# THE NAVAJO NATION

VIA EMAIL September 18 , 2014 Janet McCabe Environmental Protection Agency Acting Assistant Administrator Air and Radiation Docket Mailcode: 2822T 1200 Pennsylvania Avenue NW Washington, DC 20460 

### BEN SHELLY PRJSIDEN 

## r REX LEE JIM VlCF PRE<;IDFNT

Re: Navajo Nation's Position on a Clean Power Plan Supplemental Rule for Tribes Dear Ms

. McC abe: Thank you again for meeting with the Navajo Nation in the September 15th Government-to Government consultation to discuss US EPA ' s Supplemental Rule for the Tribes under the Clean Power Plan. 1 The purpose of this letter is to summarize the information that was presented by the Navajo Nation at that meeting and to provide you with our position on the supplemental rule for the Navajo Nation and aspects ofthe Proposed Rule , including renewable energy projects. Specifically , the Navajo Nation requests the following : 1

. The Navajo Nation requests that US EPA develop a supplemental rule for the Navajo Nation as a whole, not just a rule for the two power plants located on the Navajo Nation. In doing so , we recommend that the Navajo Nation be allowed , as are the States , to devek>p its own plan to meet any C02 emission reduction requirements under the supplemental rule. Specifically , such supplemental rule should address the following :

a . The Navajo Nation should be authorized to initiate a plan that provides for a mass-based emission standard, utilizing the highest C02 emissions at NGS and FCPP since 1997 , which would result in a cap being set at no less than 3 7 ,941 ,342 C02 tons ; b. None of the additional building block conditions under Clean Energy Proposed Rule are applicable for the Navajo Nation ;

1 The fo ur power plants located in Indian country that are s ubj ect to a s uppl emental rule are Nav a jo Generatin g Stati on (NG S ) and Four Corners Power Plant (FCPP) , both located on the Navajo Nation , the Bonan za Generating Stati o n on Ute land s, and the South Point Energy Center located on Moh ave land s .c. The Navajo Nation should be authorized to consider the useful life of the EGUs and their impact on the Navajo Nation economy in developing its plan under any supplemental rule ; d

. The Navajo Nation would be allowed to control and disposal of any carbon credits associated with its Plan as it sees fit; and

e. The unique situation of the Navajo Nation should be recognized and considered in the development of a supplemental rule

. 2. USEPA should clarify as an addendum to the Proposed Rule, and as part of the supplemental rule, that for renewable energy resources located within Indian country , which may benefit a state or a utility therein, that benefitting state can and should recognize such renewable energy resources for credit toward its EGUs compliance requirements under the Proposed Rule. USEPA's commitment to the Nava j o Nation The federal government, including USEPA , has recognized the unique legal relationship that exists between the federal government and the Native American tribes

.2 USEPA acknowledged this unique relationship and did the correct thing when it excluded Electricity Generating Units (EGUs) located in Indian country from its Clean Power Plan for Existing Power Plants (Proposed Rule) and provided instead that a supplemental rule would be prepared , if necessary or appropriate

.3 USEPA also stated that they would consult with the affected tribes (including the Navajo Nation) prior to setting any C0 2 emissions goals for Indian country. 4
On July 15, 2015 , the Navajo Nation requested Government-to-Government consultation with USEPA regarding the Proposed Rule and anticipated supplemental rulemaking for tribes. However, the Navajo Nation became concerned that USEPA was already far along in the process of drafting the supplemental rule , which it was going to release fairly soon. This promoted a joint letter from Stephen B. Etsitty, Executive Director of the Navajo Nation Environmental Protection Agency , and Harrison Tsosie, the Navajo Nation Attorney General , on August 15 ,

2 As recognized in E

.O

. 13 175 , " the United States has a unique legal relationship with Indian tribal governments as set forth in the Constitution of the United States , treaties , statutes , Executive Orders , and court decisions ." E.O. 13175 , 65 Fed

. Reg

. at 67249

. Accordingly , every federal agency " shall have an accountable process to ensure meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications ." !d

. at 67250

. As USEPA also recognizes , US EPA shares " the federal government's trust responsibility , which derives from the historical relationship between the federal government and Indian tribes

. .. " USEPA Policy on Consultation and Coordination with Indian Tribes (May 4 , 2011). USEPA ' s own Indian Policy states that USEPA will " give special consideration to Tribal interests in making Agency policy, and [to] insure the close involvement of Tribal Governments in making decisions and managing environmental programs affecting reservation Iands ," 1984 Indian Policy at I ; and " will assure that tribal concerns and interests are considered whenever EPA ' s actions and/or decisions may affect reservation environments ," id. at 3. 3 79 Fed

. Reg

. at 34844 ; see CAA § 301 (a) , (d)(4) ; 40 C

. F.R

. § 49

. 11. 4 79 Fed

. Reg

. at 3989 3 (" The EPA does plan to establish C0 2 emission goals for both Indian Country and territorie s in the future. The EPA plans to conduct additional outreach before setting these goals ." ) ; EPA Fact Sheet, " National Framework for states ," http: //www2

.epa .gov/sites/production/files /20 14-05 /documents/2 0 140602fs-settinggoals.pdf.2014 to Ms

. Regina McCarthy , USEPA Administrator (" August 15 , 2014letter" )

. They requested that USEPA not re lease a supplemental rule until the Navajo Nation had a chance to participate in the Government-to-Government consultation and until USEPA meaningfully reflected upon input received from the Navajo Nation from that consultation. In a letter dated September 11 , 2014 , you reiterated that a supplemental rule will not be published until after US EPA ' s consultation with the Navajo Nation , but that US EPA also has tight deadlines. While the Navajo Nation is sensitive to the fact that US EPA has deadlines , I would also like to stress the importance of the supplemental rule to the Navajo Nation and clarification regarding renewable energy resources to the Proposed Rule

. For example , the immediate impact ofthe ambiguity created by the Proposed Ru le has been the delay in completion initiating construction on several renewable energy projects on the Navajo Nation

. The Navajo Nation is at a severe economic disadvantage compared to the states and an appropriate Navajo Nation Clean Power Plan not only would take that disparity into account but also could create a great economic opportunity for the Navajo Nation

. Again , we respectfully request that USEPA consider the importance of this decision to the Navajo people and that USEPA will take the time to reflect upon our comments and concerns in a meaningful way prior to the release of a supplemental rule , which is expected in mid-October. The Navajo Nation appreciates USEPA ' s assurances at the September 15 1h consultation that our discussions on the supplemental rule will continue , that Monday ' s consultation will not have been our only chance to provide input to USEPA on a supplemental rule , and that, to use your words from the consultation, " the draft [of the rule] is not locked in. " We trust that US EPA will truly abide by these statements. The Nava jo Nation 's Unique S ituation Any rule developed for the Navajo Nation should consider key characteristics that distinguish the Navajo Nation from the states
. These characteristics include the following:

• The Navajo reservation was set aside as a cult ural homeland for the Navajo people. Under the supervision of our trustee , the United States government, the Navajo Nation 's economy developed into a coal-based economy . It was the federal government who established this coal-based economy , which the Navajo Nation has grown to rely upon. Previous environmental regulatory decisions by USEPA have already impacted our economy in a negative way, and will reduce the output ofthe power plants by about a third of what they were. More restrictions by USEPA directed toward the power plants and associated mines have the potential to weaken the Navajo Nation economy even further. There are no other industries on the Navajo Nation that can compensate for this economic los s. • The Navajo people as a whole live in extreme poverty , which includes a staggering unemployment rate of 52%. The per capita income of the Navajo Nation is around $10 ,000 , whi le the per capita income of the poorest state (Mississippi) was $34 ,478 in 2013. 5 This extreme poverty leads to higher rates of alcoho lism, domestic violence , other crimes and suicides.

5 U. S

. Bureau of Ec onomi c Analys is.

### •

•

•



### •

• A lack of jobs severely strains the Navajo Nation economy and forces the Navajo people to leave their homeland in search of work, sometimes leaving behind their spouse and children and weakening family bonds

. 32 % of the Navajo people do not have electricity , which is worse than Nepal and Indonesia, and only slightly better than Bangladesh. 6 The per capita use of electricity on the Navajo Nation is 10% of that used by neighboring states and about 15% ofthat ofthe most efficient state (California). 7 Electricity consumption on the Navajo Nation needs to increase in the future to promote economic development. Almost all of the electricity generated on the Navajo Nation is exported to the states; it is not used by the Navajo people. The Navajo Nation has an extremely low carbon footprint compared to our neighboring states. Notably, the Navajo people receive almost all their power from carbon-free sources (primarily hydroelectric). Unlike the states , any reductions at the existing EGUs on the Navajo Nation cannot be offset or shifted to other facilities

. Key Components of a Clean Power Plan for the Navajo Nation The Navajo Nation advocates for a Clean Power Plan that considers the unique situation of the Navajo Nation and also incorporates the key components described below. 8
1. The Navajo Nation recommends a mass-based C0 2 emission standard based on historical C02 emissions. The Navajo Nation supports a plan that provides for a mass-based emission limit because it would better allow for an option of trading carbon allowances than a rate-based approach. The Navajo Nation is interested in preserving an option for trading , for the reasons given below

. The Navajo Nation also believes that the emission rate on which the mass-based standard is based should be based on the highest C0 2 emissions at NGS and FCPP since 1997. 1997 was the year just prior to implementation of various pollution-control technologies and other processes (including unit shutdowns) that have already resulted in significant carbon reductions at the two power plants. This approach would result in a cap being set at 3 7 ,941 , 342 C0 2 tons. The cap that the Navajo Nation is proposing is based on NGS ' s 2002 emissions of20,458 ,265 C0 2 tons and FCPP ' s 1999 emissions of 17 ,483 ,077 C0 2 tons. An acceptable alternative emissions rate , although not ideal , would result in a cap of37 ,077 ,435 tons , which are the 2000 total C0 2 emissions from the two power plants. Moreover, any carbon mass emissions cap

6 Navajo Tribal Utility Authority , International data from World Bank and International Energy Agency . 7 NTUA and California Energy Commi ss ion

. 8 As mentioned in the Au g ust 15 , 2014 letter from the Navajo Nation to US EPA , the Navajo Nation has embarked on a hi storic an.rt unprecedented undertakin g concerning the Propo sed Rul e and the Supplemental Rule

. Th e Navaj o N ation , includin g its Environm ental Protection Agency and Divi s ion of Natural Resource s, along with Nava j o tribal enterpri ses (NTUA , Navajo Transitional Energy Corporation and Navajo Nation Oil and Gas Company) have com e together to plan a course of action that will be in the be st intere st of the Navajo Nation to determine its economic and cultural future.developed from historical emissions should not be adjusted downward to account for retirement of units at the plants since this was not performed by USEPA when developing state emissions rates under the Proposed Rule. It is unreasonable to use the year 2012 as the basis of a mass emissions rate because 2012 was a low-emitting year for both plants as a result of unusually low generation. The Navajo Nation believes that using historical C0 2 emission rates for the baseline is a fair and reasonable recommendation

. The Navajo Nation has already suffered adverse economic impacts due to unit retirements at the power plants. Navajo workers lost high-wage jobs, both at the plants themselves and at the associated coal mines , and equivalentjob opportunities are not available elsewhere on the Navajo Nation. The power plant unit retirements also decreased revenue to the Navajo Nation government in the form of taxes and royalties. This decrease has strained the government ' s budget and lowers the ability to provide essential services to our people, many of whom live in extreme poverty. Using a mass-based emissions standard based on historical emissions will help assure longer-term operation of the two power plants, enabling more time for development of and transition to other industries on the Navajo Nation. The resulting excess carbon credits also could be used in a carbon credit trading program that may help generate funds and provide other opportunities for the Navajo Nation , as discussed further in item 2 below.
In the alternative , if USEPA were to require a rate-based approach either as the preferred approach or as the first step in developing a mass-based standard, the power plants should not have to improve their heat rates as set forth under Building Block 1 of the Proposed Rule. USEPA ' s Proposed Rule for the states relies on the assumption that power plants did not improve their heat rates prior to 2012

. This is an incorrect assumption for NGS and FCPP. As demonstrated by USEPA ' s data, both power plants have reduced their C0 2 emissions , C0 2 emission rates and heat rates significantly since 1997 and prior to 2012

. Therefore , it would be unreasonable and infeasible to require any further reductions ofheat rates. 2. The Navajo Nation requests carbon credits and ownership and control of such credits. 9
We strongly request that USEPA grant the Navajo Nation carbon credits and that the Navajo Nation have ownership and control of those credits

. This will allow the Navajo Nation to participate in a current or future multi-jurisdiction trading program(s). 10 The Navajo Nation ' s intention would be to use such a program as a means to finance clean energy development on the Navajo Nation and provide transitional employment opportunities for the Navajo people. Granting carbon credits to the Navajo Nation also may prove to be a significant mechanism for mitigating the effects of extreme poverty on the reservation

. We also ask that you clarify that any carbon credits resulting under the Clean Power Plan are separate and distinct from those

9 "C arb on credits " and " allowance s" are used interchan geably

. 10 The Navajo Nation understands that US EPA cannot g ive us the authority to participate in a multi-jurisdictional plan

. However, we request that US EPA not structure the final rule for the states and/or the supplemental rule for th e tribes in a way that poses obstacles to participating in a multi

- juri sdictional approach

.under any other federal programs , such as the Department of Interior ' s Carbon Reduction Credit program. We understand that USEPA has the option of determining that no plan is necessary for the Navajo Nation. 11 Such a determinati on woul d acknowledge the efforts made by NGS and FCPP in response to USEPA ' s other environmental regulations that resulted in lower carbon emissions (e

.g . the BART rules)

. 12 However, this determination wou ld not acknowledge the sacrifices made by the Navajo Nation. Navajo employees lost their jobs at NGS , FCPP and the associated mines due to these environmental regulations and these high

-paying jobs cannot be replaced elsewhere on the Navajo Nation . The Navajo Nation government has also seen reduced tax and royalty payments as a res ult of the changes mandated at NGS and FCPP by USEPA. This option also would not recognize the fact t hat the Navajo Nation historically has had extremely low electricity demand (currently only 10% of its neighboring states) and is not a significant contributor to carbon po llution

. Therefore , we are requesting that USEPA acknowledge both the sacrifices made by the Navajo Nation and the Navajo Nation's historically negligib le contribution to the current carbon problem by all owing us to receive carbon credits and to retain ownership and control of such credits. Determining that no plan is necessary for the Navajo Nation would be USEPA taking the easy way out. We request that USEPA not take this course of action and work with us to determine another course of action that results in significant carbon credits for the Navajo Nation. 1 3 

### 3. The Oth er Building Blocks Outlin ed in th e Proposed Carbon Rule for the States are Not Applicable to the Navajo Nation.

a. Switching from coal-fired to Natural Gas Combined Cycle (NGC C) power plants should not be a component of a supplemental rule for the Navajo Nation. There are no NGCC plants located on the Navajo Nation, nor are there p lans to build any. The Navajo Nation is a coal- based economy and does not rely on natural gas in any significant capacity. Therefore , the requirements of the Proposed Rule ' s Building B lock 2 are inappropriate for the Navajo Nation and should not be a component of a Navajo Nation rule. 

### b. A Navajo Nation rule should no t require increased use of no or low carbon electric- generating sources . Although there are two power plants located on the Navajo Nation, the Navajo peop le receive virtually all their electricity from carbon

-free sources (mostly hydroelectric power). Almost all of the electricity generated at the two power plants leaves the Navajo Nation and is consumed in neighboring states. Additionally , the Navajo people's use of electricity is negligible compared to the electricity generation at the power plants. The Navajo peop le have a much lower carbon footprint t han the states , including the most energy-efficient states. Therefore, the Proposed

11 See e.g. 79 Fed. Reg

. at 34852 ( " If it determ ines that such a plan is necessary or approp riate, the EPA has the responsibility to estab lis h a CAA section Ill (d) p lan for areas of Ind ian country
. . . ") 12 The Navajo Nation certainl y acknowledges and appreciates the efforts made by NGS and FCPP

. 13 US EPA has provided extra allowances in the past to state s that hi storically were not s ignificant c ontributors to an environmental probl em, specifically to " c lean states " in the acid rain pro g ram .Rule's Building Block 3 is not appropriate for the Navajo Nation and should not be a component of a Navajo Nation rule. c. A demand-side approach to energy efficiency is inappropriate for the Navajo Nation. The Navajo Nation should not be subjected to any rule that requires a reduction in energy consumption. As noted above, per capita electricity use in the Navajo Nation is about 10% of that of neighboring states and about 15% of the most energy efficient state, and 32% of the Navajo people do not even have electricity. The Navajo Nation's energy consumption needs to increase, not decrease. It would be a social injustice to require the Navajo people to reduce their energy consumption when they use negligible amounts of electricity and when a significant percentage of the people do not even have electricity. The issue facing the Navajo Nation is not energy efficiency; it is inadequate access to electricity. As was brought up by USEPA during the consultation, Building Block 4 of the Proposed Rule applies to future electricity consumption in order to make sure that energy consumption grows in an efficient manner. The Navajo Nation maintains that any demand-site approach to energy efficiency , whether based on current or future consumption, is inappropriate for the Navajo Nation. It is completely unreasonable to put such restrictions on a group ofpeople such as the Navajo, who live in poverty and one third of whom do not even have electricity. Therefore, Building Block 4 of the Proposed Rule is not appropriate for the Navajo Nation and should not be a component of a Navajo Nation rule. Any rule applied to the Navajo Nation should allow for the increase of energy consumption on the Navajo Nation. Any emission rate should be determined accordingly to provide for increased electricity consumption rather than decreased consumption. 4. The proposed rule should consider the useful life of the power plants located on the Navajo Nation. A Navajo Nation rule should examine and incorporate the useful life ofNGS and FCPP. Because oftheir huge significance to the Navajo Nation, these plants should be allowed to continue operating into the future. The Navajo Nation is a coal-based economy in large part due to the actions of our trustee , the United States government. The Navajo people depend on the power plants and associated mines to earn a living and support their families. NGS, FCPP and the associated mines (Navajo Mine and Kayenta Mine) provide approximately 1,584 Navajos with employment. USEPA has already rendered decisions impacting these power plants and mines which have adversely affected Navajo families. We respectfully ask that you consider the harmful effects to these Navajo workers and their families that may occur from additional 1 . 14 regu atory reqmrements.

14 San Juan Generating Station (SJGS) is located just outside the Navajo Nation in Farmington, NM

. This power plant also employs many Navajos

. Any impact to SJGS under New Mexico 's Clean Power Plan has the potential to negatively affect Navajo workers and further strain the Navajo economy. The Navajo Nation has an interest in assuring that jobs at all three plants are protected

.5. Renewable energy projects on the Navajo Nation that provide electricity outside the Navajo Nation should be counted toward the relevant state's emission rate. States , and utilities therein , should not be hindered from receiving credit for engaging in renewable energy projects on the Navajo Nation in order to meet carbon emission rates , reduce reliance on carbon sources , and satisfy renewable energy goals. USEPA should clarify as an addendum to the Proposed Rule , and as part of the supplemental rule, that for renewable energy resources located within Indian country , which may benefit a state or a utility therein, that benefitting state can and should recognize such renewable energy resources for credit toward its EGUs compliance requirements under the Proposed Rule. Language to this effect will benefit both the states and the Navajo Nation. Furthermore , this clarification should state that the Proposed Rule in no way modifies the federal government's intent to promote the development of renewable energy projects on Indian Land as described in EPAct 2005. The Proposed Rule has already created an obstacle to the development ofrenewable energy resources within the Navajo Nation. At least one Navajo Nation enterprise is directly engaged in the development ofrenewable energy resources for sale of energy and Renewable Energy Credits to utilities not located within or regulated by the Navajo Nation

. The enterprise has been informed by such a utility that it is re-evaluating the purchase due to the ambiguity of whether the renewable energy resource with the Navajo Nation could be used as credit against the utility ' s EGUs not located within the boundaries of the Navajo Nation. This ambiguity of the Proposed Rule is delaying job creation and much needed investment into the development of renewable energy projects on the Navajo Nation. Without clarification of the Proposed Rule , states will not have the incentive to develop these types of projects on the Navajo Nation. As a result, the Navajo Nation's economy will be severely hindered and we will lose an opportunity to develop a green economy. Other Considerations The Navajo Nation is aware ofthe threats posed by climate change and supports USEPA's decision to take action. It is also possible that environmental groups will seek to minimize any C02 allowances that may be proposed for the Navajo Nation , and most likely will seek further reductions in emissions at the power p lants. However, the situation at Navajo is one where social justice and environmental goals should go hand-in

-hand

. The Navajo Nation has already made , and continues to make , substantial sacrifices as a result of efforts to reduce the environmental impact of the two power plants even without an additional C02 emissions requirement. It is possible to create a Navajo Nation rule that reflects our unique situation, helps the Navajo people out of poverty and also assists the United States in the fight against climate change

. USEPAjust needs to be willing to do the hard work to create such a rule

. The Navajo Nation will do whatever we can to assist USEPA with the complexities that are involved in developing such a rule. With our extremely low carbon footprint , the Navajo Nation is not a large contributor to the climate change problem , but we are ready and willing to be a part ofthe solution.Thank you again for meeting with the Navajo Nation and for allowing us to provide our input on a supplemental rule for the Navajo Nation. The Navajo Nation looks forward to an ongoing discussion with USEPA on this matter. Please direct any follow

-up communications concerning this matter to Stephen B. Etsitty , Executive Director, Navajo Nation Environmental Protection Agency , at 928

- 871-7692 , stephenbetsitty @ navajo-nsn

.gov.

Sincerely ,

Cc: Jared Blumenfeld, Regional Administrator, USEPA Region 9 Stephen B. Etsitty , Executive Director, Navajo Nation EPA