Navajo Generating Station lease extension talks stall

Power plant owners reject a number of lease amendments the Navajo Nation Council proposed

The owners of Navajo Generating Station and the Navajo Nation have yet to agree on terms for a lease extension agreement for the power plant. Photo/NHO

The owners of Navajo Generating Station and the Navajo Nation have yet to agree on terms for a lease extension agreement for the power plant. Photo/NHO

WINDOW ROCK, Ariz. -- The Navajo Generating Station (NGS) lease extension is in limbo because the power plant's owners can't agree to all of the lease amendments the Navajo Nation Council wants.

The council added the amendments to the legislation during its meeting on April 29.

Salt River Project (SRP), on behalf of the NGS owners, sent a letter to the Navajo Nation informing the council that while they accepted some of the amendments made to the legislation there were a few amendments that the owners found unacceptable.

Scott Harelson, from SRP, said that negotiations for the lease extension have been going on for two and a half years with a lot of give and take from both parties.

"The Nation and the owners both made concessions, and concessions that were uncomfortable for both and we believe that the agreement that we reached after those two and a half years is fair, it's fair to the owners and it's fair to the Nation," Harelson said. "We believe we are very close."

The owners agreed to many of the changes the council made, including modifications that require NGS owners to when possible work with Navajo-owned businesses and to provide additional ground cover over the ash landfill when the plant is decommissioned.

But there are some sticking points.

"There are some amendments that have been tacked on to the legislation by the council, some of which the owners have accepted," Harelson said. "But there are a few, we've been very clear, and we were clear before they voted on them, that we could not sign."

Specifically, the owners said that requiring the Bureau of Reclamation (BOR) to be a signatory to the lease is unacceptable because neither the United States nor the BOR was a party to the lease and any references to the U.S. or any of its agencies must be removed.

Also, the council wants acknowledgment that the U.S. contractual interest in NGS is in direct conflict with the trust responsibilities to the Navajo Nation. The plant's owners said this item would prevent the secretary of the interior from approving the amendment, once the National Environmental Policy Act (NEPA) is approved five years from now - a risk that the owners are unwilling to accept.

The council also added a provision that states that the owners may not interfere with or oppose a Navajo Nation claim to water from the Upper Colorado River Basin. The owners said a future claim could have a direct impact on NGS owners and their customers so they will not waive their ability to oppose any future claim.

The council amended the legislation with a condition that SRP annually meet with the Navajo Nation. SRP officials said because they cannot require the Nation to meet with SRP, they cannot agree to this provision.

The legislation seeks to require the federal government to pay a portion of the signing bonus even if the secretary of the interior never approves the amendment. The owners said that because the federal government may not make a payment for its share of the signing bonus, if the amendment is not approved, the U.S. is unable to commit to making a payment on something it may never approve.

The letter also said there is conflicting language and a modification to the portion of the agreement regarding hiring preferences that the owners would not agree to. The owners said that they would accept language that states "in the event that federal law prohibits the [owners] from providing employment preferences based on tribal affiliation, [owners] will give preference to qualified Indians." The owners also said that any change relating to training preferences must be modified to make it workable for NGS, NGS owners and the council. The owners said the provision as currently written could prevent SRP from providing appropriate and necessary training for all positions at NGS.

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