Desert Rock heats up
Navajos threaten EPA with lawsuit amid rising concerns over cost

Sheep graze while the San Juan Generating Station, between Shiprock and Farmimgton, does its work in the distance. It, and its neighbor to the south, the Four Corners Power Plant, could soon be joined by a third, the Desert Rock plant proposed for the Navajo Nation. Plant foes allege costs for the proposed plant have skyrocketed, which may cause investors to falter. However, Desert Rock developers maintain it’s full steam ahead and may sue the EPA over an overdue verdict on its air quality permit./Photo by David Halterman

by Missy Votel

While Desert Rock proponents tick away the days on a threatened lawsuit against the Environmental Protection Agency, opponents are also saying that time may be running out for the massive proposed power plant.

Among the stumbling blocks still facing developers of the coal-fired power plant planned on Navajo land hear Shiprock, are more than a dozen federal permits, including the long overdue air quality permit from the EPA, as well as a record of decision on the environmental impact statement, the draft of which was released in June 2007. Meanwhile, opponents charge, costs for the proposed 1,500-megawatt facility, pegged at $1.5 billion in 2005, continue to balloon, now hovering at heights of $3.6 billion.

“Desert Rock’s developers always spoke of the immense need for the plant’s electricity and the immense need for the Navajo Nation to have a project that makes sense,” said Mike Eisenfeld, New Mexico energy coordinator for the San Juan Citizens Alliance. “But this may not be the money-making venture that they think it is.”

In addition to skyrocketing construction costs, Eisenfeld said that Desert Rock partners Sithe Global and the Dine Power Authority may be facing the possibility of carbon taxes in the not-too distant future. Under the Bush administration, such a program, which would impose a fee on carbon dioxide producers, has been brushed under the carpet, he said. However, with the impending regime change in Washington next year, such a program could become reality. “We are talking about a fine of anywhere from $10 to $100 per ton of CO2 emitted,” said Eisenfeld.

According to Sithe Global’s estimates, Desert Rock is expected to emit 12.7 million tons of carbon dioxide a year. A carbon tax could translate to as much as a 50 percent jump in electricity prices, with either the Navajo Nation, as operator of the plant, or utility consumers picking up the tab. “The difference will be passed on to consumers or the Navajo Nation, which would lose its potential profits,” Eisenfeld said.

In addition, Eisenfeld casts doubt on whether the local aquifer will be able to supply the 5,000 acre-feet of water a year required for the project. He also points out that the Navajo Transmission Project, the actual power lines that would deliver the power from the plant, has neither been built nor funded. “All these schemes they were counting on have yet to materialize,” he said. “I think they thought it would be a slam dunk, but things are much more complex than that.”

All this could stack up to a risky investment in today’s tightening financial market. Sithe is a privately held, independent power company based in Houston. Desert Rock is backed financially by Wall Street’s Blackstone Group, formerly the world’s largest private equity firm which recently went public. “If I was an investor, I would be very, very hesitant to put my money into Desert Rock,” said Eisenfeld.

However, Desert Rock planners are still pledging to put their money where their mouths are. According to Desert Rock spokesman Frank Maisano, the project’s cost is currently estimated at about $3 billion, slightly down from opponents’ estimates. While he admits the price has gone up, he maintains it is all due to normal inflationary pressures. “The costs have gone up, but not more than they would have anyway,” he said.

Power lines stretch to the horizon near Farmington. The proposed Desert Rock plant would also require such lines, although critics point out that no funds have yet been allocated by the Navajos for construction./Photo by David Halterman

The real losers, however, are the Navajo people, who are losing an estimated $5 million dollars in tax revenue every month that the project is delayed, according to tribal leaders. Maisano also reiterates that Sithe was approached by the Navajos about building the project, not vice versa. “The project is something the Navajo Nation needs,” he said. “Every day they don’t get the project done is another day they don’t get the economic benefits, they don’t get jobs.”

To that end, Navajo leaders sent a letter warning the EPA that if there is no action on Desert Rock’s air quality permit (also known as a Prevention of Significant Deterioration, or PSD, permit) by March 17, they will sue the agency. The notice, dated Jan. 17 and written by Blackwell and Giuliani, the law firm of former presidential candidate Rudy Giuliani, charged that under the Clean Air Act, the EPA is required to issue a decision within 12 months of PSD applications being filed. Sithe submitted its permit in May of 2004, making the EPA about three years late, the lawyers charged. As such, Sithe has the right to sue the EPA for a decision within 60 days of the notice.

Connie McKaughn, associate director of air quality for the EPA’s Region 9 in San Francisco, admitted that a decision on the permit has been a long time coming. However, the agency is by no means dragging its feet. She noted that the sheer complexity of the project, as well as constantly changing EPA rules on the matter, have contributed to the lengthy review process. “A permit of this type is extremely complicated,” she said. “There were a lot of air quality models that had to be run, and it took several years to get them done.”

Furthermore, she noted that the comment period for the draft PSD in 2006 registered more than 1,000 comments, each of which had to be responded to individually. “We’re trying to do the best we can, given the controversial nature of the project,” she said. “We are trying to resolve complicated policy issues, and of course they keep changing. If everything would just hold still, we’d be fine.”

If the lawsuit does come to fruition, McKaughn said the EPA will likely try to settle out of court. “We usually try to negotiate first,” she said.

And while she could not give an exact timeline on the decision, she said the agency is in no hurry. “The purpose of the Clean Air Act is to provide for growth without degrading the environment,” she said. “That’s one of the things we need to make sure won’t be happening here.”

However, Maisano is optimistic that the plant will break ground late in 2008 or early 2009. He maintains the longer the delay, the worse off the Four Corners’ airshed will be. Pointing to Desert Rock’s much-touted state-of-the-art technology, he said sidelining it only means more pollution at the hands of the San Juan Generating Station and its neighbor, the Four Corners Power Plant. The two plants rank among the top 10 dirtiest coal-fired plants in the West.

“The reality is, Desert Rock will provide us with a cleaner environment,” he said. “With three or four plants like Desert Rock, you can take the San Juan or Four Corners plant off line and still see a reduction in CO2 and pollution.”

However, the bottom line, Maisano pointed out, is the booming Southwest’s insatiable appetite for electricity. “There are huge, vast power needs in the Southwest,” he said. “Desert Rock addresses those needs.”

While Maisano does not discount the need for renewable energy sources, as promoted by Desert Rock foes, he said coal and alternative power are not mutually exclusive. “This is not an ‘either/or’ situation, it’s an ‘and’ situation. We need both.”

However, Eisenfeld, with the San Juan Citizens Alliance, is not quite ready to buy off on Desert Rock’s argument. “I think there’s been a huge paradigm shift in the past couple of years, and massive, coal-fired power plants are being seen as inappropriate,” he said. “We better start thinking of new ways to generate electricity and raise our kids in a reasonable way.”



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