The Story of Black Mesa

It sometimes seems that scarcely a news cycle goes by without some allusion to the various energy industries: the BP oil spill, the debate about offshore drilling, the controversy over the impact of fracking, and our ongoing search for alternative energy are only a few examples. In this excerpt from North American Indians: A Very Short Introduction, Theda Perdue and Michael D. Green discuss the history of exploitation of natural resources on American Indian reservations by power, mining, and oil companies.

After World War II, economic development was at the top of the agendas of virtually every reservation. Unemployment was almost universal, family incomes were virtually nil, and the tribes had no income beyond government appropriations to the BIA (Bureau of Indian Affairs). Some reservations did have natural resources. Some tribes own important timber reserves, but mineral resources attracted most postwar attention. Thirty percent of the low-sulfur coal west of the Mississippi is on Indian land, as is 5 to 10 percent of the oil and gas and some 50 to 80 percent of the uranium. Congress enacted legislation in 1918 and again in 1938 to authorize the secretary of the interior to negotiate leases to develop tribal mineral resources. Stipulations in these acts set royalties below those demanded for similar activity on government land and omitted provisions for periodic renegotiation of the contracts.

The Navajo reservation is especially rich in oil, uranium, and coal. Oil exploration began before World War II, and in the 1950s a huge strike generated major interest. The Cold War created a market for uranium, which Navajo mines largely supplied until 1982 when they closed. The most important Navajo resource, however, is coal. Coal underlies much of the Navajo reservation, and Black Mesa, which the Navajos share with the Hopis, is a virtual mountain of coal. As early as 1943 the Navajo tribal council had begun to explore the possibility of developing its coal, but there was no market. The postwar population explosion in southern California, Arizona, and Nevada created an unprecedented demand for electricity that changed everything. Twenty power companies formed a consortium, which drew up plans for a huge power grid anchored by a series of coal fired power plants located adjacent to the Navajo reservation. Black Mesa coal would provide the fuel, and Peabody Coal Company of Denver would mine it.

Mining coal on such a scale is an enormously complicated and expensive business. Both the Indians and the Interior Department lacked the necessary expertise to understand all that was involved. But Peabody and its attorneys knew. Chicanery, fraud, manipulation, and ignorance marked the arrangement. By the end of the 1960s the Navajo and Hopi tribal councils had signed the necessary contracts and the enterprise was under way. The going market price for coal at the time was $4.40 per ton, $1.50 of which was the standard payment to the owner. The contract concluded between Peabody Coal and the Interior Department provided seventeen cents per ton to the tribes with no provision for renegotiation if the price of coal went up. In 1973, during the time of the OPEC oil embargo, the price of coal reached fifteen dollars per ton. The Navajos and Hopis, the owners of the coal, continued to receive seventeen cents.

In 1975 the mineral-rich tribes organized the Council of Energy Resource Tribes (CERT) in hopes of improving their situation relative to the mining companies. CERT hired experts, commissioned surveys, developed a library, and positioned itself to provide the tribes with expert advice on how to gain better control over their resources and prevent the kind of exploitation experiences by the Navajos and Hopis. The Jicarilla Apaches of New Mexico, caught in a similar situation, enacted a severance tax on the oil and gas pumped from their reservation. Amoco challenged the tribe’s right to do so. In 1982 the Supreme Court upheld the authority of the sovereign Jicarilla nation to levy the tax and opened the way for other tribes to follow suit.

The story of Black Mesa is perhaps the most disgraceful, but it is by no means the only example of resource-rich tribes being swindled by the sweetheart deals concluded by power, mining, and oil companies and the Interior Department for rights to Indian-owned minerals. Congress attempted to fix things in 1982 with the Indian Mineral Development Act, which recognized the right of the tribes to develop their own minerals. The exploitation of oil, coal, and other resources can provide jobs and income, but doing so is controversial. Coal strip mines are ugly and cause a great deal of environmental damage. Coal-fired plants emit pollution that fouls the air for hundreds of miles, and they require enormous amounts of water, which in the desert southwest is scarce. But the tribal governments need income and the people need jobs.

All these schemes for breathing new economic life into the reservations share serious disabilities. Contracting and compacting depend on unpredictable government appropriations, and the heavy hand of the BIA is present everywhere. The controlling power in the exploitation of natural resources lies in the Department of the Interior and the mining and energy companies. Tribes receive royalty payments, but the profits generated by the development of tribal resources belong to the corporations and leave the reservations. Neither plan provides the tribes with the investment capital necessary to create meaningful economic autonomy.

Theda Perdue is Atlanta Distinguished Professor of Southern Culture at the University of North Carolina at Chapel Hill. She is the author of many books, including Sifters: Native American Women’s Lives and Cherokee Women: Gender and Culture Change, 1700-1835. She is past president of the Southern Association for Women Historians and the American Society for Ethnohistory, and will serve as president of the Southern Historical Association in 2011.

Michael D. Green is Professor Emeritus of American Studies at the University of North Carolina at Chapel Hill. He has held fellowships from the Newberry Library and the Rockefeller Foundation and is former chair of the Native American Studies Program at Dartmouth College.