VIA EMAIL 

May ll,2015 

Janet McCabe 

Acting Assistant Administrator 

Office of Air and Radiation 

Environmental Protection Agency 

EPA Docket Center (EPA/DC) 

Mail code 2822 1T 

Attn: Docket 10 No. EPA-HQ-OAR-20 13-0602 

1200 Pennsylvania Ave. NW 

Washington, DC 20460 

DANA L. BOBROFF 

DEPUTY ATTORNEY GENERAL 

Re: Additional Information from the Navajo Nation Regarding U.S. EPA's Clean Power 

Plan 

Dear Ms. McCabe: 

Thank you again for meeting with the Navajo Nation during our government-togovernment consultation held on April 28, 2015 in Washington, D.C. The Nation believes the 

meeting was very productive and appreciates EPA's request for additional information from the 

Nation regarding the Clean Power Plan and its effect on the Nation. This letter contains 

additional information that supplements our comments and other documentation previously 

submitted to EPA. 

First, the Navajo Nation takes this opportunity to reiterate its general support for EPA's 

actions to combat climate change. The effects of climate change will have severe impacts on 

Native American tribes and the Navajo Nation is no exception. The Nation's 27,000 square 

miles are located in the high desert, which is susceptible to issues like severe drought and water 

shortages. However, the Navajo Nation also has a coal-based economy and the two power plants 

located on the Nation, Navajo Generating Station (NOS) and Four Corners Power Plant (FCPP), 

provide an economic lifeline for the Navajo people and their government. The avajo Nation 

cannot support any rule that jeopardizes the Navajo Nation economy. 

This letter also provides additional information regarding the following issues: 

• The unique situation of the Navajo Nation 

• An earlier base year for the Navajo Nation under Building Block 1 

P.O. Box 2010 ·Window Rock, Navajo Nation (AZ) 86515 • 928-871-6347/6210 · Fax No. 928-871 -6177 
Letter to Janet McCabe 

May 11 , 2015 

Page 2 of9 

• The Parity Glide Path proposed by the Nation that takes into consideration the large 

difference in energy use by the Navajo people versus their regional neighbors 

• Challenges faced by the Navajo Nation regarding renewable energy development on its 

lands 

Unique Situation of the Navajo Nation 

The Navajo Nation is sympathetic to the chall enges that EPA is facing with this proposed 

rule. Among other things, the Nation understands that differences between the states may 

complicate EPA's efforts to craft a coherent approach to regulating carbon pollution emissions. 

However, the situation on the Navajo Nation is unlike anything occurring in the states and merits 

special attention. 

The unemployment rate in the Navajo Nation is a staggering 52%, compared to 5.8% for 

the United States overall. In other words, the Navajo Nation's unemployment rate is over eight 

times that of the United States as a whole. The per capita income of $10,695 on the Navajo 

Nation is well below that of the poorest state (Mississippi). An estimated 32% of the Navajo 

people lack electricity, 38% lack running water, 31% lack complete plumbing, 28% lack kitchen 

facilities, and 60% lack telephone service. 

NGS and FCPP are vital to the Navajo Nation economy. They provide essential jobs to 

the Navajo people and revenue to the Navajo Nation government. The Navajo Nation's top 

priority is the continued, unhindered operation of both power plants. Another top concern is to 

ensure that economic development on the Nation, especially in the area ofRE development, is 

not hindered as a result of the Clean Power Plan. 

Jobs at NGS and FCPP, along with the associated coal mines, are generally high-skilled, 

high-paying jobs with benefits like health insurance and pensions. These types of jobs are 

extremely difficult to find on the Nation and are virtually irreplaceable. The scarcity of jobs 

such as these often leads the family "breadwinner" to take a job off the Navajo Reservation, thus 

leaving his or her family for extended periods of time. Sometimes an entire family is forced to 

move offthe Reservation, which strains its ties to extended family, homeland, culture and 

traditions. The importance of these jobs to the Navajo workers is illustrated in this short clip 

from a video called "The Faces ofNGS" produced br Salt River Project: 

http://www.ngspower.com/video _ employment.aspx. 

These power plants and mines provide essential revenue to the Navajo Nation 

government through royalties, taxes, lease payments and other means. The Nation also owns the 

Navajo Mine which supplies coal to FCPP. Any negative impacts on the power plants and the 

mines, including unit shutdowns, have a severe and direct effect on the Navajo Nation economy. 

The end result is a significant decrease in the government's general funds, which weakens the 

1 The Nation can provide the complete "The Faces ofNGS" DVD to EPA upon request. 
Letter to Janet McCabe 

May 11 ,201 5 

Page 3 of9 

government's ability to provide essential services to its people. It also weakens the Nation's 

sovereignty and forces the tribe to rely on the federal government for additional funding. 

The L. William Seidman Research Institute at Arizona State University analyzed the 

impacts ofFCPP and Navajo Mine on the economies ofthe Navajo Nation, San Juan County and 

the State of New Mexico. The economic impact analysis concerning the Navajo Nation is 

included in this letter as "Exhibit A" and the economic impact analysis concerning San Juan 

County and the State ofNew Mexico is included as "Exhibit B." 

Among the various findings concerning the impacts ofFCPP and Navajo Mine on the Navajo 

Nation were the following: 

• 80% of the employees from FCPP and the Navajo Mine originate from the Navajo 

Nation. 

• The average annual wage of a FCPP worker was over four times higher than the 2007 

median household income for the Navajo Nation. 

• A Navajo Mine worker's average annual wage was three and a halftimes higher than the 

2007 median household income for the Navajo Nation. 

• In 2011, FCPP (5 units operating) and Navajo Mine combined were estimated to generate 

2,483 jobs for the Navajo Nation, $ 186. 1 million in labor income, and $424.8 million 

Gross Navajo Nation Product (GNNP) (both in 2011 $). 

• The annual economic impact ofFCPP and Navajo Mine combined, based on only units 4 

and 5 operating at FCPP and the change in mine in ownership, is estimated to generate 

2,293 jobs for the Navajo Nation, $ 159 million labor income, and $338 million GNNP 

(both in 2011 $). 

o This means a loss of 190 jobs2

, $27. 1 million labor income, and $86.8 million in 

GNNP. 

The Nation expects similar negative economic impacts concerning the likely one unit 

shut-down at NOS. These shutdowns are the primary driver of the Nation's interest in 

participating in a regional carbon trading program. Participation in such a program would allow 

the Nation to recover lost revenue due to the unit shutdowns and would also assist in economic 

development on the Nation, including renewable energy development. 

Rationale for using an earlier base year for the Navajo Nation 

As noted in our earlier comments to EPA, the Navajo Nation reiterates that 201 2 is an 

unrepresentative base year for operation ofNGS and FCPP and should not fo rm the basis of the 

rule for the Navajo Nation. The Nation evaluated total generation over the same period that EPA 

used for its Building Block I statistical analysis, 2002-20 12. Using a normal distribution, there 

is only a 3% population probability (3 .6% sample probability) that generation would be at or 

below the levels it was in 20 12. This result demonstrates that 2012 was at the extreme low end 

2 These jobs are lost via natural attrition, not layoffs. 
Letter to Janet McCabe 

Mayll,2015 

Page 4 of9 

of likely generation levels and was primarily driven by natural gas prices being at historic lows, 

which reduced demand for coal generation for the plants' customers. 

Total Net Generation, Probabilit) at or below 

Year MWh1 Population Sample 

2002 30,746,372 19.1% 20.3% 

2003 32,003,869 60.6% 60.1% 

2004 32,721,4 11 82.1% 80.9% 

2005 32,646,7 14 80.3% 79.1 % 

2006 33,508,007 94.9% 94.0% 

2007 32,213,646 67.6% 66.9% 

2008 32,206,687 67.4% 66.7% 

2009 31,780,184 52.6% 52.5% 

2010 30,334,397 10.6% 11.7% 

20 11 31,006,231 26.2% 27.2% 

2012 29,629,453 3.0% 3.6% 

I. From EIA fonn 923 

The Nation is very economically dependent upon the operation of the two coal power 

plants and, unlike states that have more diverse economies and more generating resources, there 

is no flexibility to offset the economic impact of reductions in operation of the coal plants with 

other generating resources. As discussed in past government-to-government meetings and in our 

comments, the Nation is contemplating converting its carbon emission rate to a mass-based limit 

to comply with the Clean Power Plan. The Navajo Nation therefore believes that the base year 

should be at a level that accommodates operation at levels significantly above the average for 

this period. If the limit is based upon the average or a lower value than the average, under a 

scenario where capacity remained the same, it would force the future generation level to well 

below historical levels, which would be harmful to the economy of the Navajo Nation. In fact, 

even factoring in the retirement ofFCPP units 1-3, in the event that all NOS units continue to 

operate, total generation could be impeded when using a 2012 base year. 

EPA developed the four building block approach for the proposed Clean Power Plan as 

the Best System of Emission Reduction (BSER). As noted in our comments, since the Nation 

has no existing NGCC to transfer coal generation to under Building Block (BB) 2 and no ability 

to impact coal generation through application of the other building blocks, the four building 

block approach as developed by EPA should not impact the generation levels o[the two coal 

power plants or their individual units. The Nation has recommended 2006 as the base year 

because that year represents the generation level where historical data indicates 95% ofthe time 

operation will be at that level or less - which would provide significant assurance that future 

generation levels will not be impeded. 
Letter to Janet McCabe 

May 11, 2015 

Page 5 of9 

Future generation for the two coal plants will likely be lower than in the 2002-2012 

period due to retirement of FCPP units 1-3 and likely, but not certain, retirement of one of the 

NGS units. However, as discussed in our prior comments, these reductions in generation are 

sacrifices that the Nation has made, and will continue to make, to improve air quality on the 

Nation. The Nation should be given credit for these sacrifices which are costing the Navajo 

government's general fund tens of millions of dollars every year. The likely retirement of one of 

the NGS units will bring further economic hardship to the Navajo Nation on a similar scale as 

the FCPP retirements. 

Parity Glide Path 

As mentioned in the Nation's prior comments, EPA did not consider per-capita energy 

consumption when factoring in BB4 goals. We believe EPA should have done so, because it is 

more difficult to reduce energy consumption when it is already very low. The Nation uses much 

less energy per-capita than any state, even the most efficient states, and, in particular, much less 

than our regional neighbors - Arizona, Colorado, New Mexico, and Utah - which have per-capita 

energy consumption within roughly 10% of one another. We have offered the Parity Glide Path 

(PGP) as a means to account for this disparity, and we welcome EPA's comments on it or on any 

alternative means that EPA might recommend to address the large disparity in per-capita energy 

use between the Nation and its closest neighbors. 

How to make the PGP enforceable 

The Nation appreciates EPA's comments in our government-to-government meeting on 

April28 that the PGP, if permitted, must be performed in a manner in which it will be 

enforceable. To this end, we believe it may be best to use historical data rather than forecasts to 

formulate the PGP rate adjustment. The PGP adjustment proposed by the Nation to be used in 

the EPA rate equation is based upon the base year EIA and U.S. Census data. 

Data sources 

• EIA Form 861 for the base year 

o Total electricity retail sales for each of AZ, CO, NM, UT and for the Navajo 

Tribal Utility Authority (NTUA) 

• U.S. Census estimate for the base year 

o Total population for each of AZ, CO, NM, UT and for Navajo Nation for same 

year as most recent EIA Form 861 data 

Approach 

1. For each jurisdiction, divide total electricity retail sales in the year by respective 

population to determine per-capita energy use in MWh/yr 

2. Average the per-capita energy use in MWhlyr for AZ, CO, NM and UT 
Letter to Janet McCabe 

May 11, 2015 

Page 6 of9 

3. Divide result by per capita energy use ofNavajo Nation, to result in per-capita 

energy use ratio 

4. Subtract 1.0 from per-capita energy use ratio to result in energy multiplier 

5. Multiply the resulting energy multiplier by NTUA retail energy sales in the base 

year ofEIA Form 861 data to determine the POP adjustment 

6. Determine emission rate for rate equation by subtracting POP adjustment from 

denominator of EPA rate equation 

The following is an example using 2012 data. 

Jurisdiction Population 2012 MWh 3 Per Capita A vg. for states (2012 estimate) MWh 

Arizona 6,467,315 I 75,063,343 11.61 

Colorado 5,116,302 I 53,685,297 10.49 

10.95 

New Mexico 2,078,674 I 23,178,568 11.15 

Utah 2,8}4,347 I 29,723,368 10.56 

Navajo Nation 178,212 2 676,014 3.79 3.79 (NTUA) 

I. U.S. Census Estimate 

2. 2010 U.S. Census of 173,667 and assumed 1.3% annual growth. The above is provided for illustrative 

purposes. In practice, the Navajo Nation will develop a formal estimate of its population. The 1.3% 

annual growth rate was based upon a 20 13 Affidavit by Dr. Gretchen Greene in State of New Mexico, 

ex rei. State Engineer v. United States of America (defendant), The Jicarilla Apache Tribe and the 

Navajo Nation (defendant interveners). 

3. EIA Fom1 861 

Note that previously submitted examples of the POP used 2013 U.S. Census population 

estimates and 2012 EIA data, which at the time were the most recent data. The above is 

provided so that data is consistent for a particular year. 

The POP adjustment will be equal to: 

676,014 X [(10.95/3.79) - 1] = 1,277,114 MWh 

When applying the POP adjustment, it is also reasonable to adjust the BB4 by the factor 

10.95/3.79. 

Application to the rate equation: 

For the Navajo Nation, since BB2 and BB3 do not apply, the rate goal will be: 

(C02 emissions from the two fossil plants for the base year) x.BB 1 factor 

MWh generated in the base year+ BB4 adjustment for the year- POP adjustment 
Letter to Janet McCabe 

May11,2015 

Page 7 of9 

Using 2012 as the base year and 2012 energy demand and census data, and using the 

2029 884 and 2014 BB4 adjustments as an example, the following table shows the results of 

calculations for Option 1 and for Option 2. 

Option 1 Option 2 

2012 C02 lbs 62,833,745,182 62,833,745,182 

2012 MWh 29,629,453 29,629,453 

BBl factor 0.94 0.96 

C02 lbs after BBl 59,063,720,471 60,320,395,375 

Normal BB4, MWh 66,525 25,554 

Adjusted BB4, MWh 192,203 73,830 

PGP Ad_justment MWh 1,277,114 I ,277,1 14 

Normal Final Rate (lb/MWh) 1,989 2,034 

PGP Adjusted Final Rate 

(lb/MWh) 2069 2122 

Mass Cap- Normal (short tons) 29,465,703 30,134,208 

PGP Mass Cap (short tons) 30,654,297 3 1,436,883 

Demonstrating Compliance 

If complying with a mass emissions cap, the mass emissions cap (in short tons) will be 

compared to: 

• The total C02 emissions (in short tons) of the two plants reported to EPA each 

quarter per the Air Markets Program Data 

• Plus any C02 allowances (in short tons) used off of the Navajo Nation lands to 

another jurisdiction in a trading system 

• Minus any C02 allowances (in short tons) acquired from other jurisdictions in a 

trading system 

If complying with an emission rate goal, the emission rate goal will be compared to: 

The calculated emission rate of the plants, determined by: 

• The total C02 emissions (in short tons) of the two plants reported to EPA per the 

Air Markets Program Data times 2000 lbs/short ton and the result divided by the 

total net generation (in MWh) reported to the Energy Information Administration 

in Form 923 (or equivalent). Ideally, it will be possible for the plants to report 

their net generation shortly to avoid the delays associated with posting of Form 

923 data on the EIA web site. 
Letter to Janet McCabe 

May 11, 2015 

Page 8 of9 

Challenges of renewable energy development on the Navajo Nation 

The Navajo Nation has a coal-based economy. However, as we have stated in our 

comments and in our government-to-government consultations with EPA, the Nation is 

interested in renewable energy (RE) development. The Nation is committed to a balanced 

energy portfolio, as is demonstrated by the Navajo Nation Energy Policy of 2013, which is 

included as "Exhibit C." However, the Nation faces many hurdles when it comes to RE 

development on its lands. Some of those challenges include land availability for renewable 

projects and the lack of funding for projects.3 

As discussed in our comments and consultations with EPA, the language of the proposed 

Clean Power Plan also presents a challenge to RE development on the Nation. RE development 

that occurs on tribal lands should be able to count toward a state's emission reduction goal. 

Additionally, developing a section lll(d) plan should not be a requirement to get RE 

development resources on tribal lands. That requirement is nothing more than a bureaucratic 

burden that would hinder or delay renewable projects. The EPA's Clean Power Plan should not 

create restrictions on the flow of renewable energy credits (REC) and RE across state and tribal 

lines, but should continue to leave the methodology for coordinating the purchase and sale of 

RECs to the existing market. We request that EPA include language in the final rule that allows 

for renewable energy development undertaken in any jurisdiction (state, tribal or territory) to 

count toward a state's emission reduction goal. 

Conclusion 

The Nation appreciates the opportunity to submit additional information to EPA 

regarding the Clean Power Plan and its effect on the Navajo Nation. To truly understand the 

current economic situation on the Nation and the importance of the two power plants to the 

Nation, we highly encourage EPA's officials to visit the Navajo Nation to observe in person the 

challenges being faced by the Navajo people. 

The Nation looks forward to a continued dialogue with EPA concerning the Clean Power 

Plan and any Federal Implementation Plan that EPA will promulgate in the future for the Navajo 

Nation. The Nation understands that this is a very difficult exercise for EPA and we know that 

the challenges oflndian country are very complex. But we are committed to working with EPA 

in finding a solution for the Navajo Nation that allows the two power plants to continue 

operating unhindered into the future, the Nation to proceed with economic development on its 

land with REdevelopment and a potential carbon trading program, and EPA to meet its national 

carbon reduction goals. 

3 A recent Wall Street Journal article entitled "The Path From Coal to Renewable Energy Can Be Difficult" also 

chronicles some of the challenges faced by the Nation in developing RE projects on our land. The article is 

avai Iable at http://www.wsj .com/articles/the-path-from-coal-to-renewable-energy-can-be-difficult-l430881487 and 

is also included as "Exhibit D." 
Letter to Janet McCabe 

May 11, 2015 

Page 9 of9 

If you have any questions about these comments or anything else the Nation has 

submitted on the Clean Power Plan, or to arrange a visit to the Navajo Nation, please contact 

April Quinn, Staff Attorney, Natural Resources Unit, Navajo Nation Department of Justice at 

a:quinn@nndoj.org or 928-871-634 7. 

Sincerely, 

~~· sonTsosie Navajo Nation 

~ &flz.'/ ' {; B ::itty - l 

Executive Director 

Navajo Nation Environmental Protection Agency 

cc: William Niebling, Senior Advisor, Congressional & International Affairs, OAR, EPA 

Joe Goffman, Associate Assistant Administrator & Senior Counsel, OAR, EPA 

Jared Blumenfeld, Regional Administrator, EPA Region 9 

Colleen McKaughan, Associate Director, Air Division, EPA Region 9 

Amy Zimpfer, Associate Director, Air Division, EPA Region 9 

Deswood Tome, Chief of Staff, Navajo Nation OPVP