Spring Creek Mine

Aerial view of the Cloud Peak Energy Spring Creek Mine near Decker, Montana. 

The Navajo Nation revoked its critical bond support for coal mines in Montana and Wyoming on Tuesday, throwing into doubt the future of the former Cloud Peak Energy mines, again.

In a letter posted on social media, Navajo President Jonathan Nez said backing bonds for the mines posed too big a risk for the Navajo Nation. The decision came just weeks after Montana briefly denied a permit for Spring Creek Mine over liability issues.

“The Navajo Nation’s financial portfolio, as well as our resources, would be placed in a state of uncertainty if we allowed NTEC (Navajo Transitional Energy Co.) to proceed with finalizing the bonds needed to operate these three mines using the Nation’s consent given these indemnity agreements,” Nez said in the announcement.

“In addition, many experts question the viability of expanding our interests in a coal market that appears to be dwindling," he continued. "We will not support initiatives that attempt to circumvent or undermine the laws and policies of our nation.”

The tribe’s interest in the mines stems from the fall bankruptcy sale of three Cloud Peak Energy properties, which were bought by NTEC. The energy company is owned by the Navajo Nation and purchased the mines without first securing approval from the Navajo government, angering several Navajo legislators who last month tried to withdraw the tribe’s full faith and credit when it came to bonding the Cloud Peak assets. Wyoming’s Cordero Rojo and Antelope mines were also part of the sale.

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It remains unclear whether NTEC has the wherewithal to secure bonds without the Navajo Nation’s backing. Calls to NTEC for comment were not returned Tuesday. Bonds for the three mines are valued at $370 million.

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Montana’s Department of Environmental Quality had objected to granting NTEC an operating permit for Spring Creek Mine unless the company waived its tribal sovereign immunity from regulatory and legal action. The conflict resulted in Spring Creek Mine closing for a day, before DEQ and NTEC reached an agreement to keep the mine operating for 75 days as Montana’s concerns were resolved.

DEQ said Tuesday the Spring Creek Mine continues to operate under Cloud Peak Energy’s permit and $108.8 million bond as the state’s differences with NTEC are resolved.

Under the current arrangement, NTEC must pay 1% of the bond’s value annually to keep it viable. If the payments stop, the bond is forfeited and DEQ reclaims the mine, said Rebecca Harbage, DEQ’s public policy director.

At the point the Cloud Peak permit transferred to NTEC, the new owner would have to secure bonds worth $108.8 million. NTEC could continue to operate the mine under Cloud Peak’s permit, although the agreement with the state to temporarily reopen the mine calls for NTEC to apply to transfer the permit within 30 days of closing. There’s wiggle room in the language, which requires NTEC to apply for permit transfer, but not for the permit transfer to be completed.