Presentation to NGS Meeting

January 21, 2011

BackgroundThe Hopi People

Population of 12,500 Hopi – about 8,000 live on 1.6 million acre reservation

Hopi live in 12 villages across the three Hopi mesas Oraibi founded 950-1000 years ago - known as oldest

continually inhabited community in United StatesTraditional theocratic government and independent

Villages 1936 Hopi Constitution and Hopi Tribal Council –

representatives sent by villages to central government

Background - ContinuedThe Hopi Economy

Remote isolated location – limited development potential Non-gaming Tribe – twice voted downOne-third Arizona and national per-capita incomeFifty percent live below the federal poverty rate Fifty percent unemployment rate Historic economy – subsistence farmingAbundant coal resources - foundation of Hopi economy

since 1970.

Hopi Coal ReservesAt least 1.3 billion tons of high quality low sulphur/high

BTU surface-minable coal on Hopi land alone

An estimated 20 billion tons in deeper seams

Coal is jointly owned and managed with the Navajo Nation

Coal mining regulated by the United States and the Tribes under federal law

Tribe’s participate in regulatory monitoring and enforcement

Coal sales provide millions in tribal revenues and state taxes

United States Trust ResponsibilityLand and resources of Hopi Reservation are held in

trust by the United States for the benefit of Hopi Tribe and its people

United States has fiduciary trust responsibility to Hopi Tribe under federal law and court decisions to protect economic value of Tribe’s coal and other natural resource assets

Tribe uses reservation lands and natural resources to build a viable economy and a permanent homeland.

History of Coal Mining in Northern ArizonaHopi sign coal lease in 1966 – revenues for government

operations and economic development Coal mining on Hopi and Navajo Land began in1970No off-reservation markets due to transportation constraintsHopi coal sold to two power plants:

Mohave Generating Station (MGS) at Laughlin, Nevada – low-cost power for AZ, NV, and Calif.

Navajo Generating Station (NGS) near Page AZ, low-cost power for CAP system and AZ, NV, and Calif.

Coal sales fund Hopi government operations and provide jobs

Economic Losses From MGS Closure

MGS permanently closed December 2005 under federal court order - owners fail to install air emissions equipment

MGS closure results in annual Hopi revenue losses of $8.5 million

Loss of the MGS coal revenues has been devastating to the Hopi economy and Tribe’s government operationsEssential government services reducedLayoffs of tribal government employeesFewer dollars for Hopi Village local governmentsSurplus investment capital disappears

Navajo Generating Station Critical to Hopi EconomyNGS - only remaining customer for Hopi CoalNGS coal sales provide most of Tribe’s operating revenuesIn FY2010, revenue from NGS coal comprises 88% of the

Tribe’s annual operating budget.Without a viable Hopi tax base these revenues fund Tribe’s

delivery of essential governmental servicesLaw enforcementHealth and educationHousingNatural resource protection

Federal Regulatory Threats to NGSEPA proposes to require NGS to install SCR technology to

address Grand Canyon visibility issues SCR achieves very little visibility improvement over low-NOX

burners but requires large unnecessary expense – as much as $1 billion

Cost effectiveness of SCR over low-NOX is non-existent and does not justify the risks of economic collapse imposed on Hopi Tribe

EPA rulemaking must weigh the cost of small incremental visibility improvements against costs to Hopi economy and economic survival of individual Hopi families

The Future of Hopi Coal Resources and the Hopi Economy

Tribes future economy tied in part to future of coal in Arizona/national economy and energy portfolio

Coal will likely remain in energy Arizona and National energy portfolio for foreseeable future

Federal Trust responsibility requires that:carbon legislation provide Hopi allowances that enable

Hopi to economically develop its coal resources and time to catch up economically with Arizona and nation

EPA’s NGS rulemaking must consider the small incremental visibility benefit of expensive SCR technology over low NOX combustion

The Future - Continued EPA’s NGS rulemaking must allow a transitional glide path for NGS in order for there to be economic stability for the Hopi and Navajo Tribes

The national and state approach to environmental regulation should be based both on the prevailing science and on rules of common sense and reason that account for the impacts of regulatory controls on individuals and communities

Thank You