[Senate Hearing 114-42]
[From the U.S. Government Publishing Office]
S. Hrg. 114-42
EMPOWERING INDIAN COUNTRY: COAL, JOBS,
AND SELF-DETERMINATION
=======================================================================
FIELD HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
APRIL 8, 2015
__________
Printed for the use of the Committee on Indian Affairs
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COMMITTEE ON INDIAN AFFAIRS
JOHN BARRASSO, Wyoming, Chairman
JON TESTER, Montana, Vice Chairman
JOHN McCAIN, Arizona MARIA CANTWELL, Washington
LISA MURKOWSKI, Alaska TOM UDALL, New Mexico
JOHN HOEVEN, North Dakota AL FRANKEN, Minnesota
JAMES LANKFORD, Oklahoma BRIAN SCHATZ, Hawaii
STEVE DAINES, Montana HEIDI HEITKAMP, North Dakota
MIKE CRAPO, Idaho
JERRY MORAN, Kansas
T. Michael Andrews, Majority Staff Director and Chief Counsel
Anthony Walters, Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Field hearing held on April 8, 2015.............................. 1
Statement of Senator Daines...................................... 1
Witnesses
Bates, Hon. Lorenzo, Speaker, Navajo Nation Council.............. 22
Prepared statement........................................... 26
Fox, Hon. Tim, Attorney General, State of Montana................ 18
Prepared statement........................................... 20
Henson, Eric, Senior Vice President, Compass Lexecon; Research
Affiliate, Harvard Project on American Indian Economic
Development.................................................... 32
Prepared statement........................................... 34
Old Coyote, Hon. Darrin, Chairman, Crow Nation................... 5
Prepared statement........................................... 8
Small, Jason, Journeyman Boilermaker; Labor Advocate; and
Northern Cheyenne Tribal Member................................ 29
Prepared statement........................................... 31
Appendix
Buffalo Spirit, Alaina, Enrolled Member, Northern Cheyenne Tribe;
Member, Northern Plains Resource Council, prepared statement... 53
Bullock, Hon. Steve, Governor, State of Montana, prepared
statement...................................................... 51
Navajo Nation, prepared statement................................ 52
Tester, Hon. Jon, U.S. Senator From Montana, prepared statement.. 51
EMPOWERING INDIAN COUNTRY: COAL, JOBS, AND SELF-DETERMINATION
----------
WEDNESDAY, APRIL 8, 2015
U.S. Senate,
Committee on Indian Affairs,
Crow Agency, MT.
The Committee met, pursuant to notice, at 10:30 a.m. in
room 628, Little Big Horn College Health and Wellness Center,
Crow Agency, Hon. Steve Daines, U.S. Senator from Montana,
presiding.
[Opening prayer and drum ceremony performed.]
[Introductions by Robert Oldhorn.]
OPENING STATEMENT OF HON. STEVE DAINES,
U.S. SENATOR FROM MONTANA
Senator Daines. Thank you for that very warm introduction.
And I also want to thank all the Crow legislative and
executive officials that are also here. We are very glad that
they are here. I understand nearly all of them are here. It is
a real honor that you have all made it.
We've got a lot to cover today, and so I call this hearing
to order.
Today, the Committee will examine Empowering of Indian
Country, Coal, Jobs, and Self-Determination.
It's an honor to be on the Crow Reservation here today
examining an issue that means a great deal not only to Indian
Country, but to all Montanans and Americans.
What gets lost in the debate back in Washington about
energy development in general, and coal in particular, is what
it means to real people in real places like Crow Agency,
Montana, Where this is not some abstract policy, not some
abstract debate in the halls of Congress, but this is a debate
about the lives of real people. This is a debate about the
future of sovereign nations looking to be self-sufficient and
providing for their own livelihood.
The key issue for today's hearing, I believe, is jobs and
the numbers are absolutely staggering.
According to the Montana Chamber of Commerce and Chairman
Darrin Old Coyote, who we're going to hear from today, the
unemployment rate on the Crow Reservation is 47 percent. But
without the jobs provided by coal production, that number will
climb to something greater than 80 percent.
I want to thank the Little Big Horn College for hosting us
today, and particularly President David Yarlott. Your staff has
been great to work with, and your facility is beautiful.
I can tell you this dais up here is so much more beautiful
than we have back in Washington, D.C. So, truly, it is an honor
to be here today, and your very, very warm welcome.
Additionally, Chairman Old Coyote, we appreciate the
hospitality from the Crow Tribe, not just for this hearing but
for the last several years.
I am also grateful to Attorney General Tim Fox for making
the trip to be here--I know it was an early start for him to
come down--and for his hard work defending Montana on energy
policy and a whole host of other issues.
I also want to thank the Chairman of the Senate Committee
on Indian Affairs. That's my colleague from Wyoming, Senator
John Barrasso, along with the ranking member of the Committee,
Senator John Tester, who couldn't make it to today's hearing.
It's an honor to work with them on these important issues
on behalf of Indian County. And I'm glad the members of their
staff could be here today, including the Committee staff
directors, Mike and Tony. Thank you for making the trip here.
Well, today we're going to hear from witnesses who are
experiencing the effects of bad policy in Washington that was
developed from a top down approach, rather than listening to
the folks with opinions that matter most, and that's those
whose economic well-being depends on the coal industry to
provide good paying jobs right here in Montana, right here in
Indian Country.
Our young people shouldn't have to move far away just to
make ends meet and raise a family, especially when the
resources we need to power our schools, our homes, our
factories across America are right here in our backyard. We
must be responsible stewards of the land when we develop our
resources, but we must also be responsible stewards of our
children's futures.
So, while we'll hear from our witnesses about the
devastating effects that the Obama Administration's clean power
regulations would have upon the ability of Indian Tribes to
sell their coal, we will also learn about specific
opportunities to lift Tribal Nations out of poverty and take
their rightful place as sovereign nations working with the
Federal Government as a partner, not simply beholden to the
whims of bureaucrats who live thousands of miles away.
The EPA was invited to testify at today's hearing, but they
declined to do so, though, I am grateful that they have sent a
representative from Helena, EPA State Director, Julie, here to
listen to the comments from the hearing and from the audience.
I strongly encourage the EPA to listen closely to those
most directly affected by their policies and request that
today's message reaches Washington, D.C.
Additionally, export terminal projects, currently under
review by the Corps of Engineers, have the potential to create
several million dollars of tax revenue for local communities,
and would ensure that states and Tribal Nations have access to
new export opportunities in order to get a fair market value
for their products.
The decision to approve port terminals especially in the
Pacific Northwest, should take into consideration the effect on
impacted Tribal Nations, and the states would benefit from
access to international markets for products right here in the
heart of Montana.
It is my understanding that the Corps of Engineers also has
a representative here today, which I am thankful for, and I
hope this hearing will bring to light important information
considering approval for these export terminals.
In addition to insuring access to export markets for coal
produced here in Montana, the Indian Coal Production Tax
Credit, which expired at the end of 2014, after a one-year
extension, must be made permanent.
For those who have spent time on the Crow Reservation, the
economic benefits are self-evident. The Indian Coal Production
Tax Credit has worked as a catalyst towards creating jobs and
fostering tribal self-determination.
A study of preliminary findings was published in January of
2014 by the Harvard Project on American Indian Economic
Development which demonstrated how essential this tax credit is
to the economy of the Crow Reservation.
I look forward to learning more about the research findings
during the course of this hearing today.
Well, we're a long ways away from Washington, D.C., and you
know what, that's all right in my book.
I'll be taking the ideas that we will examine in today's
hearing back to Congress so the voices of Montanans, the voices
of the folks out here in Indian Country who are calling for a
change in how business is done, that their voice will and can
be heard.
So, today, we'll be hearing from a great panel. We'll be
hearing from the Honorable Darrin Old Coyote, Chairman of the
Crow Tribe of Montana, Crow Agency, Montana.
Chairman Old Coyote has become a good friend of mine in the
past couple of years, and I enjoy working with him on issues
that matter to the Crow people and all Montanans.
I know that the Chairman here is grateful about his people.
And I'm proud to have a note from his daughter, Evelyn, who was
just nine years old when she wrote it and presented it to me
back in Washington. I have it displayed in my office today back
in Washington. Evelyn is now 11.
You know what that note says? It says, ``Please keep the
coal tax credit going----
[Applause.]
--to help me and other Crow kids have a brighter future.''
That is out of the mouth of a nine-year old.
Speaking as the father of four myself, I know that our
kids' future motivates both me and the Chairman as we work
together on coal and other issues that matter that we are
facing here.
We also have with us today the Honorable Tim Fox, Attorney
General of Montana and the Montana Department of Justice in
Helena.
Attorney General Fox, I'm sure you're glad to be back in
your home turf. He's a Hardin boy originally. We appreciate you
made the long trip from Helena to be here today.
The Attorney General left about 4 o'clock this morning, no
staff, and he drove down here by himself to be a part of this
hearing, which we are grateful for.
Your work on the defending the rights of tribes and the
development of coal has shown your commitment to this area that
you call home.
Attorney General Fox has testified before Congress and the
EPA's Clean Coal Regulation, and where lucky to have him as an
advocate for Montana and for Indian Country.
His work on this is greatly appreciated, and I'm glad to
have him as a teammate in promoting energy development, even
though we root for different sides in the Cat/Griz games.
I have Grizzly bumper stickers on my pickup today because I
lost a bet last fall. We're going to keep this as bipartisan as
we can.
The Honorable Lorenzo Bates, Speaker of the Navajo Nation
Council, Window Rock, Arizona has made this long trip. Welcome
to Big Sky Country. We're very glad to have you here. It is an
honor to have you here to show this isn't just a Montana issue,
but one that affects tribes in places like Arizona as well.
Speaker Bates is a strong advocate for coal and energy
development, and it's great to see another tribal leader who is
aware of the importance of coal on their economic portfolio.
I know the Crow Tribe is glad to the Navajo as an ally in
this fight. Thank you.
Jason Small is a journeyman boilermaker, labor advocate, a
member of the Northern Cheyenne Tribe. Jason Small is a
passionate advocate for resource development.
I had the pleasure of first meeting him for the first time
at a Northern Cheyenne Council a couple years ago, where tribal
leadership there over in Lame Deer told me I was the first
Republican Congressman to ever meet with them at the tribal
headquarters in Lame Deer.
Since that first meeting, Jason and I have become friends,
and I had the pleasure of giving him a late night tour of the
Capitol back in D.C. a while ago.
Jason returned the favor a few months later when he guided
me through a boiler during spring overhaul at the power plant.
Jason is a great spokesperson for Montana coal, for the
opportunities coal holds for Indian Country, and for the
careers that coal provides to boilermakers, electrical workers,
and other trades here in Montana.
And lastly, we have Eric Henson, research fellow, Harvard
Project on American Indian Economic Development from Boston,
Massachusetts.
As we'll hear in his testimony today, Eric Henson and his
colleagues at Harvard University have done impressive research
on how the economic situation of Tribal Nations, including the
Crow Nation, and the importance that coal plays in their
economic portfolio.
We are appreciative of him making the long journey to be
here with us today. And also, as a member of the Chickasaw
Nation, Mr. Henson brings a valuable academic perspective for
discussion, and I look forward to your testimony.
I want to remind the witnesses that your full written
testimony will be made part of the official hearing record.
Please keep your statements to approximately five minutes so we
may have time for questions.
I look forward to hearing your testimony, beginning with
Chairman Old Coyote.
Please proceed.
STATEMENT OF HON. DARRIN OLD COYOTE, CHAIRMAN, CROW NATION
Mr. Old Coyote. Senator Daines, I want to thank you,
Chairman Barrasso, Vice Chairman Tester, and members of the
Committee for holding this Oversight Field Hearing on Coal,
Jobs, and Self-Determination.
My name is Darrin Old Coyote. I am the Chairman of the Crow
Nation.
The Crow Nation is honored to host this field hearing in
Crow Country. We welcome all of our guests, including the
Navajo Nation, other witnesses, Committee staff, federal agency
representatives and the public to discuss this important
subject.
I would also like to thank President Yarlott of Big Horn
College for hosting us today.
As we develop our natural resources and diversified
revenue, Little Big Horn College has, and will, continue to
help to provide our tribaal citizens with education and
training in numerous fields for new job opportunities.
Today, there are more than 13,000 enrolled citizens of the
Crow Nation with approximately 9,000 of those residing on or
near the reservation.
My administration's goal is to invite more of our citizens
to return home to their relatives, but we must be able to offer
homes, jobs and a place to realize their dreams.
Our employment rate remains too high. It's 47 percent.
The Crow Nation has 9 billion tons of recoverable coal with
our longtime mining partner, Westmoreland.
The existing Absaloka Mine has supplied 180 million tons of
Crow coal to Midwestern utilities since 1974. From the mine's
annual production, the taxes and royalties to the Crow Nation
represent as much as two-thirds of the Crow Nation's non-
federal budget.
Also, the mine employs a 70 percent tribal workforce, with
an average annual salary of over $66,000.
For two generations of the Crow leadership, we have simply
sought to obtain full value for our coal resource. In fact, the
last three administrations have testified in Congress that we
repeatedly face obstacles in development despite consistent
Crow leadership officials decisions to monetize their coal.
I, like my predecessors, simply want what is best for the
Crow people.
We have a new barrier to Crow coal development. The EPA's
Clean Power Plan Rule is a major problem for the Crow Nation.
The EPA did not consult with the Crow Nation, did not
consider the economic impacts on the Crow Nation, and did not
provide a less intrusive alternative to the severe effect on
the Crow people.
In sum, the EPA violated its trust responsibility to the
Crow Nation and must provide mitigation and transition time for
the proposed Clean Power Plan Rule.
The proposed rule unfairly penalizes Midwest customers that
currently buy and rely on production of Crow coal for its mix
of energy production.
The local Minnesota utility and the powerplant have already
publicly announced actions to comply with the EPA's plan and
reduce carbon emissions.
The net effect will be a substantial loss of that market
for Crow coal, thereby drastically reducing the Crow Nation's
operating revenues and causing the loss of basic services and
much needed employment on the Crow Reservation.
The Crow Nation has carefully examined its options for
providing future economic opportunities for its members and has
elected to monetize its coal asset by continuing to sell it for
domestic power generation and exporting it to international
markets.
The existing and future growth in the international energy
markets for Crow coal provides an opportunity for the Crow
Nation to obtain full value for our resource and would offset
their loss of revenue caused by the EPA's decisions.
The Crow Nation has partnered with Cloud Peak Energy to
develop the Big Metal Project and lease up to 1.4 billion tons
of coal from the Crow Reservation's southeast corner.
In developing the Big Metal Mine project on Crow lands, the
Crow Nation has a vital interest in a fact-based, timely
decision on the Gateway Pacific Terminal project in Whatcom
County, Washington state as an export terminal for Crow coal.
While not directly related to the development of the Big
Metal Mine, a marine export facility is necessary
infrastructure for supporting the full realization for the Crow
Nation of the economic opportunity for our coal.
Crow recognizes attaining the full economic value for the
Crow coal resource requires meeting existing and future
international coal energy demand.
Therefore, Crow interests are aligned with the success of
the Gateway Pacific Terminal and the connecting rail
infrastructure.
Here at the Crow Indian Days and the Crow Nation Coal
Summit in June, 2014, I invited Cloud Peak Energy, Burlington
Northern Railway and SSA Marine to Crow Agency to see firsthand
what coal means to Crow people.
At the summit, I observed the need for closer collaboration
between the four partners, with each of us having a better
chance of success by sharing information and working together
on the export project.
This leadership was the start of a mutually supportive
partnership between the four partners that exist today.
I would like to address the issue that has been raised by
export opponents and addressed by Burlington Northern, coal
dust.
In fact, coal dust was an issue that Burlington Northern
first identified a decade ago as a contributer to derailments
in mine holding areas. After studying the implementation steps
to counter loads and apply vacuums in coal loading areas, coal
dust was largely eliminated.
Burlington Northern Santa Fe has been hauling coal for
export through the Pacific Northwest for decades, and during
that time has not received any complaints from a natural
resource agency about coal dust until after the Gateway Pacific
Terminal was announced.
To aggressively address opponents' foundation for lingering
concerns about coal dust, Burlington Northern Santa Fe took the
added step to salvage a second vacuum spray facility in Pasco,
Washington at the east end of the Columbia River Gorge.
BNSF has also sought an independent third-party system of
coal dust. The U.S. Department of Transportation, National
Transportation System Center is currently engaged in a full
coal dust research study.
All of these steps represent a comprehensive commitment by
BNSF to eliminate any various allegations about coal dust.
The Crow Nation recognizes the national importance of the
Gateway Pacific Terminal as the best potential new site to ship
U.S. cargos through U.S. ports.
Along with partnering with Cloud Peak and BNSF Railway, the
Crow Nation has partnered with Washington state-based terminal
developer, SSA Marine.
SSA Marine has secured 1,500 acres of private property, and
the heavy impact industrial zone at Cherry Point in Washington
State. In February, 2011, they submitted applications to
develop and operate the proposed Gateway Pacific Terminal bulk
quantity marine shipping facility.
The terminal is designed to process up to 48 million tons
of coal, and would be the fourth pier at Cherry Point, located
next to three existing refineries.
There are existing heavy industrial utilities and existing
rail line on the property. Even more important is the naturally
occurring deep water requiring no dredging to construct a wharf
that will accommodate deep-draft Capesize bulk cargo vessels.
Approximately 75 percent of the cost of landing U.S. bulk
cargo in Asia is related to transportation.
Shipping U.S. commodities in Capesize vessels can cut
overall ocean transportation costs by 20 to 30 percent. This is
an important factor allowing Crow and other U.S. producers to
be competitive in the growing Asian market.
The terminal is being designed and engineered to meet
Washington state's high environmental standards and is already
undergoing a rigorous evaluation in an EIS.
The State Environmental Policy Act EIS review is led by
Whatcom County and the Washington Department of Ecology. The
U.S. Army Corps of Engineers is the federal lead agency for the
National Environmental Policy Act EIS.
The State and Federal EIS will provide the basis for making
informed decisions on the terminal project.
Similar to the big metal mine provided for the economic
future of the Crow Nation, the privately funded Gateway Pacific
Terminal Project will provide a lift to the local economy
during construction and a permanent boost in Whatcom County's
industrial sector with hundreds of new, permanent family-waged
jobs.
That is why the Gateway Pacific Terminal Project enjoys
broad support from the national AFL-CIO, Montana State AFL-CIO,
Northwest Washington Central Legal Council, to name just a few,
construction will generate approximately 4,430 direct and
indirect jobs and nearly $92 million in state and local taxes
over two years.
When operating at full capacity, the terminal will sustain
approximately 1250 permanent direct and indirect jobs and
generate about $11 million annually in local and state tax
revenues.
Investments in export terminals, particularly the Gateway
Pacific Terminal will improve critical infrastructure and
create economic wealth to both the Pacific Northwest and for
the Crow Nation.
Today, the Crow Nation desires to develop its vast coal
resources not only for itself, but for our energy partners, the
surrounding communities and for the United States.
By developing Crow coal via domestic markets, export
terminals and coal conversion, we firmly believe that we can
help ourselves while simultaneously meeting national energy
goals, achieving energy independence, securing a domestic
supply of valuable energy, and, reducing the country's
dependence on foreign oil.
My administration has been very busy in working to develop
our coal resources and to remove obstacles to successful
development.
I simply desire for the Crow Nation to become self-
sufficient by developing our own coal resources and to provide
basic services for the health, hopes and future of the Crow
people.
It is also important to understand that this is our
permanent homeland, and we will always take care of it as
responsible developers.
With help from you, our historic treaty ally, in leveling
the energy development playing field, we can achieve my vision
and both benefit immensely.
Senator Daines, thank you again for the opportunity to
testify on this critical subject before you today. Thank you.
[The prepared statement of Mr. Old Coyote follows:]
Prepared Statement of Hon. Darrin Old Coyote, Chairman, Crow Nation
I. Introduction
Good morning. On behalf of the Crow Nation, I want to thank
Chairman Barrasso, Vice-Chairman Tester, Senator Daines and the members
of the Senate Committee on Indian Affairs for holding this Oversight
Field Hearing on Empowering Indian Country. My name is Darrin Old
Coyote and I am the Chairman of the Crow Nation. I appreciate this
invitation to provide testimony from the Crow Nation's perspective on
coal development, an area central to my administration and a topic that
has unlimited potential to improve the ongoing substandard
socioeconomic conditions of the Crow people and the surrounding
communities in southeastern Montana (the northern portion of the Powder
River Basin) and northern Wyoming.
I have served as an elected official of the Crow Nation for over 10
years. Over the past 2 years, with the help of our coal partners and
the Crow Nation Legislative Branch, we have taken several meaningful
steps toward the successful development of our coal resources and look
forward to completing, in the next few years, projects that will
positively transform my community. My purpose today is to provide a
brief history of the Crow Nation's resources, to summarize my
administration's efforts to develop Crow coal in the northern Powder
River Basin, and to share the benefits and challenges of Crow coal
development.
II. Brief Overview of Crow Reservation, Land Issues and Resources
A. Brief History of Land and Development Challenges
The Crow Nation is a sovereign government located in southeastern
Montana. The Crow Nation has three formal treaties with the Federal
Government, concluding with the Fort Laramie Treaty of May 7, 1868. The
Crow Reservation originally encompassed most of Wyoming (including the
Powder River Basin) and southeastern Montana, totaling 38.5 million
acres. Through a series of treaties, agreements and unilateral federal
laws over a 70 year span, Crow territory was reduced by 94 percent to
its current 2.2 million acre area.
In addition to substantial land loss, the remaining tribal land
base within the exterior boundary of the Crow Reservation was carved up
by the 1920 Crow Allotment Act. In 1919, prior to the Allotment Act,
there were 2,453 allotments (individual Crow ownership), consisting of
482,584 acres. By 1935, there were 5,507 Crow allotments, consisting of
2,054,055 acres (218,136 acres were alienated by 1935). The Big Horn
and Pryor Mountains were not allotted and still remain reserved for the
Crow Nation and its citizens.
Because of allotment and federal probate of Indian property (with
many Indians dying without wills), the phenomenon of fractionated land
ownership arose--where several (sometimes hundreds of) owners might
have varying interests in a single parcel. By 1928, the Meriam Report
declared the federal allotment policy to be one of the most disastrous
federal policies of all time. During discussions leading up to the
Indian Reorganization Act of 1934, one congressman explained the
fractionating effects of allotment in this fashion:
``It is in the case of the inherited allotments, however, that
the administrative costs become incredible. . . . On allotted
reservations, numerous cases exist where the shares of each
individual heir from lease money may be 1 cent a month. Or one
heir may own minute fractional shares in 30 or 40 different
allotments. The cost of leasing, bookkeeping, and distributing
the proceeds in many cases far exceeds the total income. The
Indians and the Indian Service personnel are thus trapped in a
meaningless system of minute partition in which all thought of
the possible use of land to satisfy human needs is lost in a
mathematical haze of bookkeeping.'' 78 Cong.Rec. 11728 (1934),
cited in Hodel v. Irving, 481 U.S. 704 (U.S.S.D. 1987).
The Crow land base had been decimated by fractionated ownership of
various allotments. The Department of the Interior (DOI) estimated that
over 10 percent of all fractionated lands within Indian country are
actually within the Crow Reservation (with numerous parcels of allotted
lands that have more than 10 owners and sometimes more than 100
owners).
Recently, the Crow Nation partnered with DOI and meaningfully
addressed the fractionation issue through implementation of the Cobell
Settlement. As of March 2016, the Crow Land Buy-Back Program (LBBP) had
a willing buyer--willing purchaser success rate of 64 percent (Crow
allottees sold their interests in various parcels of land to DOI in
trust for the Crow Nation). The Crow LBBP resulted in more than $130
million paid out to Crow landowners, with more than 240,000 equivalent
acres purchased for the Crow Nation. The original intent of reducing
fractionation was accomplished and, simultaneously, the Crow Nation can
make more of the Crow homeland productive for both residential and
energy development purposes.
However, the overall loss of the Crow land base and allotment have
collectively resulted in checkerboard ownership of reservation lands,
giving rise to overlapping governmental authority in Indian country
(federal, state, tribal and local). Sometimes, the land issues become
cost prohibitive for some project developers. As discussed later, tax
incentives are critical in order to level the playing field for Indian
energy projects.
B. Present Land, Population, and Education
The statistical land ownership resulting from the above described
legal history (and successful fraction reduction efforts) is
approximately: 32 percent Crow allotments; 33 percent Crow Nation trust
and fee land; and 35 percent non-Indian fee land (basically 2/3 of
surface land is owned by the Crow Nation and individual Crows).
However, overall, the pattern of surface ownership generally is
``checkerboard'' with interspersed Crow Nation trust and fee lands,
Crow allotments and non-Indian fee lands. At times, the checkerboard
nature of the surface ownership creates challenges, summarized later,
for developing the subsurface minerals (almost all of which is owned by
the Crow Nation).
Today, there are more than 13,000 enrolled citizens of the Crow
Nation, with approximately 9,000 of those residing within the exterior
boundaries of the Reservation. Our goal is to invite more of our
citizens to return home to live and resume tribal relations, but we
must be able to offer homes, jobs, and a place to find their dreams.
Our current unemployment rate is 47 percent. The Crow Nation has always
emphasized higher education and we currently have more than 400 annual
applications for higher education assistance. Because of federal
funding limitations and internal budget constraints, however, we can
only partially fund 90 students each year.
In addition to providing financial support for education, we have a
separately chartered tribal college (Little Bighorn College, ``LBHC'')
that started operations in 1981. Among the hundreds of LBHC graduates,
many are employed on and around the Crow Reservation in a variety of
positions including teachers' aides, computer technicians, office
managers and administrative assistants. At least sixty have completed
bachelor's degrees and are pursuing professions in education, social
work, human services, science, nursing, technology, accounting and
business. As we move forward in developing our coal resources, LBHC can
help to provide our citizens with training in fields for new job
opportunities.
C. Coal--Past and Present
The Crow Nation has very substantial undeveloped coal resources. In
fact, today, the Crow Indian Reservation contains 2 million acres in
subsurface mineral rights, including an estimated 9 billion tons of
coal. The Crow Nation has developed a limited amount of its resource,
by leasing a portion of its coal reserves for 40 continuous years to
Westmoreland Resources, Inc. (WRI). WRI owns and operates the Absaloka
Mine (``Mine''), a 15,000-acre single pit surface coal mine complex
near Hardin, Montana, on the northern border of the Crow Reservation.
The Absaloka Mine was developed to supply Powder River Basin coal
to Midwestern utilities and it has produced over 180 million tons of
coal since 1974. From the Mine's 5-7 million tons per year of coal
production, it provides production taxes and royalties to the Crow
Nation--exceeding $20 million in 2010 when the Mine was operating at
full capacity. The revenue generated from the Mine represents as much
as two-thirds of the Crow Nation's non-federal budget.
Furthermore, WRI employs a 70 percent tribal workforce, with an
average annual salary of over $66,000, and a total employment expense
of approximately $18.6 million dollars. The Absaloka Mine is the
largest private employer within the Crow Reservation. The importance of
the Mine to the economy of the Crow Reservation cannot be overstated.
Without question, it is a critical source of jobs, financial support
and domestically-produced energy. WRI has been the Crow Nation's most
significant private partner over the past 40 years.
A recent example demonstrates the importance of the Absaloka Mine
to the Crow people. A major unplanned outage at the Mine's largest
power plant customer during 2011-2013 resulted in a 50 percent
reduction in tribal coal revenue and numerous employment layoffs. This
recent outage reinforced the need for the Crow Nation to pursue
multiple coal projects to diversify our revenue base.
III. My Administration's Vision on Energy Development: Potential
Benefits
Given our vast mineral resources, the Crow Nation can, and should,
be self-sufficient. My goal is clear. My administration desires to
develop our mineral resources in an economically sound, environmentally
responsible manner that is consistent with Crow culture and beliefs.
More than anything, I desire to improve the Crow people's quality of
life, create a future with good-paying jobs and employment benefits
within the Crow Reservation, and provide hope and prosperity for the
next seven generations of Crow citizens.
My larger vision is to become America's energy partner and help
reduce America's dependence on foreign oil. Over the next 40 years, the
World Energy Council predicts that the world will need to double
today's level of energy supply to meet increased demand. Primary energy
sources, such as coal, oil and gas, have a finite life and therefore we
must have an all-of-the-above energy development strategy to meet
America's needs as well as global demand.
My administration stands ready to meet the global energy challenge,
but the future both near and long term, must have coal in its equation.
With President Obama's recent speech on climate change, we are mindful
of the increased efforts, policy and otherwise, to restrict coal as a
domestic fossil fuel source to generate electricity (with domestic coal
produced electricity being reduced from approximately 50 percent to 40
percent in less than a decade). Our coal partners and our coal
economist consistently remind us of the difficult environment for
domestic coal production.
Despite the challenging environment, the Crow Nation has
intensified its efforts to develop its coal resources to diversify its
revenue streams. With respect to the Absaloka Mine, the Crow Tribal
Legislature approved and I executed an agreement with WRI in March 2013
to expand its mining operations with a lease of an estimated 145
million tons of Rosebud-McKay seam coal resources located adjacent to
the Mine. This new lease will provide the Crow Nation with long-term
revenues and employment and sustain the operations of the Mine past
2020.
Similarly, in June 2013, the BIA approved another tribally-approved
agreement with Cloud Peak Energy (CPE) to explore, with options to
lease and develop an estimated 1.4 billion tons of Crow coal in the
southeastern corner of the Crow Reservation. This long-term agreement
will also provide much needed revenue to the Crow Nation, increase
employment opportunities for Crow and Montana citizens, and diversify
Tribal revenue sources. However, the CPE project--named Big Metal
(www.bigmetalcoal.com), is largely dependent on coal exports through
the Northwest.
As such, I have directed my administration to investigate and
pursue coal exports, given the increased coal demand in the Pacific
Rim. Since 2013, I have sent three Crow delegations to the Northwest to
meet and work with other tribal nations, investigate proposed coal
export projects, and then to analyze and follow-up on these recent
diplomatic discussions and fact-finding trips about possible
relationships involving Crow coal, transportation, and export terminal
partners. During the last two trips, which I attended, I invited
present and potential project partners, as well as tribal leaders from
Northwest tribal nations, to visit my homeland to see first-hand Crow
coal development and listen to their concerns.
The last two summers I have hosted a Crow Nation Coal Summit to
answer questions about coal transportation issues (coal dust and train
traffic), jobs (viewing Crow citizens at the Absaloka Mine),
reclamation and the potential for future export development. We worked
with our coal partners to provide mine tours of CPE's Spring Creek and
WRI's Absaloka mine, to provide coal transportation information from
BNSF Railway (BNSF) representatives, and to have coal export terminal
questions answered by representatives from SSA Marine, the project
developers of the proposed Gateway Pacific Terminal marine export
facility.
We have been made aware of local concerns regarding coal export
projects expressed by citizens in the Northwest. That is the reason I
brought industry, tribal nations and local citizens together to inform,
educate, and work with each other to address any substantive issues. I
will continue to work with everyone and respect tribal treaty rights
and local concerns. However, I strongly feel that non-governmental
organizations cannot and should not tell me to leave Crow coal in the
ground; I was elected to provide basic services and jobs to my citizens
and I will steadfastly and responsibly pursue Crow coal development to
achieve my vision for the Crow people.
Finally, with a substantial Crow coal resource, I would like to
continue to build the first coal-to-liquids (CTL) plant in North
America with carbon capture and utilization. In fact, in 2008, the Crow
Nation and our partner signed a project agreement to develop Many
Stars, a planned coal-to-liquids project that sought to produce up to
50,000 barrels or more per day of ultra-clean jet and diesel fuel. Crow
sought to contract with the U.S. Air Force and other local industries
to supply clean diesel fuel that would meaningfully reduce carbon
emissions throughout the world, reduce America's dependence on foreign
oil, and provide a safe and secure domestic fuel supply to our national
defense.
Unfortunately, the economic recession hit and an uncertain national
energy policy made it difficult for the proposed project to proceed. We
remain hopeful that the Administration can and will support clean coal,
that technology advancements can create a smaller scale project, and
that clean coal legislation (discussion draft entitled, ``Native
American Clean Coal Economic Development Act of 2015'') to provide for
bonding authority with incentives to industry partners will be
introduced and passed in this Congress. I am pursuing an all-of-the-
above energy development strategy (hydropower, wind, coal export and
CTL) but I will need some help in order to effectuate my energy vision.
IV. Challenges and the Need to Level the Playing Field
A. EPA's Clean Power Plan
The Crow Nation and the Montana Attorney General sent joint
comments to the EPA on December 1, 2014, to express grave concern about
the substantial negative impact that the EPA's Proposed Rule, dated
June 18, 2014, and titled, ``Carbon Pollution Emission Guidelines for
Existing Stationary Sources: Electric Utility Generating Units,'' will
have on the Crow Nation, its citizens and resources, and their
collective future. In sum, both the Proposed Rule dated June 18, 2014,
and the subsequent and separate proposed Clean Power Plan Rule for
Indian country dated November 4, 2014, simply ignore the Crow Nation's
concerns.
The lack of meaningful government-to-government consultation, as
required by Executive Order 13175, in developing the aforementioned
Proposed Rules is telling. Despite minimal tribal outreach (and no
direct contact with elected Crow Nation officials before the rule was
proposed), significant substantive policy prescriptions are likely to
cause serious setbacks to the Crow Nation, potentially over multiple
generations. The longstanding trust responsibility between the Federal
Government and the Crow Nation may be violated unless an exception and/
or mitigation of the rule is provided to us.
The Proposed Rule is a major problem for the Crow Nation. The EPA
did not consult with the Crow Nation, did not consider the economic
impacts on the Crow Nation, and did not provide a less intrusive
alternative to the severe effect on the Crow Nation of this Proposed
Rule. In sum, the EPA violated its trust responsibility to the Crow
Nation and must provide a substantive alternative and/or mitigation of
the Proposed Rule.
i. The agency failed in its duties to consult with the Crow
Nation and to consider the economic effects of the proposal on
the Crow Nation.
As mentioned above, the Crow Nation receives revenues equaling 66
percent of its annual non-federal budget from severance taxes and
royalties paid for the mining of coal owned by the Crow Nation at the
Mine, near Hardin, Montana. Ninety percent of the coal mined from the
Mine is sold to, and burned at, electrical generating units (EGU) in
Minnesota. The Proposed Rule strongly encouraged the State of Minnesota
to demand retirement of the older units of the power plant to meet the
carbon reduction goals set by the EPA.
The Proposed Rule also sets higher renewable standards for the
State of Minnesota to meet by 2030, despite Minnesota law already
requiring higher levels of renewable energy to be produced by 2020.
Because the Proposed Rule will unfairly penalize Minnesota and other
Midwest customers that currently buy and rely on production of Crow
coal for its mix of energy production, and since the Minnesota EGU have
already taken action to reduce carbon emissions, the result will be a
substantial loss of that market for Crow coal.
That in turn will mean drastic hits to the Crow Nation's operating
revenues, which will directly cause the loss of services and employment
on the Crow Reservation. Despite Executive Orders requiring federal
agencies to engage in substantive consultation with Indian Tribes
affected by agency proposals, and to consider the impact of proposals
on economic growth and job creation, the EPA utterly failed to do so
with respect to the effect of this proposal on the Crow Nation.
Executive Order 13175 requires agencies to ensure meaningful and
timely input by tribal officials in the development of regulatory
policies that affect tribes. In this case, that simply didn't happen.
Despite representations at Section III.A.5 of the Proposed Rules that
the ``EPA conducted significant outreach to tribes,'' the actual extent
of the agency's effort was minimal, at best. Other than a letter
purportedly sent to the Tribe (a form letter stating, ``Dear Tribal
Leader''), no one in the agency contacted the Crow Nation directly--
government-to-government--as is required in the aforementioned
Executive Order and Presidential Memo that implements EO 13175.
The lack of meaningful consultation is perplexing in light of the
fact that the Crow Nation is one of only four tribes nationwide that
owns merchantable coal deposits, and is one of only three tribes (out
of 566 federally recognized tribes) for whom the mining of coal burned
in electrical generating units impacted by the proposal is a hugely
significant piece of the Tribal economy. Because the Crow Nation only
produces coal with its longstanding development partner and there is
not a coal-fired power plant on the Crow Reservation, the EPA Proposed
Clean Power Plan for Indian country (those tribes with EGUs within
their reservation boundaries) also does not apply.
The November 4, 2014, Clean Power Plan Rule simply provides an
option for a tribe to develop its own Section 111(d) plan and, if they
choose not to, then the EPA would develop a federal plan necessary to
achieve the EPA's suggested carbon emission reductions in Indian
country. Since the Crow Nation does not have an EGU on its reservation,
the Clean Power Plan Rule is inapplicable to the Crow Nation.
Therefore, both sets of the EPA's Proposed Rules do not address the
Crow Nation's significant interests impacted as a result of federal
agency action.
Furthermore, Executive Order 13563 requires federal agencies to
propose or adopt a regulation only upon a reasoned determination that
its benefits justify its costs and to tailor its regulations to impose
the least burden on society consistent with regulatory objectives. It
requires that regulations be based on an open exchange of information
and perspectives among State, local and Tribal officials. Any open
exchange with Crow Tribal officials would have brought to light the
impact of the proposal on the Crow Nation and would have highlighted
the unfairly prejudicial impact of the proposal on the Minnesota
customer of Crow coal.
B. Practical Challenges
In addition to the EPA's Clean Power Plan, numerous practical
problems consistently arise with each proposed Indian coal project. The
lease approval and development process is burdensome, slow, and
complicated. Federal regulatory requirements for appraisals, surface
access approvals and environmental assessments to conduct exploration
within the Reservation often create significant delays. Further,
incomplete land records (in some cases BIA records for surface and
mineral ownership are erroneous, missing and out of date), inadequate
BIA staffing (e.g., the BIA area office in Billings, Montana, has one
primary individual to work on environmental issues for eight tribal
nations), and surface land fractionation (described above) create
uncertainty that discourages investment and significantly impedes
project development.
It is extremely difficult to compete with off-reservation
development because of these problems. Many companies view these
additional regulatory and practical burdens as cost prohibitive, even
with the best efforts of particular BIA employees and the Crow Nation.
Based on our experience in working with current and prospective coal
partners, we strongly recommend a two-prong approach to leveling the
playing field for energy development in Crow country: (i) eliminate
regulatory obstacles (we provided written support for H.R. 1548, Native
American Energy Act); and (ii) permanently extend existing tax
incentives to offset the extra development burdens.
C. Leveling the Playing Field
There are a few federal tax incentives that encourage investment
and development in Indian country, but their utility is diminished by
their short-term nature. Accelerated depreciation and the Indian
employment tax credit are two examples of such incentives (the latter
needs some modifications to enhance its effectiveness). These
incentives, originally enacted in the 1993 Budget Reconciliation Act,
have been extended year-to-year in the tax extenders package and, as
such, generally are not relied upon by potential investors with large
Indian energy projects because of the extended length of time (often 5-
10 years for large coal projects) that development takes before the
energy commodity is produced. The Crow Nation supports the permanent
extension of these tax incentives, with modifications, but another more
specific tax incentive is the most important for Crow coal development.
The Indian coal production tax credit (ICPTC), originally enacted
in the 2005 Energy Policy Act, has kept the Absaloka Mine open and
competitive since 2006. This credit neutralized the threat of a
potential mine closure and also continued WRI's ability to provide
critical employment and revenue for essential Crow governmental
functions. Like the aforementioned tax incentives, it expired on
December 31, 2014, and continues to be part of the overall tax
extenders package.
In order to overcome all of the additional regulatory costs and
land transaction issues described above, the Crow Nation seeks a
permanent extension of ICPTC, with a few modifications. We would like
for the ICPTC to be used against the alternative minimum tax, to extend
the placed in service date to include the aforementioned projects, and
to eliminate the unrelated person requirement in the original credit
(to allow for a CTL project in the future). With these tax incentives
made permanent, the Crow Nation would have the opportunity to compete
with others on a level playing field.
V. Market Access for Crow Coal
A. Crow Tribe Interest in Infrastructure
The Crow Nation has carefully examined its options for providing
future economic opportunity for its members and has elected to monetize
its coal asset by continuing to selling it for domestic power
generation and exporting it to international markets. The existing and
future growth in the international energy markets for coal provides the
opportunity for the Crow Nation to obtain full value for their resource
and would offset their loss of revenue caused by the EPA's decisions.
In pursuit of exporting Crow coal, the Crow Nation is engaging in
interstate commerce and international trade. Crow Nation has partnered
with CPE, BNSF and SSA Marine to gain access to international markets
and compete with other nations in supplying a secure source of energy
to meet global demand to United States trading partners.
Powder River Basin coal is exported out of Canadian ports in
British Columbia today. In the absence of U.S. port capacity, British
Columbia ports have been expanding to receive U.S. cargoes. The Crow
Nation recognizes the national importance of the Gateway Pacific
Terminal as the best potential new site to ship U.S. cargoes through
U.S. ports.
B. The Big Metal Mine Project
The Crow Nation is partnered with CPE on the Big Metal Project. The
agreement is for the exploration and the option to lease up to 1.4
billion tons of coal from the Crow Reservation's southeast corner. CPE
has demonstrated their commitment to both safety and the environment,
and we appreciate their leadership as one of this country's largest
coal producers. In addition, CPE has been a good partner with the Crow
Nation, providing college scholarships to more than 40 Crow students
and supporting those in need. All of this has happened while CPE has
worked with the Tribe to complete exploratory drilling, which has been
ongoing since June of 2014.
In developing the Big Metal Mine project on Crow lands, the Crow
Nation has a vital interest in a fact-based, timely decision on the
Gateway Pacific Terminal project in Whatcom County, Washington as an
export terminal for Crow coal. While not directly related to the
development of the Big Metal Mine, a marine export facility is
necessary infrastructure for supporting the full realization for the
Crow Nation of the economic opportunity for its coal. Crow recognizes
attaining full economic value for the Crow coal resource requires
meeting existing and future international coal energy demand; to that
end, Crow interests are aligned with Gateway Pacific Terminal's success
and the connecting rail infrastructure.
C. Energy Poverty and the Global and Asian-Pacific Coal Demand
Let me address a few key issues pertaining to coal and its place in
the world's energy portfolio and in the amelioration of energy poverty.
According to the International Energy Agency, 1.3 billion people are
without access to electricity. That is 18-percent of the world's
population or nearly 1 in 5 people. For many of these people, coal-
fueled, low-cost, reliable electricity represents an opportunity to
climb out of the misery of poverty.
Coal is an important component of the world's energy portfolio
until better solutions are arrived at, especially in those countries
that are in need of electrification to resolve poverty. A key goal of
the Copenhagen Accord of 2010 is to provide energy to these
impoverished populations. For the time being, coal is simply an
essential source of fuel.
According to the International Energy Agency, global demand for
coal will increase to more than 9 billion tons of coal by 2019 with
much of that growth fueled by demand from Asia and India. Since the
beginning of the 21st century, coal has been the fastest-growing global
energy source worldwide. According to the U.S.'s Energy Information
Administration, ``Japan imported nearly 211 million short tons of coal
in 2013, up from 204 million short tons in 2012, after more coal
capacity came online.'' In addition, the Japanese are funding coal-
fueled power plants in Japan and throughout Asia, leading to increased
demand.
Bill Gates, himself a climate change activist, offered this
observation on the present need for the use of fossil fuels in
developing countries: ``[People in poor countries] desperately need
cheap sources of energy now to fuel the economic growth that lifts
families out of poverty. They can't afford today's expensive clean
energy solutions, and we can't expect them to wait for the technology
to get cheaper.'' Gatesnotes, The Blog of Bill Gates, June 25, 2014
Independent experts at places like Stanford University state that
U.S. coal exports will not increase the usage of coal in Asia, but will
likely replace inferior sources of coal from other countries. As well,
they have concluded that exporting U.S. coal will not increase
greenhouse gas emissions and may actually reduce them.
As long as coal is to be utilized, from an environmental
perspective, Powder River Basin coal is a preferred alternative (and
has been called ``clean coal'' by the USGS), because it is lower in
sulfur, ash, and other contaminants. As well, it is mined under the
world's highest labor and environmental standards.
Cloud Peak Energy is the largest U.S. supplier of coal for
electricity to South Korea. Last year alone, Cloud Peak Energy shipped
4 million tons to Asian utilities, many of whom are constructing the
world's most-advanced coal-fueled power plants. According to the U.S.
Energy Information Administration, ``[c]oal consumption in South Korea
increased by 55 percent between 2005 and 2012, driven primarily by
growing demand from the electric power sector.'' South Korean utilities
are currently adding even more coal-fueled power plants to meet the
country's increasing need for electricity.
The increasing demand for power from coal has raised questions
about air quality impacts, both locally and globally. It is important
to note that Powder River Basin coal from Crow mines is lower in sulfur
dioxide and nitrogen oxide, which is better for the environment than
the coal that is currently mined in Asian countries. Together with
modern power plant technology being developed in Asia, use of Powder
River Basin coal may reduce, and not raise, global emissions of air
pollutants and carbon emissions.
D. Rail Transportation
BNSF is the leading railroad in the U.S. with a network of 32,500
route miles, 48,000 employees and 8,000 locomotives. Montana and
Wyoming are home to over 4,000 BNSF employees and their families.
Payroll for these two states exceeds $300 million. BNSF is aggressively
investing to preserve, maintain, and grow capacity across its 28-state
network with a capital investment plan of over $5 billion in 2014 and
$6 billion in 2015. Much of this investment is dedicated along its
major coal routes.
BNSF Railway serves the Powder River Basin (PRB) region,
transporting coal to customers throughout the Midwest and southern
regions of the U.S., as well as to the west coast for export. Since
2000, BNSF has doubled coal delivery to Eastern customers from 50 to
100 million tons. In addition, BNSF delivers more coal than any other
U.S. company, including 57 percent from the PRB region.
The Federal Railroad Administration determined that 2013 and 2014
were the safest in U.S. history for freight railroads. With major
investment in infrastructure, safe operating practices, and a
comprehensive safety culture, BNSF continues to make great strides in
their highest priority of safety.
E. Gateway Pacific Terminal
The Terminal developer, SSA Marine, is a Washington State
corporation founded in 1949 in Bellingham, Washington. They have grown
to be the largest privately held terminal operating company in the
world. In 1991, SSA Marine's subsidiary, Pacific International
Terminals, Inc., secured the property at Cherry Point, Washington
State. Since then, they have taken thoughtful steps to develop the
1,500-acre property located in Whatcom County, 17 miles south of the
U.S.-Canadian border. Pacific International Terminals has committed to
develop the Terminal while ensuring that the environment, the community
and shippers' interests all benefit.
Pacific International Terminals submitted an application for
project permits in February 2011 to develop and operate the proposed
Gateway Pacific Terminal (``Terminal'') as a multi-commodity bulk
terminal for transshipment of dry bulk commodities between rail and
marine transportation systems. It is intended to meet the need for a
West Coast marine shipping facility to serve the transpacific market.
The Terminal is designed to process up to 54 million tons of dry
bulk commodities annually, including up to 48 million tons of coal.
Other potential cargoes are grains, potash and wood bio-fuels. It will
be the fourth pier at Cherry Point, a designated Heavy Impact
Industrial zone, located next to the existing BP Cherry Point Refinery,
the ALCOA--Intalco Works aluminum smelter and Phillips 66 Ferndale
Refinery.
Cherry Point is an ideal location for the Terminal. The existing
heavy industrial utilities and existing rail line are essential for
efficient operation of the marine shipping facility. Even more
important is the naturally occurring deep water requiring no dredging
to construct a wharf that will accommodate deep-draft ``Capesize'' bulk
cargo vessels. The Terminal is adjacent to a designated international
shipping corridor that is highly regulated by a Vessel Traffic System
jointly operated by the U.S. and Canadian Coast Guards for over 40
years with great success.
The economies of scale of Capesize vessels allows them to be more
fuel, carbon, and cost-efficient than smaller ships in moving a ton of
product. Approximately 75 percent of the cost of landing U.S. bulk
cargo in Asia is related to transportation. Shipping U.S. commodities
in Capesize vessels can cut overall ocean transportation costs by 20-30
percent. This is an important factor allowing Crow and other U.S.
producers to be competitive in the growing Asian markets.
The Terminal is being designed and engineered to meet Washington
State's high environmental standards and is already undergoing a
rigorous evaluation of the environmental, social, and economic benefits
and impacts in an Environmental Impact Statement (EIS). The State
Environmental Policy Act (SEPA) EIS, led by Whatcom County and the
Washington Department of Ecology. The U.S. Army Corps of Engineers is
the Federal lead agency for the National Environmental Policy Act
(NEPA). The State and Federal EIS's will provide the basis for making
informed decisions on the Terminal project.
The privately funded Terminal will provide a big lift to the local
economy during construction, and a permanent boost in Whatcom County's
industrial sector with hundreds of new, permanent family-wage jobs.
Construction will generate approximately 4,430 direct and indirect jobs
and nearly $92 million in state and local taxes over two years. When
operating at full capacity, the Terminal will sustain approximately
1,250 permanent direct and indirect jobs and generate about $11 million
annually in local and state tax revenues. Altogether, with the tax
revenue and wages during two years of construction plus 10 years of
full operations, the Terminal would bring more than $1.8 billion in
revenue to the region.
VI. Conclusion
Today, the Crow Nation desires to develop its vast coal resources
not only for itself, but for our energy partners, the surrounding
communities and for the United States. By developing Crow coal via
domestic markets, export terminals and coal conversion, we firmly
believe we can help ourselves while simultaneously meeting national
energy goals--achieving energy independence, securing a domestic supply
of valuable energy, and reducing the country's dependence on foreign
oil. My administration has been very busy in working to develop our
coal resources and to remove obstacles to successful development.
I simply desire for the Crow Nation to become self-sufficient by
developing its own coal resources and to provide basic services for the
health, hopes and future of the Crow people. With help from you--our
historic treaty ally--in leveling the energy development playing field,
we can achieve my vision and both benefit immensely.
Mr. Chairman and Committee members, thank you again for the
opportunity to testify on this critical subject before you today. I
would be happy to answer any questions.
Addendum--Additional Crow Nation Perspective on World Energy Demand and
Coal Exports
The Crow Nation has carefully examined its options for providing
economic opportunity for its members and has elected to monetize its
coal asset for export to Pacific Rim countries.
Global climate issues are an administration priority and the Crow
people share the President's concern. Coal is an important component of
the world's energy portfolio until better solutions are arrived at,
especially in those countries that are in need of electrification to
resolve poverty. \1\ \2\ A key goal of the Copenhagen Accord of 2010 is
to provide energy to these impoverished populations. For the time
being, coal is simply an essential source of fuel. \3\
Bill Gates offered this observation on the present need for the use
of fossil fuels in developing countries: ``[People in poor countries]
desperately need cheap sources of energy now to fuel the economic
growth that lifts families out of poverty. They can't afford today's
expensive clean energy solutions, and we can't expect them wait for the
technology to get cheaper.'' Gatesnotes, The Blog of Bill Gates, June
25, 2014
U.S. coal exports will not increase the usage of coal in Asia \4\,
but will likely replace inferior sources of coal from other countries.
As long as coal is to be utilized, from an environmental perspective,
Powder River Basin coal is a preferred alternative (and has been called
``clean coal'' by the USGS), because it is lower in sulfur, ash, and
other contaminants. \5\ \9\ As well, it is mined under the world's
highest labor and environmental standards.
Exporting U.S. coal will not increase greenhouse gas emissions and
may actually reduce them. \6\ If the U.S. does not build the port
capacity to export its own coal, then Canada and/or Mexico are likely
to do so. \7\
The Crow need the option of shipping their product through an
efficient west coast port. The proposed Gateway Pacific Terminal in
northwest Washington would have a maximum coal exporting capacity of 48
million metric tons per year. (The facility is being proposed by
Washington-based SSA Marine, which is the nation's leading shipping
terminal operator with 125 locations worldwide.) Although this would be
an economically transformative activity for the Crow people, it would
constitute a tiny fraction of coal consumption in Asia. \8\
Crow coal exports will support the purposes of the administration's
National Export Initiative and NEI/NEXT, and help to increase trade
with other countries. As well, it is consistent with national policies
(such as those articulated in the National Defense Authorization Act)
that aim to support our Asian allies, who need affordable and geo-
politically stable sources of fuel.
Freedom of interstate commerce and reservation of power to regulate
commerce (national and tribal nations) to the Congress (as opposed to
individual states) are foundational principles embedded in Article I,
Section 3 of the U.S. Constitution. That same section reserves to the
Congress the exclusive power to regulate commerce ``with the Indian
tribes.'' The governments of North Dakota, Wyoming, and Montana have
expressed concerns that the environmental review processes for west
coast coal export projects are being used to interfere with
constitutionally protected interstate commerce.
The export of Crow coal supports the people of the Crow Nation and
is consistent with the federal government's constitutional and treaty
trust obligations to the tribe.
Footnote References--World Energy Demand and Coal Exports
\1\ The Global Energy Network Institute has confirmed, ``Every
single one of the United Nations' Millennium Development Goals requires
access to electricity as a necessary prerequisite.'' The International
Energy Agency's (IEA) Faith Birol, agrees and states, ``The importance
of coal in the global energy mix is now the highest since 1971. It
remains the backbone of electricity generation and has been the fuel
underpinning the rapid industrialization of emerging economies, helping
to raise living standards and lift hundreds of millions of people out
of poverty.''
Letter from National Mining Association to Export-Import Bank of
the U.S., November 8, 2013
\2\ ``Like it or not, coal is here to stay for a long time to
come.Coal is abundant and geopolitically secure, and coal-fired plants
are easily integrated into existing power systems.''
--Maria van der Hoeven, the International Energy Agency's executive
director, Paris Presentation of the IEA's Medium-Term Coal Market
Report 2013, December 16, 2013
\3\ According to Frank Clemente, a retired Pennsylvania State
University professor, ``Coal is the only fuel that can sustainably meet
growing global demand at such a scale.'' China has seen the future, and
it is coal, The Washington Post, December 30, 2010
\4\ ``By importing U.S. coal, China is not changing the amount of
coal that it burns. I understand why on an emotional level people don't
like it. But if you actually understand the economics, and you
understand how climate change works, it's a non-issue.'' Richard Morse,
director of research on coal and carbon markets at Stanford University,
Trading Markets, December 27, 2010
\5\ ``Not all coal is created equal. The proposed export terminals
in the Northwest would ship coal that is better for the environment in
almost every way than the coal mined in East Asian countries like
China, particularly with regard to sulfur dioxide and nitrogen oxide
levels.''--Fred Thompson, professor of public management and policy at
Willamette University, Exporting coal to China is the greenest option,
The Register-Guard, March 12, 2013
\6\ ``If Pacific Coast states construct sufficient coal export
facilities, the United States is likely to sell heaps of coal to Asia
in the years ahead, but that should cut--not raise--global emissions of
greenhouse gases, according to Frank Wolak, professor of economics at
Stanford University and director of Stanford's Program on Energy and
Sustainable Development.'' Reduce greenhouse gas by exporting coal?
Yes, says Stanford economist, The Stanford Report, January 15, 2013
\7\ ``This demand for coal in China appears to be long lived. The
coal-fired power plants are expensive to build and are designed to last
a long time, at least 30 years. If the United States does not build
West Coast ports to ship western coal to Asia, Canada will likely do
so.'' Reduce greenhouse gas by exporting coal? Yes, says Stanford
economist, The Stanford Report, January 15, 2013
\8\ Wood Mackenzie forecasts a worldwide coal demand growth of 5.5B
tons from 2012 to 2030. [See also IEA data at http://www.iea.org/
aboutus/faqs/coal/]
The U.S. Energy Information Administration (EIA) projects world
energy consumption will increase 56 percent from 2013-2040.
\9\ Chapter PQ COAL QUALITY AND GEOCHEMISTRY, POWDER RIVER BASIN,
WYOMING AND MONTANA, By G.D. Stricker and M.S. Ellis in U.S. Geological
Survey Professional Paper 1625-A, 1999
Senator Daines. Chairman Old Coyote, thank you.
Attorney General Fox.
STATEMENT OF HON. TIM FOX, ATTORNEY GENERAL, STATE OF MONTANA
Mr. Fox. Senator Daines, I'd like to thank you and Chairman
Barrasso and Senator Tester for the invitation to speak here
today. My name is Tim Fox. I'm the attorney general for the
state of Montana.
I grew up in Hardin, and have a deep appreciation for the
history, culture, but most importantly, the people of the Crow
Nation.
Like most other Montanans, one thing the Crow people
treasure is the land that they were born and raised in. I think
the Chairman just alluded to that.
And thank you, Chairman Old Coyote, for hosting this
important hearing.
Like most other Americans and Montanans, among the things
that the Crow people would most like to see, for themselves and
their children, are the opportunities for jobs that will allow
them to make a reasonable living in the place they grew up so
they can stay rather than having to move elsewhere of
necessity.
The Crow Nation, like the rest of our state, is rich in
resources. Those resources, including coal, are currently
providing opportunity for Montanans, including the Crow people
and, wisely used, will continue to do so.
I am concerned, though, that we are today seeing political
and regulatory developments which, though not intentionally
targeting the Crow Nation and, more generally, all of Montana,
will, if unchecked, destroy present and future opportunities
for our people.
I would like to talk briefly about a couple of those
developments.
One of those developments is the U.S. Environmental
Protection Agency's June 18, 2014 existing source proposal
under Section 111(d) of the Clean Air Act.
I joined the attorney generals of 16 other states in
comments on that proposal, but I also filed separate comments
with Chairman Darrin Old Coyote of the Crow Nation, and I want
to talk just a minute about those comments.
The Crow Nation's coal resources are still largely
undeveloped, but there is currently one operating mine, the
Absaloka Mine. And just that one mine provides two-thirds of
the Crow Nation's annual non-federal budget, and is by far the
largest private employer on the reservation.
Unfortunately, one of the very likely effects of the EPA's
existing source rule would be to kill the market for the coal
produced by the Absaloka Mine, which is nearly all sold to
Minnesota utilities. This will, in turn, kill the mine, causing
drastic loss of services and employment on the Crow
Reservation.
The EPA has a legal duty under Executive Order 13175 to
ensure meaningful and timely input by tribal officials in the
development of regulatory proposals that affect tribes.
In the development of its existing source rule proposal,
EPA went through the motions, issuing two, ``Dear Tribal
Leader'' form letters, but nobody from the agency contacted the
Crow Nation directly in a government-to-government contact
saying, ``Excuse me, but this proposal could, as implemented in
the State of Minnesota, kill the market for the output from the
Absaloka Mine, and we'd like to talk to you about that.''
The Executive Order requires that the EPA ensure meaningful
and timely input. The agency didn't get that job done before it
promulgated its proposal, and the agency needs to withdraw the
proposal and do the consultation it is required to do with the
people of the Crow Nation.
The second development I wanted to talk about is the
importance of keeping open the avenues of interstate commerce
which coal mined in Montana needs to travel to reach markets
outside our state, and this affects not only the Absaloka Mine
in Crow Nation, but the other coal mines in Montana, both
present and future.
As a landlocked state, we are dependent on port facilities
in our sister states for shipping Montana-produced bulk
commodity products to international markets.
There is currently an international market for coal mined
in the northern Powder River Basin, and some coal is, in fact,
being exported from Montana mines to that market.
For example, 4.7 million tons of coal was shipped in 2013
from the Spring Creek Mine through Westshore Terminals in
British Columbia. But that terminal is at capacity, meaning
more port capacity is needed to ensure open markets for our
coal.
There are three active proposals to construct terminals
which would provide capacity for shipment of coal from the
northern Powder River Basin to international markets, two in
the state of Washington, and one in Oregon.
The two in Washington, the Millennium Terminal Project at
Longview and the Gateway Pacific Terminal at Cherry Point, are
in the permit review and environmental analysis stage.
The Coyote Island Terminal project in Oregon, which would
provide a terminal to take coal from rail at Boardman, Oregon
for transport by barge down the Columbia to Port Westward for
loadout onto ocean-going vessels, was denied a fill permit by
the Oregon Department of State Lands, and an administrative
appeal of that decision is pending.
My office has been involved in the scoping process for the
environmental analysis of the Gateway Pacific Project, and we
are actively tracking the process for that Millennium Project.
We have actually intervened in the appeal of the permit
denial for the Coyote Island Terminal, along with the state of
Wyoming.
The reason we have taken these steps is to ensure, as our
sister states make their decisions regarding these port
proposals, that our state's constitutional right not to have
the avenues of interstate commence unduly burdened is fully
protected.
I know from discussions I have had with Chairman Old
Coyote, that the Crow Nation shares these concerns.
As I mentioned a minute ago, one of the effects of the
EPA's proposed existing source rule would be to close the power
plants which are the market for the Absaloka Mine, and with
that possibility looming, the Asian market is the obvious
alternative market for coal from that mine. But our coal can't
reach those markets without suitable port facilities in our
sister states.
This is a very big concern to our state and for the Crow
Nation. For the year 2013, the tax revenues collected by the
state of Montana on coal mined in Montana totaled $78,134,000.
I have already told you of the economic benefits the Absaloka
Mine provides to the Crow Nation.
As domestic markets for Montana and Crow coal are
diminished by the impacts of political trends and federal
regulatory initiatives, access to international markets in Asia
will become critical to the economic welfare of our state and
the Crow Nation.
Senator Daines, thank you again for giving me some time
here today. Thank you again, Mr. Chairman.
I want to thank my classmate, Doctor Yarlott, for hosting
this hearing at Little Big Horn College.
And I say hello to my friends in the Crow Nation and thank
you for listening to me, and I would be happy to answer any
questions you may have.
Thank you.
[The prepared statement of Mr. Fox follows:]
Prepared Statement of Hon. Tim Fox, Attorney General, State of Montana
Senator Daines, members of the Committee, thank you for inviting me
to speak here today. I'm Tim Fox, attorney general of the State of
Montana.
I grew up in Hardin, and have a deep appreciation for the history,
culture, but most important, the people of the Crow Nation. Like most
other Montanans, one thing the Crow people treasure is the land they
were born and raised in. And like most other Montanans, among the
things they would most like to see, for themselves and their children,
are opportunities for jobs that will allow them to make a reasonable
living in the place they grew up, so they can stay rather than having
to move elsewhere of necessity.
The Crow Nation, like the rest of our State, is rich in resources.
Those resources, including coal, are currently providing opportunity
for Montanans, including the Crow people, and, wisely used, will
continue to do so. I am concerned, though, that we are today seeing
political and regulatory developments which, though not intentionally
targeting the Crow Nation and, more generally, all of Montana, will, if
unchecked, destroy present and future opportunities for our people. I
would like to talk briefly about a couple of those developments.
One of those developments is the U.S. Environmental Protection
Agency's June 18, 2014 existing source proposal under section 111(d) of
the Clean Air Act. I joined the attorneys general of sixteen other
states in comments on that proposal, but I also filed separate comments
with Chairman Darrin Old Coyote of the Crow Nation, and I want to talk
just a minute about those comments.
The Crow Nation's coal resources are still largely undeveloped, but
there is currently one operating mine, the Absaloka Mine, and just that
one mine provides two-thirds of the Crow Nation's annual non-federal
budget, and is by far the largest private employer on the reservation.
Unfortunately, one of the very likely effects of EPA's existing
source rule would be to kill the market for the coal produced by the
Absaloka Mine, which is nearly all sold to Minnesota utilities. This
will in turn kill the mine, causing drastic loss of services and
employment on the Crow Reservation.
EPA has a legal duty under Executive Order 13175 to ensure
meaningful and timely input by tribal officials in the development of
regulatory proposals that affect tribes. In the development of its
existing source rule proposal, EPA went through the motions, issuing
two ``Dear Tribal Leader'' form letters, but nobody from the agency
contacted the Crow Nation directly in a government-to-government
contact, saying, ``excuse me, but this proposal could, as implemented
in the State of Minnesota, kill the market for the output from the
Absaloka Mine, and we'd like to talk to you about that.'' The executive
Order requires that EPA ``ensure'' meaningful and timely input. The
agency didn't get that job done before it promulgated its proposal, and
the agency needs to withdraw the proposal and do the consultation it is
required to do.
The second development I wanted to talk about is the importance of
keeping open the avenues of interstate commerce which coal mined in
Montana needs to travel to reach markets outside our State. As a
landlocked state, we are dependent on port facilities in our sister
states for shipping Montana-produced bulk commodity products to
international markets. There is currently an international market for
coal mined in the Northern Powder River Basin, and some coal is in fact
being exported from Montana mines to that market. For example 4.7
million tons of coal was shipped in 2013 from the Spring Creek Mine,
through Westshore Terminals in British Columbia. But that terminal is
at capacity, meaning more port capacity is needed to ensure open
markets for our coal.
There are three active proposals to construct terminals which would
provide capacity for shipment of coal from the Northern Powder River
Basin to international markets, two in the State of Washington, and one
in Oregon. The two in Washington, the Millenium Terminal Project at
Longview and the Gateway Pacific Terminal at Cherry Point, are in the
permit review and environmental analysis stage. The Coyote Island
Terminal project in Oregon, which would provide a terminal to take coal
from rail at Boardman, Oregon, for transport by barge down the Columbia
to Port Westward for loadout onto ocean-going vessels, was denied a
fill permit by the Oregon Department of State Lands, and an
administrative appeal of that decision is pending.
My office has been involved in the scoping process for the
environmental analysis of the Gateway Pacific Project and we are
actively tracking the process for the Millenium Project. We have
actually intervened in the appeal of the permit denial for the Coyote
Island Terminal, along with the State of Wyoming. The reason we have
taken these steps is to ensure, as our sister states make their
decisions regarding these port proposals, that our State's
constitutional right not to have the avenues of interstate commerce
unduly burdened is fully protected.
I know from discussions I have had with Chairman Old Coyote, that
the Crow Nation shares these concerns. As I mentioned a minute ago, one
of the effects of EPA's proposed existing source rule would be to close
the power plants which are the market for the Absaloka Mine, and with
that possibility looming, the Asian market is the obvious alternative
market for coal from that mine. But our coal can't reach those markets
without suitable port facilities in our sister states.
This is a very big concern to our State and for the Crow Nation.
For the year 2013, the tax revenues collected by the State of Montana
on coal mined in Montana totaled $78,134,334. I have already told you
of the economic benefits the Absaloka Mine provides to the Crow Nation.
As domestic markets for Montana and Crow coal are diminished by the
impacts of political trends and federal regulatory initiatives, access
to international markets in Asia will become critical to the economic
welfare of our State and the Crow Nation.
Senator Daines, members of the committee, thank you again for
giving me some time here today to speak on behalf of the people of
Montana. I'm happy to answer any questions you may have.
Senator Daines. Thank you, Attorney General Fox.
Speaker Lorenzo Bates.
STATEMENT OF HON. LORENZO BATES, SPEAKER,
NAVAJO NATION COUNCIL; ACCOMPANIED BY RAYMOND SMITH, JR.,
COUNCIL DELEGATE
Mr. Bates. Good morning. My name is Lorenzo Bates. I'm the
Speaker of the Navajo Nation Council currently serving in my
fourth term as Council Delegate, and representing the
communities of Nenahnezad, Newcomb, San Juan, Tiis Tsoh Sikaad,
Tse'Daa'Kaan and Upper Fruitland.
I stand before you today representing these communities.
These communities are directly impacted by the coal economy as
well as the Navajo Nation as a whole whose future is dependent
on this natural resource.
I want first to extend my gratitude, on behalf of the
Navajo Nation to Chairman Barrasso, Vice-Chairman Tester,
Senator Daines and the members of the Senate Committee on
Indian Affairs for holding this Oversight Field Hearing on
Empowering Indian Country, as well as my brothers and sisters
of the Crow Nation for hosting these very important talks
today.
I am currently serving my 13th year as a Navajo Nation
elected official, having previously served as Chairman of the
Navajo Nation Budget and Finance Committee.
I am deeply grateful to have this opportunity to address
you here today with this past experience as my guide, as well
as a guide for the Navajo Nation in our future, despite the
many challenges that face us as we strive to empower our Nation
through self-determination and the natural resources given to
us by the Great Creator.
The Navajo Nation is a sovereign nation located in the Four
Corners region of the United States, encompassing over 27,425
square miles and occupying land in the states of Utah, Arizona
and New Mexico.
Of the 500 recognized tribes and 318 reservations, the
Navajo Nation is the largest, with a population topping
300,000, and is larger in land mass than 10 of the 50 states.
The Navajo Nation Government is balanced between three
branches, including the Executive Branch with a President and
Vice-president, who are elected by the Navajo people; the
Legislative branch, with a Navajo Nation Council; five Standing
Committees; a Speaker; 24 elected officials, representing 110
communities, who serve on a committee; and the Judicial Branch
with a Chief Justice and Supreme Court.
Of the 300,000 members of the Navajo Nation, less than half
are able to make a living on the Nation, with the others
choosing to move to one of the larger cities for work. Our
unemployment rate is well over 50 percent and growing with our
population as economic development remains stagnate.
We currently graduate over 2,000 high school graduates each
year while creating an average of 40 new jobs resulting in dire
circumstances.
Currently our General Funds represents one-third of our
overall budget. For 2015, it was at $175 million, with
approximately 60 percent of that produced from our coal
economy. The remainder of our budget is comprised of external
funds, including the federal, which control up to 43 percent.
We recently collaborated with the School of Business at
Arizona State University to study the economic impact of one of
our two coal mines on the Navajo Nation economy.
What we found is that our Peabody Coal Mine, together with
our Navajo Generating Station will boost the Navajo Nation
economy by over $13 billion over the next 25 years.
That is just the economic benefits to the Navajo. It does
not include the economic linkage enjoyed by surrounding
communities off our reservation.
Our 2010 Comprehensive Economic Development Strategy
uncovered the fact that 64 percent of every dollar generated on
the Navajo Nation is spent off the reservation due to the lack
of retail outlets located within our Nation.
The Navajo Nation economy is often compared to as a third
world country. Speaking before the Navajo Nation Council on
January 18, 1996, Senator John McCain made the following
statement:
L``. . . Each of us shares a strong commitment to promote
and defend tribal sovereignty, tribal self-governance, and
tribal self-sufficiency.
LBut my friends, these things we hold dear, will wither and
die unless they are watered by a strong reservation economy
that produces a decent standard of living for all our people.
Unfortunately, as you well know, economic development success
stories in Indian Country are still the exception and not the
rule.
LMost Americans would be stunned to find out that the basic
necessities of life they take for granted are solely lacking on
the Navajo Reservation and in many other Native American
communities across the Country. No other group of Americans is
more economically depressed than Native Americans, and no other
areas in America suffer more from inadequate infrastructure and
a lack of job opportunities than do Indian Reservations and
Alaska Native villages.
LHere at Navajo, your large land-base and membership
magnify the socio-economic problems that infect much of Indian
Country. In my lifetime I have been too many places around the
world and have experienced many terrible living conditions.
What is so shocking is that the social and economic conditions
for many Navajos closely resemble those of people living in
Third World countries.''
With our high unemployment rate, our lack of income, paved
roads, modern housing; lower education level; our high poverty
rate, give our Navajo economy such a resemblance.
The Navajo Nation has identified four main areas of focus
within our Navajo Nation Energy Policy as it relates to the
energy needs of the nation, which will guide decisions during
the 23rd Navajo Nation Council.
One, first is to protect and expand upon the current jobs
and revenues realized by our current energy projects located on
the Navajo Nation.
Next is to expand and diversify our energy portfolio and
transition our energy production into alternative and renewable
resources to meet the future needs of our people.
Another area of focus is to ensure that the Navajo people
have access to residential and commercial electricity here at
home and with competitive rates.
Last, but certainly not least, is to strive to keep our
balance with Mother Nature and the needs of our people. With
these guiding principles, the Navajo Nation will make decisions
that are responsible and meet the needs of our Navajo people.
The Navajo Nation mines approximately 8 to 10 million tons
of coal each year, down from 13 to 16 million tons before the
U.S. EPA regulations began to take its toll on our resources,
and we have billions of tons more to mine to feed our Navajo
economy.
Additionally, we produce approximately 3,750 megawatts of
electricity sold primarily off our Nation, effectively taking
advantage of hydroelectricity from the Glen Canyon Dam to meet
our Nation's needs.
This industry is responsible for more than 2,000 of the
highest paying jobs on the Navajo Nation and better than 60
percent of our general revenues. These revenues represent our
ability to act as a sovereign nation and to meet our own needs
without a handout through outside jurisdictions.
It is unthinkable to consider what our people would do
without these critical funds. In fact, our reliance on these
resources has led us to invest in the purchase of our Navajo
mine from BHP this past year to gain greater control of our
resources and insure the continuation of these vital funds for
our future generations.
This purchase was made through our Navajo Transitional
Energy Company, who, as its name suggests, is mandated to
transition our Nation into our energy future by investing no
less than 10 percent of its profits into alternative and
renewable energy development.
The consequences of the latest rounds of EPA regulations
resulted in the shutdown of three of the five power generating
units at the Four Corners Power Plant and the forced investment
of a billion dollars in BART retrofits on the remaining two
units.
This, in turn, reduced the coal mined at our Navajo mine
while simultaneously increasing the cost of power generation.
The Four Corners Power Plant and the Navajo mine were
poised to discontinue operation this year if it were not for
the Navajo Nation's purchase of the Navajo mine.
While we are now in a position to maintain our jobs and
revenues and possibly increase them from this mine, we are
being threatened by additional EPA regulations and an unstable
energy future.
Across the United States, coal economies are feeling the
pinch, but not near to the extent as the Navajo Nation. What
other economy in the United States stands to lose as much?
Some may call this a war on coal, but from the Navajo
Nation's perspective, this is a war on the Navajo economy and
our ability to act as a sovereign nation.
It is difficult enough working to meet the needs of the
Navajo Nation with our current resources. I do not dare imagine
the difficulty that will come with a 50 percent reduction in
general revenues due to our coal mines shutting down. With our
current budget heavily subsidized by federal funds, this
scenario only increases that dependence.
Many coal critics have argued that we can simply convert
our power generation to natural gas and renewable energy while
maintaining our jobs and revenues.
Similar arguments were made when the Mohave Generating
Station in Nevada shut down in 2005 cutting our coal supply
through the Black Mesa pipeline, and we have yet, we have yet
to see any replacement of those jobs or revenue ten years
later.
The challenges of economically producing power through gas
at the high elevations common on Navajo are enough to
discourage the investment.
Navajo is open to solar generation, although it takes 10
acres per megawatt to produce commercial power and has yet to
significantly meet market demand.
Even if these resources were cut, we would still see major
economic cuts as our coal mines would shut down, which
represents over, again, 50 percent of our jobs and revenues
realized through coal power generation.
The challenges are daunting when we look to the future of
our Navajo people. Our hope lies in the understanding and
collaboration of the U.S. government to insure that the
transition of our Nation's energy resources happens in an
economically responsible way, considerate of the lives that are
impacted by the policies written by individuals who have yet to
visit our Nation.
We continue to request for government-to-government
consultation that is on equal ground, cognizant of our needs
and not merely a box to be checked off on yet another
government form.
Our hope lies in the development of alternative clean
technologies that would effectively bridge the gap between the
utilization of our coal resources and the environmental
concerns of the day.
We implore the U.S. government to work with us to develop
the financial incentives necessary for investors to bring these
coal technologies to our reservation where our need is so
great, where we have a ready workforce, abundant coal
resources, and the infrastructure to get gasified coal products
and captured carbon into the market.
The Navajo Nation wants to be a part of the solution that
brings the United States closer to energy independence while
meeting our needs at home.
We ask that the U.S. government respect the decisions we
make with our state, tribal and regional partners in response
to meeting our ever changing environmental regulations while
maintaining our regional and tribal economies.
When we are able to work together in a meaningful way we
can find some middle ground when it comes to our financial
stability as a nation.
We want to move forward towards self-reliance by utilizing
our resources that meet our needs while reducing our dependence
on external funds from the Federal Government.
In conclusion, I would like to reiterate the tremendous
need to work together to meet the needs of our people and not
to take the easy road in implementing federal standards at the
peril of local tribal economies.
Take the time to listen, to truly listen, and understand
our needs and to work with us to find creative solutions to the
challenges of our day.
Allow us the financial incentives necessary to achieve the
realization of basic necessities, such as home ownership,
electricity, water, access to improved roads and an education
for our children so that they may be in a position to do what
we are unable to do.
An education that will allow them to participate in the
transition of our energy resources and the financial know-how
to compete in the worldwide marketplace.
I thank you.
And with your permission, I would like to have my
colleague, Mr. Raymond Smith, sitting next to me, provide us
with additional remarks in addition to what I presented here.
Mr. Smith. Good morning.
Senator Daines. Good morning.
Mr. Smith. Thank you, Senator.
My name is Raymond Smith, Jr. I'm from the Navajo Nation as
a Council Delegate.
I'd just like to bring up a couple of keynotes that our
Nation is experiencing with the coal intrusion.
We're having technical difficulties--
Senator Daines. Excuse me, I think what we'll have to do
with the time is I'll have you submit your comments as written
record, and have them recorded as part of written testimony,
but I'm going to have to keep moving ahead here with these
other witnesses for the time management.
So, if you could just submit those in a written record.
Would that be okay?
Mr. Smith. That's fine with me.
Senator Daines. Okay. Thank you very much for your
understanding. I appreciate it.
The prepared statement of Mr. Bates follows:]
Prepared Statement of Hon. Lorenzo Bates, Speaker, Navajo Nation
Council
Good Morning. My name is Lorenzo C. Bates, Speaker of the 23rd
Navajo Nation Council currently serving in my fourth term as Council
Delegate representing the communities of; Nenahnezad, Newcomb, San
Juan, Tiis Tsoh Sikaad, Tse'Daa'Kaan and Upper Fruitland. I stand
before you today representing these communities that are directly
impacted by the coal economy as well as the Navajo Nation as a whole
whose future is dependent on this natural resource.
I first want to extend my gratitude, on behalf of the Navajo Nation
to Chairman Barrasso, Vice-Chairman Tester, Senator Daines and the
members of the Senate Committee on Indian Affairs for holding this
Oversight Field Hearing on Empowering Indian Country, as well as my
brothers and sisters of the Crow Nation for hosting these very
important talks.
I am currently serving in my 13th year as a Navajo Nation elected
official having previously served as Chairman of the Navajo Nation
Budget and finance Committee. I am deeply grateful to have this
opportunity to address you here today with this past experience as my
guide and the hope we as a Nation have in our future, despite the many
challenges that face us as we strive to empower our Nation through
Self-Determination and the natural resources given to us by the Great
Creator.
The Navajo Nation is a sovereign Nation located in the Four Corners
region of the United States, encompassing over 27,425 Square Miles and
occupying land in the States of Utah, Arizona and New Mexico. Of the
500 recognized tribes and 318 reservations, the Navajo Nation is the
largest with a population topping 300,000 and is larger in land mass
than 10 of the 50 states.
The Navajo Nation Government is balanced between three branches
including the Executive Branch with a President and Vice President who
are elected by the Navajo people, the Legislative Branch with a Navajo
Nation Council, five Standing Committees a Speaker and 24 elected
Council Delegates representing 110 Navajo communities who each serve on
a Committee and the Judicial Branch with a Chief Justice and Supreme
Court. Of the 300 thousand members of the Navajo Nation, less than half
are able to make a living on the Nation with the others choosing to
move to one of the larger cities for work. Our unemployment rate is
over 50 percent and growing with our population as economic development
remains stagnate. We currently graduate over 2,000 high school
graduates each year while creating an average of 40 new jobs resulting
in dire circumstances. Currently, our General Funds represent \1/3\ of
our overall budget at $175 million with approximately 60 percent of
that produced from our coal economy. The remainder of our budget is
comprised of external funds from the federal government. We recently
collaborated with the W.P. Carey School of Business at Arizona State
University to study the economic impact of one of our two coal mines on
the Navajo Nation economy. What we found is that our Peabody Coal mine
together with our Navajo Generating Station will boost the Navajo
Nation economy by over $13 billion dollars over the next 25 years! That
is just the economic benefits to Navajo and does not include the
economic leakage enjoyed by the surrounding communities off our
reservation. Our 2010 Comprehensive Economic Development Strategy
uncovered the fact that 64 percent of every dollar generated on the
Navajo Nation is spent off the reservation due to the lack of retail
outlets located within our Nation.
The Navajo economy is often compared to as a third world country.
Speaking before the Navajo Nation Council on January 18, 1996, Senator
John McCain made the following statement:
``. . . Each of us shares a strong commitment to promote and
defend tribal sovereignty, tribal self-governance, and tribal
self-sufficiency.
But my friends, these things we hold dear, will wither and die
unless they are watered by a strong Reservation economy that
produces a decent standard of living for all our people.
Unfortunately, as you well know, economic development success
stories in Indian Country are still the exception and not the
rule.
Most Americans would be stunned to find out that the basic
necessities of life they take for granted are solely lacking on
the Navajo Reservation and in many other Native American
communities across the Country. No other group of Americans is
more economically depressed than Native Americans, and no other
areas in America suffer more from inadequate infrastructure and
a lack of job opportunities than do Indian Reservations and
Alaska Native villages.
Here at Navajo, your large land-base and membership magnify
the destitution and socio-economic problems that infect much of
Indian Country. In my lifetime I have been too many places
around the world and have experienced many terrible living
conditions. What is so shocking is that the social and economic
conditions for many Navajos closely resemble those of people
living in Third World countries.''
With our high unemployment rate; our lack of income, paved roads,
modern housing and amenities; lower education level; our high poverty
rate; give our Navajo economy such a resemblance.
The Navajo Nation has identified four main areas of focus within
our Navajo Nation Energy Policy as it relates to the energy needs of
the Navajo Nation, which will guide my decisions during my time as
Speake of the 23rd Navajo Nation Council; first is to protect and
expand upon the current jobs and revenues realized by our current
energy projects located on the Navajo Nation; nest is to expand and
diversify our energy portfolio and transition our energy production
into alternative and renewable sources to meet the future needs of our
people; another area of focus is to ensure that the Navajo people have
access to residential and commercial electricity here at home and
within competitive rates; last but certainly not least is to strive to
keep our balance with Mother Nature and the needs of our people. With
these guiding principles the Navajo Nation will make decisions that are
responsible and meet the needs of our Navajo people.
The Navajo Nation mines approximately 8 to 10 million tons of coal
each year, down from 13 to 16 million tons before the U.S. EPA
regulations began to take its toll on our resources and we have
billions of tons more to mine to feed our Navajo economy. Additionally,
we produce approximately 3,750 Megawatts of electricity sold primarily
off our Nation, effectively taking advantage of hydroelectricity from
the Glen Canyon Dam to meet our Nation's needs. This industry is
responsible for more than 2,000 of the highest paying jobs on the
Navajo Nation and better than 60 percent of our General Revenues. These
revenues represent our ability to act as a sovereign nation and meet
our own needs without a hand out to outside jurisdictions. It is
unthinkable to consider what our people would do without these critical
funds. In fact, our reliance on these resources has led us to invest in
the purchase of our Navajo Mine from BHP this past year to gain greater
control of our resources and insure the continuation of these vital
funds for our future generations. This purchase was made through our
Navajo Transitional Energy Company, who, as its name suggests is
mandated to transition our Nation into our energy future by investing
no less than 10 percent of its profits into alternative and renewable
energy development. The consequences of the latest rounds of EPA
regulations resulted in the shutdown of three of the five power
generating units at the Four Corners Power Plant and the forced
investment of a billion dollars in BART retrofits on the remaining two
units. This in turn reduced the coal mined at our Navajo Mine while
simultaneously increasing the cost of power generation. With the
economies of scale lost to circumstance, the Four Corners Power Plant
and the Navajo Mine were poised to discontinue operation this year if
it were not for our purchase of Navajo Mine. While we are now in a
position to maintain our jobs and revenues and possibly increase them
from this mine, we are being threatened by additional EPA regulations
and an unstable energy future. Across the United States, coal economies
are feeling the pinch, but not near to the extent as the Navajo Nation,
what other economy in the United States stands to lose as much? Some
may call this a war on coal, but from the Navajo Nations perspective,
this is a war on the Navajo economy and our ability to act as a
sovereign Nation.
It is difficult enough working to meet the needs of the Navajo
Nation with our current resources; I do not dare imagine the difficulty
that would come with a 50 percent reduction in general revenues due to
our coal mines shutting down! With our current budget heavily
subsidized by federal funds, this scenario only increases that
dependence. Many coal critics have argued that we can simply convert
our power generation to natural gas and renewable energy while
maintaining our jobs and revenues. Similar arguments were made when the
Mohave Generating Station in Nevada shut down in 2005 cutting our coal
supply through our Black Mesa Pipeline and we have yet to see any
replacement jobs or revenue ten years later. The challenges of
economically producing power through gas at the high elevations common
on Navajo are enough to discourage the investment. Navajo is open to
solar generation although it takes 10 acres per Megawatt to produce
commercial power and has yet to sufficiently meet market demand. Even
if these resources were possible, we would still see major economic
cuts as our coal mines would shut down which represents over 50 percent
of our jobs and revenues realized through coal power generation.
The challenges are daunting when we look to the future of our
Navajo people, our hope lies in the understanding and collaboration of
the U.S. Government to insure that the transition of our Nation's
energy resources happens in an economically responsible way,
considerate of the lives that are impacted by policies written by
individuals who have yet to visit our Nation. We continue to request
for government to government consultation that is on equal ground,
cognizant of our needs and not merely a box to be checked off on yet
another government form. Our hope lies in the development of
alternative clean coal technologies that would effectively bridge the
gap between the utilization of our coal resources and the environmental
concerns of the day. We implore the US Government to work with us to
develop the financial incentives necessary for investors to bring these
clean coal technologies to our reservations where the need is so great,
where we have a ready workforce, abundant coal resources and the
infrastructure to get gasified coal products and captured carbon into
the market. The Navajo Nation wants to be a part of the solution that
brings the United States closer to energy independence while meeting
our needs at home. We ask that the US Government respect the decisions
we make with our State, tribal and regional partners in response to
meeting the ever changing environmental regulations while maintaining
our regional and tribal economies. When we are able to work together in
a meaningful way we can find some middle ground when it comes to our
financial stability as a Nation. We want to move towards self-reliance
by utilizing our resources to meet our needs while reducing our
dependence on external funds from the Federal Government.
In conclusion, I would like to reiterate the tremendous need to
work together to meet the needs of our people and not to take the easy
road in implementing federal standards at the peril of local tribal
economies. Take the time to truly listen and understand our needs and
work with us to find creative solutions to the challenges of our day.
Allow us the financial incentives necessary to achieve the realization
of basic necessities such as home ownership, electricity, water, access
to improved roads and an education for our children so that they may be
in a position to do what we are unable to. An education that will allow
them to participate in the transition of our energy resources and the
financial know how to compete in the worldwide marketplace.
Senator Daines. Mr. Small.
STATEMENT OF JASON SMALL, JOURNEYMAN BOILERMAKER; LABOR
ADVOCATE; AND NORTHERN CHEYENNE TRIBAL MEMBER
Mr. Small. Good morning, Senator Daines and members of the
Committee.
My name is Jason Small. I am an enrolled member of the
Northern Cheyenne Tribe, and I'm also a resident on the
reservation. I am a journeyman boilermaker, a member of
Boilermaker Local 11 here in Montana.
And my comments today are based upon my experience working
in coal-related employment across the nation in the capacity as
a journeyman welder, boilermaker and also a union steward.
I am also one of two internationally certified welding
instructors here in Montana for the boilermakers. I teach at
the Spencer Benson Welding Trading Center at Colstrip, quite
frequently, and it assists many young people, especially
members of the Crow and the Northern Cheyenne Tribes to enter
the boilermaker trade. That center is financially supported by
the International Brotherhood of Boilermakers and also PP&L.
So, first, I'd like to thank you, Senator, for arranging
this hearing, specifically asking how the Congress can be more
helpful to tribes, such as the Crow and the Navajo, who are
developing coal resources, and the Northern Cheyenne, who will
hopefully pursue this option to address unacceptable rates of
unemployment and poverty on our reservation.
As you know, Indian Reservations contain 30 percent of the
nation's coal reserves west of the Mississippi, and also $1.5
trillion of energy resources. In my opinion, coal must continue
to be the mainstay in the energy mix.
While wind, solar, bio-mass, and hydroelectricity can
contribute to our national energy needs, it is clear that they
cannot totally replace coal as a base load power source.
I am a strong proponent for development of the rich
Northern Cheyenne coal reserves, recently expressing my reasons
in a widely publicized Op-Ed piece.
While development is opposed by some, I firmly believe that
a majority of the tribal members are favorably inclined. So do
some of our traditional leaders, such as Tim Lame Woman, who is
the General District Chairperson for the reservation, and he's
also a direct descendant of Chief Little Wolf and a member of
the traditional Elkhorn Scrapers Society.
Our Tribal President Llevando ``Cowboy'' Fisher promised to
hold a referendum vote on that question, and I believe it will
overwhelmingly pass. In a 1990s vote, the majority of the
tribal members have already said ``yes'' to coal development.
I believe the main reason it will pass, in my opinion, is
because of the positive experiences that the Northern Cheyenne
have had at Colstrip, through employment and other financial
benefits from agreements related to Units 3 and 4 and the
Western Energy Coal Mine.
Presently, about 125 tribal members are employed at PP&L
generating stations and the mine. Many others have retired and
are now enjoying a good retirement income that come from these
sorts of jobs.
And you have to realize that the people who are still
working there draw some of the highest hourly wages in the
state and are thus able to provide very well for their
immediate families and often extended family members.
This employment, which started in the 1980s, has
significantly changed the attitudes of many Northern Cheyenne
about coal development because it has enabled them to break out
of poverty.
In addition, those companies provide scholarships,
charitable donations and support environmental air quality on
the reservation to the tune of about $500,000 a year.
Over the years, the Cheyenne have learned about
reclamation; developing confidence that the lands can be fully
restored. Indeed, one of our tribal members actually heads up
Western Energy's Reclamation Program.
Under federal and state law, the companies are held to very
high standards, and many of the Cheyenne have learned that the
lands disturbed by mining when reclaimed are actually in better
condition than they were prior to mining.
Western Energy has received numerous national awards for
reclamation excellence including the National Institute for
Urban Wildlife. In addition to federal and state laws, the
tribes can enact additional laws to protect sacred sites and
address other tribal concerns related to reservation coal
development.
The energy complexes at Colstrip and Crow provide profound
benefits to the region, state and two reservations. For
example, economists from the University of Montana provide the
following statistics:
The Colstrip generating plants provide 3,740 jobs
directly related to energy production in Montana, 3500
in eastern Montana alone. An additional 2,688 private
sector jobs are related also.
Personal income from coal-related employment is
nearly $363 million statewide.
PP&L Colstrip employs 363 permanent workers also,
which includes 41 tribal members, which is nearly one-
eighth of the workforce.
Others are also employed by subcontractors,
especially during the outages and overhauls in the
spring when there are 680 employed by North American
Energy Services alone, and also many of those are
Navajo workers that have a huge boilermaker
constituency.
The Western Energy Mine in Colstrip currently
employs 80 minorities, and the majority of are them
Northern Cheyenne, nearly one-third of the craft
workforce. This satisfies an original agreement or an
original tribal goal of developing a trained workforce
for the day when the Northern Cheyenne would develop
their own reserves.
The beneficial impacts of the Westmoreland Mine at
Crow are even more powerful, as Mr. Old Coyote here has
already stated.
In conclusion, I suggest that responsible coal development
can be a major key enabling the Northern Cheyenne and its
members to rise out of poverty and achieve self-sufficiency.
Your national leadership and compassion for the native
people is essential in this struggle. I ask you to please keep
up the good fight, and particularly against the unrealistic and
punitive regulations being pushed by the EPA.
We know that additional regulations will be mandated. They
must be pursued in a reasonable manner, though, which will not
devastate the economy of southeastern Montana and still allow
for responsible development.
Thank you for the opportunity to testify, and I will be
happy to answer any questions you may have.
[The prepared statement of Mr. Small follows:]
Prepared Statement of Jason Small, Journeyman Boilermaker; Labor
Advocate; and Northern Cheyenne Tribal Member
Senator Daines and members of the Committee: My name is Jason
Small. I am an enrolled member of the Northern Cheyenne Tribe and
reside on the Northern Cheyenne Reservation. I am also a journeyman
boilermaker, member of Montana's Local 11, and my comments today are
based upon my experience working in coal-related employment across the
Nation, including as a union steward. I am also one of two
internationally certified welding instructors in Montana. I teach at
the Spencer Benson Welding Training Center, Colstrip, MT which assists
many young people, especially members of the Crow and Northern Cheyenne
Tribes to enter the boilermaker trade. That center is financially
supported by the International Brotherhood of Boilermakers and PPL as a
way to help people gain a trade, particularly those from the Cheyenne
Reservation with 70 percent unemployment.
Thank you Senator for arranging this hearing, specifically asking
how the Congress can be more helpful to Tribes such as the Crow and
Navajo who are developing coal resources and the Northern Cheyenne who
will hopefully pursue this option to address unacceptable rates of
unemployment and poverty on our Reservation. As you probably know,
Indian Reservations contain 30 percent of the nation's coal reserves
west of the Mississippi, an estimated 1.5 trillion dollars of energy
resources. In my opinion, coal must continue to be the mainstay in the
energy mix. While wind, solar, bio-mass, and hydro energy can
contribute to our national energy needs, it is clear they cannot
totally replace coal as a base load power sources.
I am a strong proponent for development of the rich Northern
Cheyenne coal reserves, recently expressing my reasons in widely
publicized Op-Ed piece. While development is opposed by some, I firmly
believe that a majority of tribal members are favorable inclined. So do
some of our traditional leaders such as Tim Lame Woman, General
District Chairperson for the Reservation, a direct descendant of Chief
Little Wolf and member of the traditional Elkhorn Scrapers Society .
Tribal President Llevando ``Cowboy'' Fisher promised to hold a
referendum vote on that question and I believe it will overwhelmingly
pass. In a 1990's vote,the majority of tribal members said ``Yes'' to
coal development, but ``No'' to coal bed methane. Still, our current
leaders feel that another vote is necessary.
The main reason it will pass, in my opinion, is because of the
positive experiences that the Northern Cheyenne have had at Colstrip,
through employment and other financial benefits from agreements related
to Units 3 & 4 and the Western Energy Coal Mine. Presently, about 125
tribal members are employed at PPL Generating Stations and the mine.
Many others have retired, now enjoying good retirement income. Those
employees draw some of the highest hourly wages in the State and are
thus able to provide very well for their immediate families and often
extended family members. This employment which started in the 1980's
has significantly changed the attitudes of many Northern Cheyenne about
coal development because it has enabled them to break out of poverty.
In addition, those companies provide scholarships, charitable donations
and support environmental air quality on the Reservation to the tune of
about $500,000 per year. Over a hundred other tribal members have
gained college degrees as a result of the PPL and Western Energy
scholarship programs.
Over the years, the Cheyenne have learned about reclamation,
developing confidence that the lands can be fully restored. Indeed Rich
Spang, a great-great grandson of one our most famous Chiefs, Dull Knife
heads up Western Energy's Reclamation Program. Under federal and state
law, the companies are held to very high standards and many of the
Cheyenne have learned that the lands disturbed by mining when reclaimed
are actually in better condition than pre-mining. The water comes back;
the grazing is prime, with all of the traditional plants re-introduced
and the reclaimed lands is prime wildlife habitat. Western has received
numerous national awards for reclamation excellence including the
National Institute for Urban Wildlife. In addition to federal and state
laws, Tribes can enact additional law to protect sacred sites and
address other tribal concerns related to reservation coal development.
The energy complexes at Colstrip and at Crow provide profound
benefits to the region, State and two Reservations. For example,
economists from University of Montana provide the following statistics:
The Colstrip generating plants provide 3,740 jobs directly
related to energy production in Montana, 3,500 in eastern
Montana. An additional 2,688 private sector jobs are related.
Personal income from coal-related employment is about 363
million.
PPL Colstrip employs 363 permanent workers, including 41
tribal members, one-eighth of the workforce. Others are
employed by subcontractors, including during the annual
overhaul when 680 are employed by North American Energy
Services alone including many Navajo boilermakers.
The Western Energy Mine, Colstrip currently employs 80
minorities, the majority Northern Cheyenne, nearly one-third of
the craft workforce. This satisfies an original tribal goal of
developing a trained work force for the day when the Northern
Cheyenne would develop their own reserves.
The beneficial impacts of the Westmoreland Mine at Crow are
even more powerful and I leave that discussion to Chairman Old
Coyote.
In conclusion, I suggest that responsible coal development can be a
major key enabling the Northern Cheyenne Tribe and its members to rise
out of poverty and achieve self-sufficiency. Your national leadership
and compassion for the native people is essential in this struggle.
Please keep up the good fight, particularly with the unrealistic and
punitive regulations being pushed by EPA. While know, that additional
regulations will be mandated, they must be pursued in a reasonable
manner which will not devastate the economy of southeastern Montana and
still allow for responsible development.
Thank you for the opportunity to testify. I will be happy to answer
any questions you may have.
Senator Daines. Thank you, Mr. Small. Mr. Henson.
ERIC HENSON, SENIOR VICE PRESIDENT, COMPASS LEXECON; RESEARCH
AFFILIATE, HARVARD PROJECT ON AMERICAN INDIAN ECONOMIC
DEVELOPMENT
Mr. Henson. Thank you.
Thank you, Senator Daines, for holding this hearing, and
thank you, Chairman, for inviting us all to tribal land.
To be brief, my name is Eric Henson, a member of the
Chickasaw Nation, and I think that most people here know, I
work a couple of jobs.
I work at an economics consulting firm and we did a study
about a year ago on the importance of coal development on the
Crow Nation.
I also work as a Research Fellow at the Harvard Project on
American Indian Economic Development, and I have had the great
privilege to be associated with the Harvard Project for about
18 years now.
There are studies in my written comments, but keep in mind
the principle, and you'll find that continued and expanded coal
production on Crow lands represents up to $360 to $370 million
a year to the state economy, more than a thousand jobs, tens of
millions of dollars in local, state and federal taxes, and most
importantly, from our perspective, the potential quadrupling of
the non-federal funds for the Crow Tribe.
This would be a major benefit for the tribe, to maintain
and achieve a massive amount of self-sufficiency that it has so
far been unable to achieve.
As you've heard, the socio-economic conditions at the Crow
Reservation are very dire. Per capita income is typically less
than half of the U.S. average. Official unemployment rates are
about four times of the United States.
The unofficial unemployment rate, including people not
actively seeking jobs, as you've heard, is about six times the
United States rate.
Family poverty and childhood poverty can be twice the
average of the United States, and there are a couple of
different mechanisms by we can all strive to overcome some of
these dire economic conditions.
But first, as you know, is the Coal Production Tax Credit.
Basic economics tells us that if tax credits are a way to
decide a particular activity, one might consider the time
horizon of the tax credit in conjunction with the activity that
is going to be induced.
Obviously, coal mining is a long-term activity and, of
course, a massive upfront investment. And so tax policy is
aligned in terms of the time horizon. It simply makes more
sense.
A permanent tax credit, or one that doesn't have to be
renewed for decades, aligns itself much better with coal
production than a temporary credit that is continually up for
extension.
Secondly, as you know, uncertainty for coal produced on
Indian lands, is the ability to access our markets. Basic
economics tells us that any producer of any good, if they are
seen liable for their product, basic potential for lower
prices, greater risk, less investment in any production.
Given the infrastructure that we face here, and the
topography and geography we're dealing with, that does in fact
mean access to the Asian market, and I have some statistics
about how the total coal demand in the United States is likely
just to stay flat or decline slightly over the next several
decades, while growing markets in Asia, China, India and South
Korea may grow substantially.
Being able to access those markets would do wonders for the
coal produced on Crow lands in terms of diversifying the
consumer base and bring sustainable economic volume to the
tribe.
And with that, I'd be happy to yield to the Committees.
[The prepared statement of Mr. Henson follows:]
Prepared Statement of Eric Henson, Senior Vice President, Compass
Lexecon; Research Affiliate, Harvard Project on American Indian
Economic Development
I would like to take a moment to thank you for the opportunity to
visit the land of the Aps alooke and to speak today. My name is Eric
Henson, and I am a Senior Vice President at Compass Lexecon, which is
an economics consulting firm with offices located around the world. \1\
I primarily work out of the Compass Lexecon offices in Boston, MA and
Tucson, AZ. I also serve as a Research Affiliate with the Harvard
Project on American Indian Economic Development, \2\ and in that
position I am engaged in an ongoing effort to understand what makes
tribal economies work best. \3\ I am a citizen of the Chickasaw Nation,
and I grew up in one of the country's great oil producing regions, the
Permian Basin of West Texas. \4\
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\1\ Compass Lexecon is an international economics consulting firm
and is part of FTI Consulting.
\2\ Referred to herein as ``HPAIED'' or ``Harvard Project.'' The
Harvard Project is based at Harvard's John F. Kennedy School of
Government in Cambridge, MA. We partner with the Native Nations
Institute, which is located at the University of Arizona in Tucson, AZ.
The Native Nations Institute provides executive education and
leadership programs, uniquely tailored to senior executives and
managers within the Native communities in Canada and the United States.
\3\ See, e.g., The Harvard Project on American Indian Economic
Development, The State of the Native Nations: Conditions Under U.S.
Policies of Self-Determination, New York: Oxford University Press,
2008.
\4\ I appear today not as a representative of Compass Lexecon or
Harvard University. Furthermore, I have no financial interest in
legislation that might impact tax rates applicable to coal production
on Indian lands.
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I have a Master's Degree in Public Policy from the John F. Kennedy
School of Government at Harvard University, an MA in Economics from
Southern Methodist University, and a BBA in Business Economics from the
University of Texas at San Antonio. I attended Harvard as the Kennedy
School's Christian Johnson Native American Fellow. I have been engaged
in Indian affairs since graduate school; my Master's thesis at Harvard
examined the importance of a uniform commercial code for economic
development on the Crow Reservation. \5\ I've had the great privilege
of visiting these tribal lands on several occasions.
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\5\ A copy of my curriculum vitae has been retained in the
Committee files.
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The Harvard Project On American Indian Economic Development
Since its inception in 1987, the Harvard Project has collaborated
with Native Nations to understand how and why tribal economies, social
institutions, and political systems either succeed or fail. At the
Harvard Project, my colleagues and I undertake research and teaching
specifically tailored to meet the needs of tribal communities and
tribal leadership.
One of the major questions the Harvard Project has been grappling
with is: How is it that, despite widely-cited poverty and social
distress, which is prevalent across numerous American Indian
reservations, more and more tribes have been able to cast off the bonds
of external economic dependence? We have seen more and more tribes
taking part in what we have often referred to as an ``Indian
Renaissance,'' where dynamic self-sustaining economies are created by
tribal actions. These economies are built upon, and supported by,
vibrant political and social institutions. The success stories are
wide-ranging, from the property development and management of the
Tulalip Tribes in Washington State, to sustained energy-based projects
at Southern Ute, to the diverse array of professional and construction
services offered by Ho Chunk, Inc. in Nebraska. Many tribes have begun
actively challenging century-long economic paradigms and demonstrating
effective self-determination and governance. It is curious that,
contemporaneously, a number of other tribes experience continued
economic hardship, high unemployment, rampant social and physical
health challenges, and the like. What might be the causes of the
striking economic and social divergences within Indian Country?
In the first years of HPAIED, the founding researchers recognized
that what was needed in Indian Country was not additional unsolicited
interference from outsiders, but culturally-specific educational
programs and research, developed for tribes, and undertaken hand-in-
hand with tribal governments. The results of these studies are
channeled back to those who must deal with the daily challenges of
improving the economies and social conditions in Native communities
(i.e., Indian people working in Indian Country).
In accordance with the above-mentioned approach, graduate students
at the Kennedy School of Government and at the Native Nations
Institute, working in close coordination with tribes; have completed
several hundred projects and field research reports, many of which were
on matters specifically requested by the tribes. These field projects
have ranged from welfare reform at the Navajo Nation to bison ranching
at Cheyenne River, and from judicial reform at Hualapai to ski resort
management for the White Mountain Apache. As part of our organization's
mission, many of these reports are available on our website for all
tribes to learn from. \6\
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\6\ See the Harvard Project website at http://www.hpaied.org/.
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Another important facet of the Harvard Project's work is our
Honoring Nations program. Honoring Nations is a competitive awards
program that identifies, celebrates, and shares outstanding success
stories in tribal governance. We honor tribes that exemplify successful
tribal governance, and to date the Harvard Project has recognized
tribal governmental programs ranging from the Eastern Band of Cherokee
for their Tribal Sanitation Program (in 1999) to the Effective Law
Enforcement Program of the Gila River Police Department (in 2003) to
the Seniors Skilled Nursing Facility at the Tohono O'odham Hospice (in
2008). Since 1999, we have honored nearly 120 tribal governmental
initiatives. \7\ HPAIED remains committed to empowering Native Nations
through identifying the common characteristics of tribes that are
successfully charting a course towards a socially, culturally,
politically, and economically healthy future.
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\7\ For more examples, see ``Honoring Nations: Directory of Honored
Programs 1998-2010,'' Honoring Nations Program, The Harvard Project on
American Indian Economic Development, at pages 9 and 11, at http://
hpaied.org/sites/default/files/documents/finalhndirectory.pdf.
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Research Findings
Prior to the 1980s, there was a notable lack of research pertaining
to economic development in Indian Country. The small amount that was
available contained at least two consistent themes: First, the
overriding focus of thinking and policymaking was on what the Federal
Government could do to create jobs, raise income, and increase
household wealth. This helped contribute to the unbalanced relationship
between the Bureau of Indian Affairs, other federal programs, and the
tribes, which often became dependent on federal funding and expertise.
Second, the federal policies and programs that did exist within
Indian Country constituted what we refer to as a ``Planner's Approach''
to economic and community development. The Planner's Approach was
simplistic in treating economic development as a fundamental question
of resources and expertise, as opposed to one of incentives and
institutions. Viewing the world through the lens of the Planner's
Approach, academics, government officials, and tribal leaders
interpreted the underdevelopment seen on reservations as stemming from
a lack of access to financial capital, technical skills, and managerial
expertise. The Planner's Approach typically provided grants and loans
in a well-intended effort to stimulate economic development. However,
this heavy-handed approach was driven by federal budget allocations and
has had a strong adverse impact on many Native communities. This
approach created a world in which grant writers were always in short
supply and tribal politics revolved around which elected officials
could most effectively capture (or perhaps extract), funds from the
federal government. Under the Planner's Approach, what was originally
intended to be a solution to underdevelopment instead seems to have
perpetuated it, degrading the core tenets of economic development into
a series of rent-seeking behaviors. \8\
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\8\ ``Rent seeking'' is a term from economics and occurs when an
organization or individual(s) seeks to obtain economic gain from others
without reciprocating in the form of further wealth creation.
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A fundamental flaw of the Planner's Approach was the erroneous
assumption that a nation's economic development is a mechanical process
that can be achieved by way of the imposition of a predetermined
blueprint. While it is advisable and even advantageous to plan ahead,
it is an exercise of hubris to think that one can ``plan'' an economy,
in the sense of expecting tribal councils, national legislatures, or
federal planners to correctly select a portfolio of businesses,
projects, and activities that will not only survive, but will meet the
needs of tribal citizens, and will thrive over time. \9\
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\9\ Consider the natural experiment of the German economies after
World War II. The parts of former Germany subjected to market forces
(i.e., West Germany) became a powerhouse of development in post-war
Europe. The parts of the former Germany subjected to centralized
planning (i.e., East Germany) stagnated and the citizenry had to be
forcefully restrained from leaving for better opportunities elsewhere.
For a discussion in the context of Indian Country, see, the Statement
of Joseph P. Kalt, Establishing a Tribal Development Corporation,
Before the United States Senate Committee on Indian Affairs, September
20, 2004 (hereinafter, ``2004 Kalt Testimony''), noting that ``Economic
development is an organic process. In an environment in which
opportunities are subject to the vicissitudes of competition and
continually changing marketplace conditions, economic development
occurs as the sum of small, adaptive decisions of myriad individuals
who by luck or preparation are in the right place at the right time to
take advantage of unplanned prospects. Economic development is much
more analogous to tenacious plants looking for places to pop up and
take root, than to an engineered system.''
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The discussion above raises one obvious question: If one cannot
``plan'' an economy to arrive at productive and sustainable
development, what is the alternative? While there is no predetermined
blueprint for success, there are some general tenets for effective,
long-term economic development, and these tenets are now being
demonstrated by a large number of tribes in Indian Country. We have
found that these tenets of sustainable development are applicable to
developing nations the world over, and are being acted upon by many
successful tribes in Indian Country. A discussion of these tenets is
found below, and in contrast to the Planner's Approach, we refer to
tribes that are building their communities under these principles as
governments engaged in a ``Nation Building'' process. \10\
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\10\ For more information on the Nation Building approach, see: The
Harvard Project on American Indian Economic Development, The State of
the Native Nations: Conditions Under U.S. Policies of Self-
Determination, New York: Oxford University Press, 2008, starting at
page 26.
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Institutions Matter: The nature of a society's institutions,
whether social, cultural, and/or governmental, determines the
incentives around productive or unproductive activity. Within the scope
of our research, the Harvard Project and the Native Nations Institute
have consistently found that a tribe's economic development is anemic,
or worse, unless the tribe's institutions personify at least three
characteristics. The key attributes are:
A Rule of Law. A respect for tribal law and the
establishment of legitimate means for dispute resolution.
Separation of Politics from Day-to-Day Administration and
Business Affairs. Enterprises and economic transactions are
free from societal politics and power struggles.
Efficient Bureaucracy. Clarity of procedures, good record-
keeping, efficient administration processes, reliable computer
networks, and the like.
Culture Matters: Given the importance of institutions within a
society, the social norms and worldview of the citizens that interact
with those institutions also matter. \11\ This lesson, observed
repeatedly in our research with Native Nations, is an important tenet
regarding economic development. The importance of local conditions and
political willpower in building and promoting effective institutions as
part of economic development cannot be understated. \12\ Our research
in Indian Country indicates that, for governing institutions to provide
the foundation upon which sustained economic development can take
place, there first must be a cultural match.
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\11\ Miriam Jorgensen, Bringing the Background Forward: Evidence
from Indian Country on the Social and Cultural Determinants of Economic
Development, Doctoral Dissertation, May 2000, at page 129.
\12\ 2004 Kalt Testimony at page 13.
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One can think of cultural match as the consonance between the
structure of a society's formal institutions of governance (and its
economic development initiatives) and its underlying norms of political
power and authority (i.e., culture). \13\ In order to function
effectively, a society's institutions and corresponding economic
development must be consistent with underlying cultural, political, and
organizational norms. Simply put, they must be seen as legitimate in
the eyes of the society's citizenry.
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\13\ 2004 Kalt Testimony at page 14.
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Sovereignty Matters: Self-determination is a key issue within
Indian Country and its importance to economic development cannot be
overlooked. There are four inseparable issues connecting sovereignty
and self-determination to economic and community development within
Indian Country. They are:
Design issues. Without self-determination, it is impractical
(and perhaps impossible) to change institutions so that they
more closely match those of Native Nations and their unique
economic needs.
Ownership issues. Absent a strong sense of ownership, it is
unquestionably difficult to get a local community involved and
interested in how tribal economic investments pay off.
Accountability issues. Linked closely with the concept of
ownership, those making the investments and program decisions
need to be held accountable for how all federal (and tribal)
resources are used.
Leadership development issues. There are an increasing
number of astute, capable, highly experienced leaders emerging
within Indian Country. This is demonstrated by tribes (and
tribal leadership) taking charge of issues irrespective of
historical (or concurrently existing) federal support.
After years of research, it has become clear that tribes must have
autonomy in order to foster institutions that are a cultural match for
their societies. Successful tribal governments all exhibit effective
institutions paired with a cultural match. We have come to believe that
this is why policies of sovereignty and self-determination have been
the only strategy that has shown any prospect of breaking the patterns
of poverty and dependence that became so familiar on reservations from
the late 1800s until at least the 1990s. It is only logical that it
requires self-rule for a culture to put in place institutions that are
a cultural match. Thus, we can restate the uniform qualities that have
marked successful economic development in Indian Country as aggressive
assertions of sovereignty, resulting in self-governed institutions that
are characterized by a cultural match. It has repeatedly been shown
that, when a tribe takes control of its own institutions and runs them
in congruence with its own culture, the result is a set of economic,
social, and political systems that work for its citizens. \14\
Continued dependence on the federal government for grants and guidance
removes accountability for tribal leadership and undermines the
processes necessary for stable and lasting economic development. The
negative results of such dependence should not be surprising.
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\14\ Stephen Cornell and Joseph P. Kalt, ``Reloading the Dice:
Improving the Chances for Economic Development on American Indian
Reservations,'' Joint Occasional Papers on Native Affairs, No. 2003-02,
2003.
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The core tenets of Nation Building, which are required for
effective economic development, are directly related to the issues that
bring us here today. Over the past couple of decades, the Crow Nation
has continued to push for increased autonomy and self-sufficiency and
has made great strides in its efforts to build a sustainable economy.
However, ``the economic condition of the Crow is very poor. Jobs number
few.'' \15\ The Crow's efforts to play an active role in the regional
economy by developing the tribe's abundant natural resources have
brought jobs and revenue into the tribal economy, and have also
benefited Big Horn County and the State of Montana. Similarly,
proposals to maintain, and potentially expand, mining operations stand
to substantially benefit the Crow Nation, the County, and the State. As
noted by Chairman Old Coyote, ``There are vast resources that can be
developed to improve economic conditions of the Crow.'' \16\ Harvard
Project researchers, with support from the economics consulting firm
where I work, recently undertook a study of coal mining on the Crow
Reservation. Our study explicitly addressed the implications of
continued/expanded mining for the Tribe, the County, and the State.
\17\ The complete study (has been retained in Committee files). I next
summarize our findings and discuss the implications for economic
development on the Crow Reservation.
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\15\ Dennis Zotigh, ``Darrin N. Old Coyote, Chairman: the
Smithsonian National Museum of the American Indian's Meet Native
America Series,'' October 31, 2013, at http://blog.nmai.si.edu/main/
2013/10/darrin-n-old-coyote-crow-nation.html.
\16\ Dennis Zotigh, ``Darrin N. Old Coyote, Chairman: the
Smithsonian National Museum of the American Indian's Meet Native
America Series,'' October 31, 2013, at http://blog.nmai.si.edu/main/
2013/10/darrin-n-old-coyote-crow-nation.html.
\17\ Professor Joseph P. Kalt, The Mining of Crow Nation Coal:
Economic Impact on the Crow Reservation, Big Horn County, and Montana,
The Harvard Project on American Indian Economic Development, February
4, 2014 (hereinafter, ``2014 Kalt Report'').
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Economic Development and Coal Mining on the Crow Reservation
Great progress towards sustainable economic development has been
made on the Crow Reservation in recent years. However, efforts to
revitalize the tribal economy began from such a low base (in terms of
very low income levels, high poverty and unemployment rates, alarming
health indicators, etc.) that much still needs to be done. Consider a
few basic statistics, illustrated in Figures 1 and 2. As shown in
Figure 1, between 2006 and 2010, the annual per-capita income of
American Indians living on the Crow Reservation was $11,987 (compared
to the U.S. average of $27,334; median household income showed a
similar divergence). Figure 2 shows that during that same time period,
when the national unemployment rate was approximately 8 percent, Crow
unemployment hovered at about 32 percent. \18\ Had we also included
community members who had already given up searching for work, this
unemployment rate would have been closer to 47 percent. \19\ As noted
above, per-capita income levels on the Crow Reservation are less than
half that on the U.S. average, and family poverty levels reflect this
same shortfall: During the five-year time period used in our recent
study of coal development, the family poverty rate for the Crow Nation
averaged 24 percent which was more than twice that of the average for
the United States. Sadly, the poverty rate among Crow children during
the study period was even more pronounced: Childhood poverty rates are
alarming all across America, but on the Crow Reservation we saw a 39
percent rate (compared to the 19 percent rate for the United States).
\20\
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\18\ See, e.g., 2014 Kalt Report. According to the Montana
Department of Labor & Industry, official unemployment on the Crow
Reservation in 2012 was 25.1 percent (see Crow Nation, ``Crow
Reservation: Demographic and Economic Information,'' at page 6, October
2013, at http://lmi.mt.gov/media/9409/rf13-crow-web.pdf). This was
still dramatically higher than the United States, which had an average
unemployment rate of 8 percent throughout 2012 (see the U.S. Department
of Labor, Bureau of Labor Statistics, ``Labor Force Statistics from the
Current Population Survey,'' 2012, at http://data.bls.gov/timeseries/
LNS14000000).
\19\ Statement of Darrin Old Coyote, Chairman, Crow Nation, Mining
in America: Powder River Basin Coal Mining the Benefits and Challenges,
Before the House Committee on Natural Resources, Subcommittee on Energy
and Mineral Resources, 113th Congress 2013 (hereinafter, ``2013 Old
Coyote Testimony''), at page 3.
\20\ The U.S. Census, American Community Survey (ACS) 5-year data
were presented because the U.S. Census typically provides the most
complete and reliable data available. The ACS was utilized to ensure
the accuracy and reliability of our study of coal development on the
Crow Reservation. The ACS 5-year data for the years 2006-2010 were
chosen because 2010 represents the last year that the necessary
demographic information is available for American Indian or Alaskan
Native residents on the Crow Reservation (and Off-Reservation Trust
Land). More recent data (i.e., the ACS 5-year information for 2009-
2013) show the combined demographic information of both American Indian
or Alaskan Native residents and all other races residing in the area.
According to these more recent data, combined unemployment on the Crow
Reservation (and Off-Reservation Trust Land) was 29.2 percent, again
dramatically higher than that of the U.S. as a whole (which was 9.7
percent). Family poverty rates were similarly divergent, 22.1 percent
on the Crow Reservation and trust lands compared to 11.3 percent in the
U.S. as a whole. As before, the child poverty rate on the Crow
Reservation and trust lands was far too high, at 39.5 percent on the
reservation, compared to 21.6 percent in the United States as a whole
(see the U.S. Census Bureau, 2009-2013 5-Year American Community
Survey, at http://factfinder. census.gov/faces/tableservices/jsf/pages/
productview. xhtml?fpt=table).
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It is striking that such socio-economic conditions were (and are)
present on the Crow Reservation, despite the tribe's abundance of
valuable and accessible natural resources. These include
``approximately 1.2 million acres of grazing land, 150,000 acres of
dryland farmland, 30,000 acres of irrigated farmland,'' and of course a
substantial reserve of coal, estimated at 17 billion short tons. \21\
We are meeting here today to discuss coal development, and by any
measure, the potential resource base of the Crow is impressive; the
recoverable coal reserves in the Crow Nation account for nearly 12
percent of those in Montana and more than 3 percent of those of the
U.S. as a whole. \22\ These potential assets offer significant, unique,
and potentially life-changing opportunities for individual Crow Indians
and the entire Crow community. These opportunities should arise in the
form of well-paying jobs, substantial royalty revenues to the tribe,
and greater access to critical healthcare and social services, to name
just a few. If the Crow Nation becomes unable to access these
resources, then what is already a set of complex socio-economic
challenges could easily degrade further.
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\21\ LAO Environmental, Inc., ``Crow Indian Tribe: Resource
Report,'' at pages 20 and 71, April 15, 2002, reported by the Bureau of
Land Management, at http://www.blm.gov/style/medialib/blm/mt/field --
offices/miles_city/og_eis/crow.Par.79832.File.dat/minerals.pdf.
\22\ Montana's recoverable coal reserves are reported as 74.6
billion short tons and the total coal reserves in the United States are
reported as 256.7 billion short tons (U.S. Energy Information
Administration, ``U.S. Coal Reserves with Data for 2012,'' December 16,
2013, at www.eia.gov/coal/annual/pdf/table15.pdf).
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As many already know, Westmoreland Coal Company has leased and
operated the Absaloka Mine since the 1970s. The mine has been a
significant part of the local economy ever since. In recent years, the
Absaloka Mine alone has accounted for nearly two-thirds of the Crow
Nation's non-federal budget; these are revenues that allow the tribe to
pay for governmental salaries, provide social services, and to
supplement federal funding to vital community programs such as Family
Preservation, Tribal Elders, Head Start, and the Boys & Girls Club.
\23\
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\23\ Although the tribal budget is modest overall, services covered
by the Crow Nation include important line items such as provision of
supplemental money for staffing at the BIA-funded police department
(see, e.g., Special Session of the Crow Tribal Legislature, Approval of
the Annual Budget for the Operation of the Crow Tribal Government and
the Expenditure of Tribal Revenue for Fiscal Year 2012, CLB 11-04,
September 29, 2011, at http://www.crowlaws.org/tribal_legislation_2002-
present, at page 3).
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Our 2014 study of coal on Crow lands evaluated the Absaloka Mine,
and also assessed the potential economic value of the proposed Big
Metal Project, an ongoing development initiative between the Crow
Nation and Cloud Peak Energy (``Cloud Peak''). Our research found that
in 2013, the average annual compensation and benefits for unionized
Absaloka Mine workers exceeded $91,000 per person. \24\ We found that
expansion of operations at the Absaloka Mine, and/or initiation of
mining at Cloud Peak's Big Metal Project, would be expected to create
an impact of similar magnitude. \25\ However, the benefits of such
development do not accrue only to the specific workers with jobs in the
mining industry. We must bear in mind that the economic impacts of
mining operations on Crow lands extend far beyond just those to the
local community. Big Horn County, the State of Montana, and the United
States federal government also receive considerable economic benefits
from coal produced on the Crow Reservation.
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\24\ Salary and benefits data were provided for the 2014 Kalt
Report by Westmoreland. The average annual salary for the unionized
workforce at the Absaloka Mine was $56,264. Overtime and benefits, such
as retirement funding and healthcare provision, brought the average
annual compensation for all workers at the mine to $91,408.
\25\ Due to its operation of the Absaloka Mine, employment
opportunities with Westmoreland have been of great importance to the
Crow Nation's citizens; roughly 70 percent of the mine's workforce is
associated with the Crow Tribe (2013 Old Coyote Testimony at page 3).
The mine typically employs on the order of 100 to 125 Crow Nation
citizens or affiliated individuals (see, ``Daines introduces bipartisan
legislation to encourage investment in Indian coal,'' Sidney Herald,
June 7, 2014, and Statement of Scott Russell, Secretary, Crow Nation,
Tribal Development of Energy Resources and the Creation of Energy Jobs
on Indian Lands, Before the House Committee on Natural Resources,
Subcommittee on Indian and Alaska Native Affairs, 112th Congress, April
1, 2011 (hereinafter, ``2011 Russell Testimony''), at page 11).
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Our estimate is that the combined contribution of continued
operation of the Absaloka Mine, along with the potential mining
operations of the Big Metal Project, could contribute more than $370
million dollars annually to what is referred to as Gross Regional
Product (GRP). \26\ Annual state and federal tax revenues from the
projects are estimated to be approximately $22.9 million and $21.9
million respectively. The government of the Crow Nation would likely
benefit from as much as $107 million in royalties and taxes each year
(see Figure 3) in addition to $3.75 million in initial option payments
already received for the Big Metal Project. Such benefits, whether they
be to the state, county, federal government, or tribal nation, could
easily be lost if coal development and/or expansion at Crow is
curtailed.
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\26\ GDP is defined by the U.S. Bureau of Economic Analysis as
``the market value of goods and services produced by labor and property
in the United States.'' (See the BEA at http://bea.gov/glossary/
glossary_g.htm). GRP is similar to GDP, but it measures the total
output of an economy within a specific region/area, rather than the
national economy.
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Research has noted that tribes that engage in the natural resource
industries (such as the Crow Nation) are often overly and unjustly
burdened by the current system. The Crow have been subjected to these
burdens in multiple sectors of development. Consider, for a moment, an
example from the oil and gas industry. In January 2005, the Crow Tribal
Council approved an oil and gas lease on tribal lands, \27\ but
development of the resource was blocked until September 2007 due to the
incomprehensibly slow review and approval process in place at the BIA.
\28\ Issues with the BIA persist: For example, the Crow Nation reports
that BIA's records for surface and mineral ownership are repeatedly
missing or out-of-date. \29\ Bureaucratic inefficiencies, layers of
regulatory oversight, near-complete lack of access to markets, higher-
than-elsewhere permitting costs, and persistent infrastructure
challenges create an environment of uncertainty and contribute to
lackluster economic development. \30\ In order to level the playing
field for tribes, and allow them to overcome such hurdles to self-
sufficiency, federal action can and should be taken at once.
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\27\ Clair Johnson, ``Crow Tribe signs lease with oil exploration
firm,'' Billings Gazette, May 16, 2005, http://billingsgazette.com/
news/state-and-regional/montana/crow-tribe-signs-lease-with-oil-
exploration-firm/article85763605-8812-5993-a56d-8717f7c71bff.html. See
also, ``Crow Tribe Signs oil and gas development deal,'' May 17, 2005,
http://www.indianz.com/News/2005/008205.asp.
\28\ 2011 Russell Testimony at page 13.
\29\ See, e.g., On Improving Tribal-Corporate Relation in the
Mining Sector: A White Paper on Strategies for Both Sides of the Table,
HPAIED, April 2014, at http://hpaied.org/sites/default/files/documents/
miningrelations.pdf, at page 91.
\30\ 2014 Kalt Report at page 2.
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One such action would be making the Indian Coal Production Tax
Credit (ICPTC) permanent. Those present today know that the ICPTC
assists mining firms in absorbing part of the production cost for coal
operations on reservation land. The potential economic benefits of the
tax credit include positioning of tribal coal so that it is better able
to compete in both national and international marketplaces. In
addition, the tax credit provides an incentive which serves to promote
expansion beyond current production levels on the Crow Reservation.
However, this federal tax credit has heretofore been temporary, and has
thus been consistently threatened. The temporary nature of this tax
credit has contributed to instability in the limited number of tribal
economies that rely on coal for their well-being. The uncertainty
surrounding the tax regime applicable to coal production on tribal
lands increases risk, and thus contributes to potential under-
investment by mining firms operating within Indian Country (and, among
those considering operations on tribal lands). Indeed, economics
teaches that uncertainty around future tax rates can prevent firms from
undertaking investments which cannot be reversed once they are made,
and which pay off over long time horizons.
Although the ICPTC has (temporarily) provided a more level playing
field for coal mining on the Crow Reservation, the tax credit alone is
not sufficient to redress the bureaucratic impediments that stymie coal
production on Native lands. An additional step that is critical for the
Crow Nation to fully benefit from its coal resources would be securing
equal access to expanded markets, both domestic and foreign.
Projected increases in international coal consumption highlights
the importance of increasing access to foreign markets for coal
produced on the Crow Reservation (as can be seen in Figure 4). \31\
According to the U.S. Energy Information Administration, global
consumption of coal is expected to increase from 147 quadrillion Btu in
2010 to 220 quadrillion Btu in 2040 (i.e., a 50 percent increase), \32\
while domestic consumption is expected to remain relatively flat. \33\
The disparity between the projected growth of global and domestic
consumption emphasizes the importance of providing Native Nations
access to international markets. However, the importance of access to
international markets is not only derived from projected global demand
growth. As with any product, providers need to mitigate the risks
associated with having only a limited customer base.
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\31\ U.S. Energy Information Administration, ``International Energy
Outlook 2013,'' July 25, 2013, at http://www. eia.gov/pressroom/
presentations/sieminski_07252013.pdf, at page 6.
\32\ U.S. Energy Information Administration, ``International Energy
Outlook 2013,'' July 25, 2013, at http://www. eia.gov/forecasts/ieo/
pdf/0484(2013).pdf, at page 67.
\33\ U.S. Energy Information Administration, ``Annual Energy Report
2014: Early Release Overview,'' at http://www.eia.gov/forecasts/aeo/er/
pdf/0383er(2014).pdf, at page 11. Consider the emerging economies of
China and India. Coal consumption between those two countries has been
projected to increase from 82 quadrillion Btu in 2010 to 144
quadrillion Btu in 2040, an increase of 76 percent. Compare this to the
United States, which consumed 21 quadrillion Btu of coal in 2010 and is
expected to remain at or below that level through 2040 (see Figure 5).
The data cited here can be found at the U.S. Energy Information
Administration, ``International Energy Outlook 2013,'' July 25, 2013,
at http://www. eia.gov/forecasts/ieo/pdf/0484(2013).pdf, at pages 68-69
and 71.
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The Crow Nation has recently suffered the consequences of only
being able to access a limited market. In November 2011, the Sherburne
County Generating Station (``Sherco'') in Becker, Minnesota, suffered a
turbine malfunction which caused a fire in Unit 3. This fire shut the
unit down for nearly two years. \34\ The Absaloka Mine was specifically
developed to supply coal to the Sherco plant. \35\ The temporary
shutdown of the plant resulted in a loss of approximately 50 percent of
the Absaloka Mine's coal sales in 2012. \36\ The drop-off in demand for
coal produced on the Crow Reservation was followed by a curtailment of
the workforce at the mine, which hurt individual tribal employees of
the mine, the tribal government, and the community. \37\ This loss
clearly highlights the risk the tribe faces to its budget as a direct
result of the Absaloka Mine's limited access to a wide range of
potential buyers. \38\
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\34\ Elizabeth Dunbar, ``Xcel Energy Sherco plant returns to
service after repairs,'' MPR News, October 21, 2013, at http://
www.mprnews.org/story/2013/10/21/environment/xcel-energy-sherco-plant-
returns-to-service-after-repairs.
\35\ Tom Lutey, ``Soft Demand for Coal Ripples through Area Mines,
Plants,'' Billings Gazette, June 24, 2012, http://billingsgazette.com/
news/state-and-regional/montana/soft-demand-for-coal-ripples-through-
area-mines-plants/article_ce7eb1fc-56e9-5a33-aa22-509c3f621ab9.html.
\36\ Westmoreland Coal Company, FY 2011 Form 10K, at page 22.
\37\ 2013 Old Coyote Testimony at page 3.
\38\ There is also increasing pressure for the Absaloka Mine to
supply a wider range of markets due to policy changes underway at Xcel
Energy (``Xcel''). Xcel operates the Sherco Power Plant, and is one of
the most important outlets for coal produced on the Crow Reservation.
In January 2015, Xcel put forth plans to implement a reduction in coal-
generated electricity at the Sherco plant (from 37 percent in 2015 to
29 percent in 2030), as part of an effort to transition to more
renewable energy (see, e.g., David Shaffer, ``Xcel to Double down on
Renewable Energy in Minnesota,'' Star Tribune, January 2, 2015, at
http://www. startribune.com/business/287387921.html).
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The proposed Big Metal Project will exacerbate the need for access
to international markets for coal produced on the Crow Reservation. In
early 2013, Cloud Peak announced an agreement with SSA Marine (``SSA'')
that provides an option to transport up to 17.6 million tons of coal
through SSA's planned Gateway Pacific Terminal at Cherry Point
(``Gateway Pacific''). \39\ Completion of the Gateway Pacific facility
is subject to obtaining the required permits and estimates for
commencement of commercial operations appear to target a start date no
earlier than 2018. \40\ If completed, the Gateway Pacific facility
would be the key export terminal to reach overseas markets for coal
produced on the Crow Reservation, and basic economics tells us that a
more diversified customer-base would mitigate the marketplace risks
currently faced by those producing (or contemplating production of)
coal on the Crow Reservation. \41\ A level playing field for production
on the Crow Reservation translates into more jobs for the citizens of
the Crow Nation, with a number of benefits spilling over to Big Horn
County and the State of Montana (e.g., increased tax revenues). \42\ As
noted above, the combined impact of continued production at the
Absaloka Mine, along with operations getting underway at the Big Metal
Project, is projected to be worth as much as $107 million in revenue to
the Crow Nation's annual budget. This represents a four-fold increase
in non-federal dollars currently available to the Crow government, and
will markedly increase the tribe's ability to be self-sustaining and to
provide for the needs of its citizenry.
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\39\ Cloud Peak Energy, ``2013 Annual Corporate Report,'' Gillette,
WY, 2014, at page 3. Cherry Point is on the northern coast of
Washington State in Whatcom County, just 17 miles south of the Canadian
border and approximately 108 miles north of Seattle.
\40\ Cloud Peak Energy, Press Release, ``Cloud Peak Energy
Announces Option Agreement with SSA Marine for Capacity at Future Cape
Size Export Terminal in Pacific Northwest,'' February 13, 2013, http://
investor.cloudpeakenergy.com/press-release/business-development/cloud-
peak-energy-announces-option-agreement-ssa-marine-capacity. Current
information indicates that final environmental impact statements are
not going to be issued until 2017 (see, Washington State Department of
Ecology, ``Environmental Review: Gateway Pacific Terminal at Cherry
Point Proposal,'' at http://www. ecy.wa.gov/geographic/gatewaypacific/
). According to Cloud Peak, upon completion of the permitting process
the Gateway Pacific facility must undergo two years of construction
before it can begin operations, so prior indications of a 2018 start
date are likely to slip back by more than a year.
\41\ I note that the Gateway Pacific facility has stirred
controversy, much of which involves the sovereign territory rights of
the Lummi Nation of Washington State. The Lummi Nation asserts that
Gateway Pacific infringes upon its ancestral fishing grounds, which are
guaranteed by treaty. This is a delicate issue, and deserves respectful
consideration by all parties involved. As discussed above, tribal
sovereignty and autonomy are vital to economic growth and building
well-functioning tribal communities, and these findings of the Harvard
Project hold for all tribes (Crow, Lummi, and the hundreds of others
found throughout Indian Country alike).
\42\ Analysis provided by the House Committee on Ways & Means
indicates the 10-year cost of the most recent one-year ICPTC extension
is expected to be $38 million. This decrease in federal tax revenues is
insignificant in the federal budget, so much so that USA Today has
commented, ``The budgetary cost of the Indian coal production credit is
so small it doesn't show up in most Congressional Budget Office
estimates.'' It is not surprising that a number of Montana's
legislators have been working to make the ICPTC permanent (see, Gregory
Korte, ``In Montana, Crow Tribe sees perils to `fiscal cliff'.'' See
also, USA Today, November 19, 2012, at http://www.usatoday.com/story/
news/2012/11/18/crow-tribe-fiscal-cliff/1706695/. Finally, see the
United States House of Representatives, Committee on Ways & Means,
``Section-by-Section Summary of HR 5771, The `Tax Increase Prevention
Act of 2014','' at https://rules.house.gov/sites/republicans
.rules.house.gov/files/113-2/PDF/113-HR5771-SxS.pdf).
Senator Daines. Thank you for your testimony, Mr. Henson.
We are now going to move into some questions and answers.
Chairman Old Coyote and Speaker Bates, given the importance
of coal to your people, I want to ask about the EPA's
recognition of this when they developed their proposed clean
power regulation. The EPA has stated they consulted with both
the Crow and the Navajo Tribes during the formulation for this
proposal.
At what stage did the EPA consult with your tribes, and was
that consultation substantive? Did they take any action as a
result of your concerns that you brought forward during this
consultation? Chairman Old Coyote?
Mr. Old Coyote. We did receive a letter, kind of a general
letter, kind of a ``Dear Tribal Leader'' letter. It didn't
specifically talk about our resource or our coal mining or Crow
people specifically.
And there's only three tribes in the whole United States
that developed coal. Navajo, Hopi and Crow are the three
tribes. And you would think the EPA would come to all three
tribes to consult on any kind of a coal issue where a coal
policy that is going to be implemented, or the administration
could move forward. So, no, there was no consultation.
We went back to D.C., spoke with the President directly.
Mr. Bates and I were in the White House speaking with 12 other
tribal leaders. And so Mr. Bates and I talked about the
importance of coal. I talked about trying to diversify the use
of coal.
And the next day, I was invited back to speak about the
importance of coal to the Crow people. Invited back the third
day. So the three days I spoke about coal to the President."
Finally, I was invited back a fourth time to talk about the
effects it will have on the Crow people and so they never did
mention or take into consideration the effect it would have on
the Crow people if this EPA rule were to be implemented, today.
Senator Daines. Thanks, Mr. Chairman.
Speaker Bates?
Mr. Bates. Thank you for the question.
That would depend on, Senator, at what level.
The first level is yes, they have consulted with the Navajo
Nation to a certain extent.
To my understanding, there was negotiations; there were
talks. And when I say at the lower level, I mean staff
basically.
Senator Daines. Were you ever involved in those
consultations?
Mr. Bates. No.
Senator Daines. Was the Department of the Interior ever
involved in those conversations?
Mr. Bates. No.
The Department of Justice, as well as our environmental
protection division were in consultations with the EPA but
primarily staff.
And again, to my understanding, Senator, that those
negotiations, they understood the impact of regulations as it
pertained to the Navajo Nation in terms of revenue, in terms of
jobs.
However, that conspiracy from the local level to the higher
echelon of the Federal Government has not been taken into
consideration.
So, you can look at it in two different ways.
Yes, but yet no at the end of the day, because whatever is
decided as it pertains to Indian Country in terms of EPA
regulations, isn't going to be done by the higher folks in
Washington, D.C., and most likely, without consideration of the
impact, in this case, to the Navajo Nation.
Senator Daines. Thank you, Speaker Bates.
I want to turn to Attorney General Fox.
In a broader perspective, the EPA upholds obligations, you
mentioned Executive Order 13175 in your testimony to, quote,
``establish regular and meaningful consultations and
collaboration with tribal officials in the development of
Federal policies that have tribal implications.''
What actions should the EPA have taken to be in compliance
with that Order? In your view, what would regular and
meaningful consultation look like if they were making an honest
effort to comply with that Executive Order?
Mr. Fox. So, Senator Daines, first of all, let me
reiterate, I don't believe that the EPA did meaningful
consultation in a timely way with the three tribes that have
coal production.
I think it's important to note, too, to distinguish that
the ``Dear Tribal Leader'' letters, as the Chairman mentioned,
were very generic. They didn't discuss or give a clue really
about the impacts to any nation, tribal nation, if they have a
coal resource. Instead, actually covered issues concerning
tribal nations that may have a coal-fired generation plant on
the reservation. Which of course, is not the case here.
And to be meaningful, I think the most important aspect of
the Executive Order, it has to be consultation that's
substantive, that engages the tribe, and that the EPA has done
some work in advance to identify and determine which tribes may
have specific circumstances for which consultation may be
necessary rather than the blanket generic ``Dear Tribal
Leader'' letter.
That has to be before the EPA presents, puts pen to paper,
essentially, on the regulations. They need to consult with the
tribes, and I believe come to tribal nations and meet with
leadership. That didn't happen here.
I think it's also important to note that the Executive
Order includes language that says where there are issues
relating to tribal self-government or tribal trust resources,
that the agency is to explore and use consensual mechanisms,
including negotiated rulemaking.
And again, all of that needs to happen before the rules
were even promulgated.
The last ``Dear Tribal Leader'' letter occured six days
before the rules were promulgated. That's not meaningful, nor
is it timely.
Senator Daines. And to be clear, I personally called the
EPA in Washington, D.C., and asked if they had members here, if
Arizona and Boston could come be a part of this hearing, and
hear the concern and also testify before this panel, and they
declined to participate in the hearing.
Mr. Fox. Senator Daines, I also want to note for the record
that I wrote personally to the administrator of the EPA asking
them after they promulgated the rules to have a listening
session here.
They had numerous listening sessions across the country.
The nearest one was Denver. They declined to come here, which I
think is also telling in terms of their responsiveness to our
state's and the Crow Nation's concerns.
Senator Daines. Thank you, Attorney General.
Speaker Bates, the EPA claimed it created an accommodation
for coal plants across Indian County in the clean power regs.
While this is not going to help the Crow Tribe, because
there's not a power plant here, but their buyers in Minnesota,
which is subject to the EPA's plan, the Navajo Tribe does have
a coal plants in their jurisdiction.
Does the EPA's claimed power plan in Indian Country address
your tribe's concerns, and is it a workable plan?
Mr. Bates. No.
And I say this, again, with all due respect, Senator. In
the testimony that I provided, I indicated the impact to the
mining company in terms of jobs and revenue. That same scenario
applies to the power plants.
As I indicated again, we had in the Four Corners Power
Plant, five units. By virtue of the EPA, three of those units
were shut down. Two are running as we speak. However, the
retrofits that are required by virtue of the EPA standards,
will have cost billions, and so that expense is going to be
passed down to the customers, and it carries over into the
mining company.
But, as we speak, production from our mine has been reduced
significantly. So it does have a negative impact to the Navajo
Nation in terms of revenue, in terms of jobs, in terms of
stability of energy.
Senator Daines. Thank you, Speaker Bates.
I want to shift gears here and talk about the Indian Coal
Production Tax Credit discussed here in the testimony.
Chairman Old Coyote, what has been the effect of the
expiration of the Indian Coal Production Tax Credit on the
tribe's coal production, and how would extending that tax
credit benefit the Crow Tribe?
Mr. Old Coyote. Well, first of all, the tax credit was
established in 2006. The EPA set down a rule to close the
Absaloka Mine down in 2006 because of the high sulfur content.
Then we went to the Senate, and we were told by the EPA to
go to the Department of the Interior, they have welfare
programs we could utilize if they shut down the mine. That was
heat coming out of the EPA.
And so we went to Senator Baucus, then, who was the
Chairman of the Finance Committee, and asked him to help us,
and that's when he came up with the Indian Coal Production Tax
Credit.
Three tribes, as I stated before, are mining coal, and it
expired in 2012, extended for one year to 2013. But once that
expired, we saw a $3 million to $4 million reduction in our
budget.
Right now, the $4 million reduction in 2013 is starting to
get into our budget where we're starting to do some furloughs
and layoffs from the General Fund, and so the effects are real
for Crow people.
You know, the unemployment rate is 47 percent, and with
furloughs and some layoffs will come as a result of not having
money from the Coal Production Tax Credit.
Moving forward, it would help level the playing field for
our partners, Westmoreland, and for every ton of coal that is
purchased by a company, that tax credit will level the playing
field for all the bureaucratic red tape they have to go through
just to mine a ton of coal.
And I should have brought that red tape with me that says
all the bureaucratic red tape our partners have to go through
just to mine a ton of coal.
And so all the money they spend, all the hurdles they have
to go through just to mine on Indian land, this will level the
playing field, and our coal will be favorable in the market,
and we'll be independent of any intervention.
And so that's the benefit of going coal.
Senator Daines. Many thanks, Mr. Chairman.
Mr. Henson, on December 1, 2014, the House Ways and Means
Committee estimated that a one-year extension of the Indian
Coal Production Tax Credit would cost $38 million for ten
years.
Yet, your research has shown that the provision stimulates
hundreds of millions of dollars in GDP.
The question for you, Mr. Henson, is, given the research
and the economic impact to the Indian Coal Production Tax
Credit on the economy growth of the Crow Tribe and the State of
Montana, what sort of economic multiplier would you say this
provision would have?
Mr. Henson. The one slight caveat that I would throw out
there to answer that question is the study combined the tax
credit with the continued expanded production so we didn't
separately parse out the impact of the tax credit versus the
access to this wider marketplace.
The quick ``off the cuff'', employees at the Absaloka Mine,
impacts of the daily cost is $38 million over ten years. That's
about $4 million a year. Benefits just to the tribe alone is
more than $100 million single representative year.
So, the tax credit being aligned with the mine production
of this type of investment, along with this diversification and
access to a broader set of customers is a 25:1 payoff.
Senator Daines. So, conservatively you could parse that
out, and it's still a very marginal multiplier?
Mr. Henson. I would guess so, yes.
Senator Daines. Regarding the permanency of the Indian Coal
Production Tax Credit, if there's one thing I've learned during
my relatively short tenure, serving in Washington, D.C.,
there's one thing Congress is good at, is creating uncertainty.
And the Indian Coal Production Tax Credit is yet another
example that despite the economic needs, Congress seems to be
sending mixed signals in its commitment to the Indian Coal
Production Tax Credit, mixed signals to tribal communities, or
if there are some incentives, it's only been on a short-term
basis.
Mr. Henson, in terms of contract negotiations, business
planning, what benefits would a permanent extension of this
provision allow?
Mr. Henson. Well, any investment in mining is a multi-year
planning process. It's possible many hundreds of millions of
dollars that you're asking an investor to make.
There are a handful of companies currently interested in
actively negotiating or producing on those lands. So you have a
willing set of parties, it's much better to have multi-year
planning processes, investment processes, and production and
overrun in the several decades.
So, as I said, it kind of aligns the time horizons with
their investment.
If you live in a house 20 or 30 years, it's not really a
coincidence that mortgages sort of align in terms of the time
horizon you're looking at.
It is a similar analogy you might keep in mind here in
terms of just aligning those incentives with the time horizon.
Senator Daines. Thank you, Mr. Henson.
Attorney General Fox, you mentioned in your testimony in
reference to coal exports, that Montana has a constitutional
right to not have our interstate commerce unduly burdened by
other states.
In your view, does that same right apply to tribes?
Mr. Fox. I believe it does.
The Commerce Clause in the United States Constitution,
Article I, Section 8 Clause 3 specifically mentions tribes, and
I think it's equally important that states, our sister states,
be precluded from discriminating in commerce actions, and it's
equally important to the Crow Nation and the Navajo Nation and
other coal producing tribal nations as it is to individual
states like Montana and Wyoming.
Senator Daines. Thanks, Attorney General Fox. A question to
Chairman Old Coyote and Speaker Bates.
We talked about exports today. What impact would expanding
a possibility coal export have on jobs for your tribes?
Start with Chairman Old Coyote.
Mr. Old Coyote. The positive impact for Crow people would
result in more jobs and more revenue.
The Army Corps of Engineers is doing a study on that, the
lead agency on that, so that would have a real positive impact
on the Crow people to be another source of revenue, and there
would be more jobs for the Crow people.
Right now, with just one mine and it is like one egg in the
basket, and the EPA looking down at the Crow people for their
coal.
I think another source of revenue would help the Crow
people move forward to a better, brighter future.
Senator Daines. Thanks, Mr. Chairman.
Speaker Bates.
Mr. Bates. Thank you, sir.
As I indicated in my testimony, our production right now is
from 8 to 10 million tons down from 13 to 16 million. That's
significant in terms of, jobs.
When you look at the jobs that are required from 13 to 16
million tons, we have less jobs as we speak today.
So, by being able to export, the jobs will return, and the
revenue will return. It would have a positive impact, Senator,
if the nation was to go to exports.
Senator Daines. Thank you, Speaker Bates.
I want to shift gears here, Mr. Henson. I've heard
arguments that the Crow Tribe, the Navajo, the state of Montana
and Wyoming should leave the coal in the ground due to concerns
about climate change. In fact, it is one of the driving
arguments against exporting Crow and Montana coal in the Asian
markets.
The Gateway Pacific Terminal that was discussed here today.
Its projection was about 48 million tons of coal per year,
almost all of it will come from Montana, the Crow, and the
state of Wyoming.
It's my understanding that there's a growing demand for
energy in Asia, and Montana Powder River Basin coal is cleaner
coal. Why not allow cleaner coal to meet global energy demands?
What are the impacts on that amount of coal on climate change
and the Asian market?
Mr. Henson. That question brings a few thoughts to mind.
One is, we should keep in mind no one really wants a lump of
coal for a gallon of gasoline. People want heating for their
homes or in their offices.
So, the progress that people really demand in Asia are
energy for a myriad of uses. And there are 2 billion people in
India and China only who are, for the most part, growing into a
middle class society, and those people are going to need a
massive amount of energy to stay on that path.
I kind of looked into the statistics for China, India,
Japan and South Korea. In a single year, those four nations
consume about 5 billion tons of coal. So the amount that was
cited here, the 48 million, is less than 1 percent of that.
Senator Daines. So 48 millions tons of coal coming out of
coal country here versus 5 billion tons.
Mr. Henson. For just four countries.
It's a very small amount. During the course of our study,
the numbers that we saw for Crow coal amounted to like 3/10th
of 1 percent.
Senator Daines. So, to shift gears on coal production from
Montana, even off the reservation, Attorney General Fox, how
does the Asian coal and India demand affect the state of
Montana off the reservation?
Mr. Fox. Senator Daines, let me first say, the members of
the Crow Nation are Montanans. They are Americas. Anything that
affects them affects all of us. It affects me, and it affects
you, and we need to keep that in mind.
Certainly Crow coal, when it's mined, doesn't provide
severance taxes in particular to the state of Montana.
Obviously Powder River coal does, but Crow coal doesn't provide
taxes directly to the state.
But as has been mentioned today, it provides a huge
economic impact to not only this corner of the state, but the
entire state. There's jobs, retail purchasing that goes on, and
all the things that are basically an economic ripple effect,
and so this is very important to Montana.
It's important to our state officials. I know there are
representatives from the Governor's office here who are very
invested in this issue.
And I want to thank Jason Smith, who is the Governor's
tribal liaison, for being here, because I know that we discuss
these issues with them quite a bit.
We want to make sure that the economic impacts are not lost
in this discussion, as the Chairman said, it affects real
people right here in this area, and those are the people I'm
most concerned about. This is my home.
Senator Daines. Thanks, Attorney General Fox.
Mr. Small, if the coal industry suffers a decline in this
area, what jobs would be available for boilermakers or other
union members that currently work in the coal industry?
Mr. Small. Well, you know, I'm really not aware of any, or
at least nothing that can bring the financial stability to the
good-paying jobs that the coal industry brings to this area.
Senator Daines. So, are there industries in the area that
you can think of that can absorb these people, or are they
going to have to leave the area to find a job?
Mr. Small. Well, I'm sure they'll probably be a few jobs
around which are a lot lower paying and stuff.
And again, we'll flood the market with competent people
that could be doing other things, and I'm sure a lot of them
will have to leave the area.
Senator Daines. Mr. Small, will coal development in Indian
Country be compatible with traditional native values in the
close relationship with the land?
Mr. Small. Oh, absolutely.
I would think the Navajo and the Crow constituency in this
room right now can attest to that. They can, and it is
happening already.
I would believe that any tribes that are wanting to
develop, if they had concerns they should be able to negotiate
agreements and also create economic growth.
Senator Daines. Chairman Old Coyote and Speaker Bates,
similarly, how would you characterize the relationship between
coal production and environmental stewardship?
Chairman Old Coyote?
Mr. Old Coyote. In our experience out at the Absaloka Mine,
you know, if you haven't been out there, we invite people to go
and see where the open pit mine was before and then after.
Right now in some of the areas, all the reclamation work
that's done is better than what it was before.
And, you know, a lot of people don't think that way. They
have this mentality or mind set that with an open pit, there's
dirty coal everywhere.
But once you go out there and see the reclamation work--and
the people that did the reclamation are tribal members, and so
they take great pride in doing good work, getting the coal out.
In the next couple of days here, all the crews that did
labor, every tribal member will receive payment from that coal
mine.
And so, you know, they take great pride not only taking the
coal out, but also restoring it back to better than what it
was, and that is what our Crow people are doing.
Senator Daines. Speaker Bates.
Mr. Bates. Just to reiterate what the Chairman indicated,
in the Navajo Nation it's a similar situation when it comes to
Mother Earth. We are very dear to and will protect Mother Earth
in whatever is needed to move the Nation forward.
And as the Chairman indicated, our own Navajo people who
are within the reclamation division of our coal mine, take
great pride in bringing those lands back to where they can be
used for future generations.
Senator Daines. Thanks you, Speaker Bates.
Last question. I've heard concerns as I travel around
Montana about the impacts of coal dust from coal traveling by
train across towns in Montana.
Chairman Old Coyote, you talked about what goes on now on
these coal trains and so forth. Should Montanans be concerned
about coal dust traveling from rail shipments of Montana coal
to West Coast terminals?
Mr. Old Coyote. No, we've never had a problem with coal
dust here. As long as I can remember, the coal has been
traveling through the reservation.
I know for years nobody has ever had a problem with coal
dust until--the only time we started hearing about coal dust
was after the Gateway Pacific Terminal was announced, and NGOs
started making a issue about coal dust. But before that, there
was no complaints.
For the last few years, our coal has been going to the
Midwest, and just recently to the Washington power plant. And
the coal has been traveling that railroad for years, and
there's never been a problem.
Now they're claiming that the coal dust is going to be a
problem. But it's NGOs that are making this claim, you know,
regardless of what the NGOs say, Crow people are going to
continue mining coal, because unless they have an alternative
to feed my people, to help my people go forward, we're going to
continue to mine coal.
Senator Daines. There's an old saying, ``You're entitled to
your own opinion, but you're not entitled to your own facts.''
I'm also proud of the fact that it was Montana coal that
powered all those Detroit-Edison power plants out in the
Midwest that actually powered the U.S. Bonnefield Manufacturing
Industry--Montana coal.
Well, if there are no more comments for today, members of
the Committee may also submit written questions for the record,
and the hearing record will be open for two weeks.
The Montana Chamber of Commerce along with Governor Bullock
and Senator Tester have also submitted testimony which will be
included in the official record.
I want to thank the witnesses for their time and testimony
today and look forward to bringing these comments back to
Congress with me as I get back next week.
You know, we've got a lot of work to do to convince folks
back there that coal is an essential part of our energy
portfolio. It is the life blood of the economy in a number of
parts of the country, including right here on the Crow
Reservation.
While we heard about the devastating effects the EPA's
clean energy regulations would have on our economy, we also
heard about some concrete steps we can take to ensure the
stability of the coal industry in Indian County.
Making the Indian Coal Production Tax Credit permanent
ought to be an important first step, alongside using Northwest
ports to ship our coal overseas, adding new consumers for our
product, and allowing tribes to get a fair market value for
their coal.
With that, the hearing is adjourned.
[Whereupon, at 12:15 p.m., the hearing was concluded.]
A P P E N D I X
Prepared Statement of Hon. Jon Tester, U.S. Senator From Montana
I would like to thank Chairman Barrasso for scheduling this field
hearing in Crow country, Montana. I would also like to thank the Crow
Tribe for their generous hospitality in hosting this special field
hearing.
It's important that this Committee continue to look closely at the
various forms of economic development occurring in Indian County. As we
all know, each tribal nation is unique, and every reservation or tribal
community has specific resources available for development.
The ability for tribes to successfully and responsibly manage their
natural resources, while building self-determination, is crucial for
the economic success of Indian Country. I'm glad the Senate Committee
on Indian Affairs acknowledges these efforts on behalf of tribes, and
has taken a specific interest in the innovative means of economic
development that are happening in the Crow Nation. I think it's clear
that the future of Crow is in energy, and responsible development of
their resources will benefit the Tribe, the state of Montana, and the
country as a whole.
From the time I became a United States Senator in 2006, until
today, Crow leaders have stressed the importance of the Indian Coal
Production Tax Credit to their people, in promoting self-sufficiency,
creating and sustaining jobs, and building a stable base for economic
development. I have heard the Tribe loud and clear, and I have fought
for the continuation of this critical tax credit with each passing
year. I know how important this resource is to the Crow Nation, and I
will continue to advocate for the credit in Washington.
The Tribe has worked to develop its coal resources for years. They
are now showing bold leadership by venturing into new markets and
diversifying their energy portfolio. I applaud these efforts to ensure
a strong future for Crow children and grandchildren.
One example of this innovation is the recently announced
partnership between the Department of Interior and the Crow Nation to
enter into an agreement for hydropower development. The Yellowtail Dam
project stems from the historic Crow Tribe Water Rights Settlement Act
of 2010. Former Senator Baucus and I worked with the Tribe to ensure
the hydropower provisions were included in our final legislation. Under
this important law, the Crow Tribe has the exclusive right to develop
and market power generation on the Yellowtail Afterbay Dam. This
agreement will create jobs and a more energy independent future for
families here in Crow Nation.
Crow is showing the smart innovation that will help other tribes
throughout Indian Country realize the potential in their own lands, and
move towards self-determination. I look forward to the testimony of the
witnesses today, and in seeing how the Committee can help propel
economic development for all tribes even further.
______
Prepared Statement of Hon. Steve Bullock, Governor, State of Montana
Dear Chairman Barrasso and Members of the Senate Committee on
Indian Affairs:
Thank you for the invitation to attend the Oversight Field Hearing
on economic self-determination in Indian Country, provided to my office
late last week. I am unable to attend as I have had a long-standing
commitment to visit the Signal Peak Coal Mine, to observe first-hand
its operations and to meet with management and employees. As a member
of Montana's Land Board, I have been a strong supporter of the mine.
Coal continues to be an important source of economic opportunity
and jobs for Crow Country, and I will continue to support the Tribe's
efforts to develop their resources. I am also confident that the Crow
can lead the way in responsible coal development in Indian Country. I
also congratulate the Northern Cheyenne as they were finally successful
late last year in passing federal legislation to restore long overdue
mineral rights, giving them access and the option to develop coal on
their land.
Improving the economic health of the sovereign Indian Nations
within Montana's borders continues to be a focus of my administration.
The Main Street Montana in Indian Country initiative seeks to
strengthen state-tribal partnerships to develop infrastructure,
increase access to capital, and promote economic growth.
Economic self-determination requires a strong cultural and
educational foundation, and we have also prioritized our commitment to
the Montana Indian Language Preservation Pilot Program and other
innovative approaches to improving education in Indian Country.
In addition, a healthy economy depends upon clean water and air.
Montanans know the climate is changing--we're outdoors people and we
see it happening before our eyes. We also need reliable low-cost
electricity to power our homes and businesses, and support economic
growth. It's clear to me that this is not an either/or scenario, as
some would lead us to believe.
We can meet the challenges posed by climate change and create good-
paying jobs and a more vibrant economy. That includes within the
sovereign Indian Nations--whether it's coal or hydropower on the Crow
Reservation, hydropower on the Flathead Reservation, or harnessing wind
power which is an opportunity that exists across Indian Country.
Coal is an important part of our future--it's abundant and
accessible. As with other fuels, even natural gas, the success of coal
will require significant public investment and broad public support.
I feel strongly that Washington DC has not done enough to advance
clean coal technologies. Instead, the debate there is often about
whether someone is a ``climate change denier'' or if the President is
waging a ``war on coal,'' with lawyers and lobbyists leading the
charge.
Meanwhile, increasing energy demand--both domestic and
international--is charting our future course, and we'll need both
carbon-based and renewable sources of energy in the coming decades. I'm
proud that Montana is leading the way in much of the clean energy
research being done in this country. These emerging technologies being
pioneered on our university and college campuses--including low-carbon
coal research--will pave the way to a cleaner energy future and the
good-paying jobs that come with it. Unfortunately, as a country, we
have not prioritized this research enough.
Climate change is a global issue, and the United States will play
an important role in any solution. We should lead, and also recognize
that we can't solve this issue on our own. With global demand for
energy forecast to grow, coal is likely to continue to be an important
resource for other nations as well. I have great respect for the power
of any state to address policy challenges and meet the needs of its
citizens as it sees fit. However, I am very concerned when one state
takes action that could have significant economic consequences for
Montana. This is especially true for an issue like climate change,
where action on a much larger scale will be necessary to be successful.
As the executive of the state, I must protect Montana's interests
and follow the law. Last December I expressed in writing my concerns
with the President's Clean Power Plan. In my comments to the proposed
rule I requested changes to both protect Montana's coal industry and
strengthen the state's hand in facilitating new economic opportunities
and jobs for Montanans through renewable energy and energy efficiency.
I thank the Senate Indian Affairs Committee for coming to Crow and
holding this hearing. It is important that we maintain positive
government to government cooperation as the United States, Montana and
tribal nations continue to responsibly develop our natural resources.
The promise is in the future. What we know today will be eclipsed
by tomorrow--whether it's the challenge of integrating wind power and
other renewables or the carbon emissions associated with coal. We
simply won't get to a low carbon and secure energy future without
vision and commitment, grounded in today but unafraid of tomorrow.
______
Prepared Statement of the Navajo Nation
Elsa Johnson, from Black Mesa and Director of Iina Solutions: Even
after 50 years, coal mining has not made Navajo rich. We contend with
contamination, pollution, water depletion, and toxic ponds. Plus our
poverty and high unemployment still hasn't improved. And, most of our
people are still hauling water and live without electricity!
Adella Begaye, nurse and member of Dine CARE: I understand the old
4 corners mine that Navajo Nation bought for 80 million and thought
they would generate funds was a mistake, (we told them). Now it is in
the red for 130 million, coal is being phased out and they cannot even
sell the coal at a fair price. So Mr. Bates as one of the sponsors
pushing to buy a mine is now going defunct and we are also liable for
100 million tons of coal ash.
Percy Deal, former Council Delegate, resident of Black Mesa, board
member of Dine CARE and To Nizhoni Ani: My comment is: (1) These giant
industries that moved onto the Navajo reservations over 60 years ago in
the four corners and Black Mesa have not brought any job multiplier on
to the reservation. The jobs are the direct jobs, and they are now
declining. All businesses that happened over those years are located
off reservation, not a single one on reservation. (2) These industries
are controlling the minds of Navajo leadership making them believe
there is no way we could survive without them, they bring jobs and
revenues. As results our leadership are all in a capsule believing it
and that there is no other way. (3) Lorenzo Bates led the Council to
believe that buying the Navajo mine is the best investment, but things
are changing now. The Nation is looking for someone to buy their coal,
there are damages left behind that the federal court is ordering
cleaned-up and Navajo Nation is left holding that bag. NTEC (Navajo
Transitional Energy Company) will soon be coming to the Navajo Nation
asking for approximately $45M. (4) Water and air are contaminated which
will have to be clean up. (5) Self-Determination on Navajo? Bates and
LT are at the verge of dismantling a third of the Navajo government.
Should that happen, no businesses or government will want to come in
because of the destruction of the Judicial branch.
These individuals and others also pointed to the recent video
``Cursed by Coal: Mining the Navajo Nation'' by Vice News: https://
m.youtube.com/watch?v=F4uGCj6knVw&feature=youtu.be. The video lays out
significant environmental, health, Navajo population displacement, and
quality of life problems associated with coal development on Navajo
Nation.
______
Prepared Statement of Alaina Buffalo Spirit, Enrolled Member, Northern
Cheyenne Tribe; Member, Northern Plains Resource Council
Chairman Barrasso and Senators of the Indian Affairs Committee,
My name is Alaina Buffalo Spirit. I am an enrolled member of the
Northern Cheyenne tribe and a landowner near Birney on the southern end
of the Northern Cheyenne Reservation. I am also a member of Northern
Plains Resource Council.
Thank you for allowing me to submit my perspective on coal
development in Indian Country today. Today's Field Hearing has a small
number of hand-picked witnesses. I am afraid those witnesses will not
truly represent the will of Native peoples, and especially the will of
my people, the Northern Cheyenne. In particular, I would like to
emphasize that Jason Small does not speak officially for the Northern
Cheyenne.
It is true that the Northern Cheyenne have a weak economy right
now, and it is true that we need to work to build a stronger, more
resilient economy. But coal cannot bring prosperity, and it will harm
our people.
The 57 Affiliated Tribes of Northwest Indians passed a resolution
in 2012 stating that they oppose export of coal from Montana and
Wyoming through the Pacific Northwest. The Lummi have formally asked
that the government reject the permit to construct the Gateway Pacific
Terminal because it would violate their treaty rights, disrupt their
economy, and damage sacred lands. The Northern Cheyenne people have
never said they want coal to come to their reservation. We are
surrounded by coal mines and coal plants, and have seen only a worsened
economy and destruction of our homeland.
For the record, I am submitting with my testimony two guest
editorials published in the Billings Gazette last Saturday, April 4,
2015 (retained in Committee files--see website addresses below), as
well as the resolution of the 57 Affiliated Tribes of Northwest Indians
and a letter from the Lummi Nation Business Council to the Army Corps
of Engineers requesting that the Cherry Point terminal not be
constructed.
http://billingsgazette.com/news/opinion/guest/guest-opinion
-northern-cheyenne-future-is-in-sun-wind/article_178e86ca-d024-5802-
8353-7b2304fe05e3.html
http://billingsgazette.com/news/opinion/guest/guest-opinion
-coal-mining-fails-to-bring-prosperity-to-reservations/
article_22275946-0704-5bab-9c50-eb4ebb515c2e.html
Letter, dated Jan. 5, 2015 to Col. John G. Buck, Seattle District
Commander, U.S. Army Corps of Engineers, from Tim Ballew II, Chair,
Lummi Indian Business Council
SUBJECT: Lummi Nation Request for Denial of Permit for the Proposed
Gateway Pacific Terminal Bulk Dry Goods Shipping Facility (Ref. No.
NWS-2008-260).
Colonel Buck:
The Lummi Nation is opposed to the Gateway Pacific Terminal (Ref.
No. NWS-2008-260) project proposed at Xwe'chi'eXen (Cherry Point). (See
attached resolution). We are requesting that the U. S. Army Corps of
Engineers (Corps) take immediate action and deny the permit application
based, inter alia, on the project's adverse impact on the treaty rights
of the Lummi Nation. The impacts on the Nation's treaty rights
associated with this project cannot be mitigated.
The waters and tidelands impacted by this project are an integral
part of the usual and accustomed fishing places of the Lummi Nation.
United States v. Washington, 384 F. Supp. 312, 360-61 (W.D. Wash.
1974), aff'd, 520 F.2d 676 (9th Cir. 1975), cert. denied, 423 U.S. 1086
(1976); see also, United States v. Washington, 873 F.Supp., 1422 (W.D.
Wash. 1994), aff'd in relevant part, 157 F.3d 630, 643-644, 646-47 (9th
Cir. 1998). As part of the permitting process for this project, the
Corps is required to ensure that the Nation's treaty rights are not
abrogated or impinged upon. Northwest Sea Farms v. United States Army
Corps of Engineers, 931 F. Supp. 1515 (W.D. Wash. 1996).
Review of the impacts associated with this project, including, but
not limited to, those analyzed in the Gateway Paddle Terminal Vessel
Traffic and Risk Assessment Study lead to the inescapable conclusion
that the proposed project will directly result in the substantial
impairment of the treaty rights of the Lummi Nation throughout the
Nations' ``usual and accustomed'' fishing areas. (See attached
sections). The Lummi have harvested at this location since time
immemorial and plan to continue into the future. The proposed project
will impact this significant treaty harvesting location and will
significantly limit the ability of tribal members to exercise their
treaty rights. (See attached declarations).
Additionally, the Lummi Nation has a sacred obligation to protect
Xwe'chi'eXen based on the area's cultural and spiritual significance.
The Corps is obligated to comply with the mandates of the National
Historic Preservation Act, specifically section 106, in evaluating the
project's potential impacts. This obligation is in addition to the
Corps' obligations that spring from our treaty rights. The Lummi Nation
is opposed to this project due to the cultural and spiritual
significance of Xwe'chi'eXen, and intends to use all means necessary to
protect it.
In addition to the proposed project's unacceptable and unavoidable
impacts to the Nation's access to this significant treaty harvesting
location, and to the cultural integrity of the site, the proposed
project location is within an especially rich and fertile marine
environment that serves as important habitat for a number of forage
fish, finfish, and shellfish (including several threatened and/or
endangered species) that are inextricably linked to the Lummi
Schelangen (``Way of Life''). Anticipated impacts to this significant
aquatic environment include, but are not limited to, substantially
increased ballast water discharges and associated risk of introducing
invasive species, contaminant spills (product, bunker fuel oil, crude
oil and refined products from adjacent facilities), noise, and vessel
traffic. The impacts to these critical marine waters from coal alone
may include: smothering, toxicity, substrate change, accumulation, and
water quality degradation.
The devastating environmental impacts associated with this project,
as well as the trust responsibility of federal ageneies to ensure the
protection of the treaty rights of the Lummi Nation, mandate the denial
of any and all permits under the Corp's jurisdiction.
RESOLUTION #13-47--OPPOSE THE PROPOSALS FOR THE TRANSPORTATION AND
EXPORT OF FOSSIL FUELS IN THE PACIFIC NORTHWEST
preamble
We the members of the Affiliated Tribes of Northwest Indians of the
United States, invoking the divine blessing of the Creator upon our
efforts and purposes, in order to preserve for ourselves and our
descendants rights secured under Indian Treaties, Executive Orders, and
benefits to which we are entitled under the laws and Constitution of
the United States and several states, to enlighten the public toward a
better understanding of the Indian people, to preserve Indian cultural
values, and otherwise to promote the welfare of the Indian people, do
hereby establish and submit the following resolution:
WHEREAS, the Affiliated Tribes of Northwest Indians (ATNI) are
representatives of and advocates for national, regional, and specific
tribal concerns; and
WHEREAS, ATNI is a regional organization comprised of American
Indians/Alaska Natives and tribes in the states of Washington, Idaho,
Oregon, Montana, Nevada, Northern California, and Alaska; and
WHEREAS, the health, safety, welfare, education, economic and
employment opportunity, and preservation of cultural and natural
resources are primary goals and objectives of the ATNI; and
WHEREAS, since time immemorial, our economy, culture, religion and
way of life has centered around our fishing, hunting and gathering
resources, and the lands and waters on which they depend, and we have
been, and remain, careful and conscientious stewards over them to
ensure their continued health and well-being; and
WHEREAS, the tribes of ATNI depend on the natural resources of this
region to sustain our way of life, rights to fish, hunt and gather, our
economies, human health and fulfill our sacred obligation to protect
our First Foods and our most precious natural resource, water; and
WHEREAS, the tribes of ATNI have previously adopted Resolution No
12-53, in September 2012, recognizing the potential impacts of coal
export terminal proposals that have come to the Northwest and the
action directed to the Army Corp of Engineers to conduct a full
regional Environmental Impact Statement (EIS) to address the
significant cumulative impacts of these proposals, and
WHEREAS, the Northwest is facing the advancement of more fossil
fuel exports, including numerous oil-rail proposals in Oregon and
Washington, which would bring 500,000 barrels of oil a day via rail
line to and across Northwest waterways as well as expansion of pipeline
capacity from Alberta to British Columbia and Washington State, and
WHEREAS, based on review of proposals at these sites these past
twelve months, the tribes of ATNI believe these energy transportation
and export proposals will diminish our salmon habitat, our fishing,
hunting and gathering rights, our treaty, indigenous, and inherent
rights and resources, our life way, and will destroy sacred places of
the Pacific Northwest tribes; and
WHEREAS, the tribes of ATNI respect and honor our Sacred Places
just as we do our natural resources, including the Lummi Sacred Site
known as Xwe'Chi 'eXen where our ancestors are at rest, and the sacred
traditional reef net sites at Cherry Point, Washington; and therefore
call upon agencies to fulfill their statutory and legal responsibility
to fully comply with Section 106 of the Historic Preservation Act; and
WHEREAS, the Northwest Tribes' ancestral industry of fisheries
relies on sustainable resources that will face detrimental impacts from
the transportation and export of nonrenewable fossil fuel resources;
now
THEREFORE BE IT RESOLVED, that ATNI is in opposition of the
transportation and export of fossil energy in the Northwest based on
infringement and endangerment upon indigenous, inherent, and treaty-
protected resources, impacts on human health, economies, sacred places
and our traditional way of life, and
BE IT FURTHER RESOLVED, the tribes of ATNI support a strategy to
document the impacts of these fossil fuel energy transport and export
proposals, which includes baseline studies of science from a local
approach, impacts to the economies, as well as legal and policy
initiatives.
CERTIFICATION
The foregoing resolution was adopted at the 2013 Mid-Year
Convention of the Affiliated Tribes of Northwest Indians, held at the
Northern Quest Resort and Casino, Airway Heights, Washington ton on May
13-May 16, 2013 with a quorum present.
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