbolizes fertility and the renewal of life in Fourth World.
    Deriving our original authority from the rainbow of sovereignty, 
the Navajo Nation possesses aboriginal water rights that antedate and 
predate the United States of America and the State of Arizona. Based on 
the federal recognition of our inherent tribal sovereign status, we as 
a tribal nation maintain a special and unique treaty and trust 
responsibility relationship with the federal government that is based 
and rooted in the mutually ratified treaties of 1849 and 1868. We 
further have prior and paramount First Nation water rights through the 
applicable 1908 Winters Doctrine and the 1963 U.S. Supreme Court case 
of Arizona v. California. 
    Yet our tribal reserved water rights and historic uses are 
threatened to be severely limited and unjustifiably quantified by the 
Northeastern Arizona Indian Water Rights Settlement Agreement of 2010 
and its horrific Navajo Generating Station water provisions which if 
fully approved, will continue and extend into perpetuity the illegal 
Navajo water rights waivers of 1968 and 1969 for the sole use and 
benefit of NGS and the racist company town of Page. Although the 50-
year Navajo water rights waivers appertaining to the industrial and 
municipal operations of the Navajo Generating Station and the City of 
Page are due to expire in 2019 and 2020 (if the aforementioned 
agreement and its NGS water provisions are not approved by Congress and 
other entities), these waivers are still unconscionable and represent 
fundamental violations of basic human rights. Such gross human rights 
violations are strictly prohibited under the United Nations Declaration 
on the Rights of Indigenous Peoples as ratified by the U.N. General 
Assembly in 2007. Health impacts resulting from the pollution and toxic 
waste (coal combustion waste) generated by the Navajo Generating 
Station needs to be included in this discussion. The health impacts are 
disproportionately borne by the Navajo and Hopi communities with little 
or no access to health care. On April 13, 2005, U.S. Senate Committee 
on Indian Affairs oversight hearing on Indian health care issues, 
Anslem Roanhorse, Jr., the Navajo Nation Division of Health and Human 
Service Director testified the Navajo Indian Health Service is 55% 
funded and there is a 17--20% vacancy rate for doctors and nurses on 
Navajo. Furthermore, the legislation reauthorizing Indian Health care 
Improvement Act, last reauthorized in 1999, was finally reauthorized in 
2010.
    The Navajo Nation has tried to protect its communities from the 
toxic stew that makes up coal combustion waste. Unfortunately, the 
responsible federal agencies are ignoring a human health crisis in the 
making with no oversight. Incidentally, none of the electric power 
generated by the massive power plant on our land go to our people. The 
Navajo Nation is an energy export zone where all the power goes off our 
reservation and we are left with Superfund sites. This is an 
environmental justice issue where Native Americans are burden with 
disproportionate pollutants.
    In due consideration of the foregoing, we request a full 
congressional investigation of and hearings into why the Navajo Nation 
has not been able to fully assert its inherent national sovereign 
rights to at least 10 million acre-feet of water per year to the 
Colorado River main stem and tributaries that are located between and 
within the Four Sacred Mountains of Dine Bi Keyah. We further request 
immediate congressional authorization of an expedited official order 
directing that fair and just compensation and subsequent damages be 
assessed and paid in full for the loss and wastage of valuable tribal 
water resources due to the aggregate effect of the above-mentioned 
waivers.
    Lastly, we respectfully request that the subject waivers be 
reevaluated and investigated forthwith by Congress' General Accounting 
Office.
                                 ______
                                 
    [A statement submitted for the record by Niger Innis, Co-
Chairman, Affordable Power Alliance, follows:]

    Statement submitted for the record by Niger Innis, Co-Chairman, 
              Affordable Power Alliance, Las Vegas, Nevada

    Chairman McClintock, Chairman Young, Members of the Subcommittees, 
my name is Niger Innis. I am the Co-Chairman of the Affordable Power 
Alliance, a coalition of civil rights, social justice, and senior 
advocacy organizations formed to address the problem of rising energy 
costs. Among the member organizations of the Affordable Power Alliance 
are the 60 Plus Association, the National Black Chamber of Commerce, 
the National Hispanic Christian Leadership Conference, the Congress of 
Racial Equality, and the High Impact Leadership Coalition. These varied 
organizations within the Alliance represent millions of Americans from 
the African American, Latino, senior citizen, and small business 
communities.
    Chairman McClintock and Chairman Young, I thank you for holding 
this timely hearing and request that this testimony be entered into the 
record of this joint hearing. The Affordable Power Alliance has a vital 
interest in the outcome of the decision from the U.S. Environmental 
Protection Agency (EPA) on emissions controls upgrades that may be 
mandated for the Navajo Generating Station (NGS), not only because 
thousands of our supporters live and work in the affected areas of 
Arizona and New Mexico, but also because we recognize that higher 
energy prices anywhere in America hurt people everywhere in America.
    We know that EPA is currently evaluating controls on NOx 
emissions from NGS under EPA's Regional Haze rules to protect 
visibility in nearby areas like Grand Canyon National Park. We have 
examined EPA's ``Advanced Notice of Proposed Rulemaking Regarding Best 
Available Retrofit Technology for Nitrogen Oxide Emissions at the 
Navajo Generating Station Docket Number EPA-R09-0AR-2009-0598.''
    From studying that document, we know that if the NGS must make 
retrofits outlined in that proposed rule, it would raise NGS energy 
prices to its customers, which will mean higher costs of water for the 
Central Arizona Project, which will mean higher costs for the wheat 
farmer in Maricopa County, which will mean higher costs for the pasta 
company near Phoenix, which will mean higher food bills from Los 
Angeles to Bangor, and from Fairbanks to Miami. We know that this 
hypothetical example of one microcosm will be multiplied many times by 
reality if the EPA imposes the most stringent of its proposed rules. 
Unaffordable energy affects everything everywhere. When it comes to 
energy, there is no local impact. Energy is the basic resource. What 
hurts one hurts all.
    The Affordable Power Alliance also realizes that there is a more 
ominous potential outcome of EPA action: the cost of meeting a 
draconian retrofit rule could mean shutting down the Navajo Generating 
Station, which would mean destroying the incomes of hundreds of Navajo 
and Hopi people it now employs, and the loss of revenue due to the 
consequent termination of the current long-term coal mining contract 
with Peabody Western Coal Company's Kayenta operation to mine coal 
owned by the Navajo Nation and the Hopi Tribal Council to fuel the NGS.
    A more widespread catastrophic outcome could be the shutdown of the 
waterflow to the Central Arizona Project, or at least a desperate 
scramble to find affordable power to keep the pumps going. The CAP was 
authorized by President Lyndon B. Johnson, who signed a bill in 1968 
approving its construction, providing for the Bureau of Reclamation of 
the Department of the Interior to fund and construct CAP and an 
operating entity to later repay some of the construction cost. Various 
water authorities, known as the participants, now manage the CAP. It's 
now the largest irrigation system in America, watering a million acres 
of agricultural lands, and providing municipal water to Phoenix and 
Tucson.
    Here's the catch: the power that drives the pumps within CAP to 
move water from the Colorado River into the interior of the state comes 
from the Navajo Generating Station (NGS), a 2,250 megawatt coal-fired 
steam plant operated by the Salt River Project (SRP) on Reservation 
land under a lease from the Navajo Nation.
    We note that an article in the September 2010 Family Farm Alliance 
Water Review stated, ``The NGS participants have installed state of the 
art controls for sulfur dioxide emissions and are achieving high levels 
of particulate emissions control''--that's voluntarily, and at a cost 
of $46 million. But then the article observes that ``NGS is the only 
plant to have had such controls installed exclusively for visibility 
purposes.'' Such responsible management should be rewarded, but it 
looks like the old saying ``No good deed shall go unpunished,'' is the 
operative principle of the federal government in dealing with the NGS.
    Although this hearing does not specifically cover it, there are two 
coal-fired power plants located on Navajo Reservation land, the Navajo 
Generating Station and the Four Corners Power Plant (``FCPP''). It is 
worth listening to the Navajo view of EPA's proposal. In a March, 2010 
report to the EPA, the Navajo Nation explained their situation.
        ``No entity has a greater interest in NGS and FCPP than the 
        Navajo Nation. Accordingly, the Nation believes it is important 
        to lay out in broad strokes the interests of the Nation 
        implicated by this rulemaking. NGS and FCPP are located on 
        Navajo lands pursuant to lease agreements with the Navajo 
        Nation. The Plants provide hundreds of skilled jobs on the 
        Navajo Reservation, where unemployment approaches fifty 
        percent. The Nation's most valuable saleable natural resource 
        is its coal reserves, and the Plants were located to take 
        advantage of and provide a market for Navajo coal. The income 
        these two Plants provide to the Nation, both directly and 
        indirectly, contributes substantially to the Nation's economic 
        viability and thus, ultimately, to its sustainability as an 
        independent sovereign.
--Response to Dr. Anita Lee (Air-3), U.S. Environmental Protection 
Agency Region IX, dated March 1, 2010 by Dr. Joe Shirley, Jr., 
President of the Navajo Nation, and Ben Shelly, Vice President.
    Likewise, the Hopi Tribal Council responded to the EPA with deep 
concern for its survival:
        The fundamental problem with attempting to achieve greater 
        visibility improvements in the subject Class I areas through an 
        SCR [very expensive equipment] requirement at NGS is the simple 
        fact that visibility impairment is primarily caused, not by NGS 
        and other power plants, but instead originates from other haze 
        and particulate sources such as automobile emissions that occur 
        in Los Angeles and migrate to class I Areas, and more localized 
        sources such as dust and smoke from forest fires and controlled 
        burns. According to the Salt River Project [one of the 
        participants] analysis, power plants contribute only a small 
        fraction of the haze problem in the Grand Canyon and other 
        Class I Areas. If this finding is accurate, the huge costs of 
        EPA's NGS SCR proposal are not justified by the small 
        incremental benefits achieved. This is especially true given 
        the potential catastrophic economic outcome for the Hopi and 
        Navajo Tribes and in light of the Trust responsibility of the 
        United States to protect the Hopi Tribe and its assets from 
        outright destruction or other harm. Even larger visibility 
        improvements would not justify the economic devastation that 
        would be imposed on the Hopi people and their homeland by an 
        EPA SCR requirement at NGS.
--Response to Jarod Blumenfeld, Administrator, USEPA, Region IX, dated 
March 1, 2010, by LeRoy N. Shingoitewa, Chairman of the Hopi Tribe, and 
Herman G. Honanie, Vice-Chairman.
    We, the people of the Affordable Power Alliance, would like to see 
the United States Congress take swift and decisive action to put an end 
to the abuse of political power that looms behind the EPA's anti-energy 
NGS rulemaking proposal. We ask that Congress restore our peoples' 
ability to create an economy based on access to the natural resources, 
particularly energy resources, which are an integral part of our 
custom, culture, tradition, and right to the pursuit of happiness.
    Our commitment in response, as we clearly see in the Navajo Nation 
and the Hopi Tribal Council, is to be good and responsible stewards who 
will make sure that our energy activities are sustainable 
environmentally, economically, culturally and in concert with the tenet 
of protecting our heritage for future generations with abundant, 
affordable energy.
    Thank you again, Chairman McClintock and Chairman Young, for 
holding this hearing and giving the Affordable Power Alliance the 
privilege and honor of presenting written testimony on behalf of our 
members, our fellow minorities in the Navajo Nation and the Hopi Tribe, 
and all our fellow citizens who need and deserve an energy policy that 
is affordable by all Americans.

                                 
