Navajo Transitional Energy Company Files Lawsuit Against BNSF for Breach of Contract

A BNSF train passes through a NTEC facility after being loaded with coal

Navajo Transitional Energy Logo

The company alleges BNSF’s preferential treatment to other mines cost millions to the detriment of the Navajo Nation-owned company

BNSF is, simply put, abusing its monopoly power and picking winners and losers. And it’s not only at the expense of our business and our customers, but at the expense of the Navajo Nation.”

— Matt Babcock, NTEC’s VP of Sales and Marketing

DENVER, COLORADO, USA, December 20, 2022 /EINPresswire.com/ — Yesterday in Montana federal district court, Navajo Transitional Energy Company (NTEC) filed a lawsuit (Case 1:22-cv-00146-SPW-KLD) against BNSF Railway Company (BNSF) for breach of its contractual commitment to provide rail transportation service for NTEC’s export coal business in 2022.

Prior to the start of 2022, NTEC contracted with BNSF to move all of its Spring Creek Mine export coal in 2022 to the port of Westshore Terminals, British Columbia, where it is shipped to customers in Japan and Korea. As train performance for NTEC in the Spring of 2022 began to fall well short of required and historic levels, BNSF claimed that the lack of service was part of the widely reported service challenges all Class I rail carriers were experiencing.

Despite these broader challenges, however, BNSF’s service on the Westshore route actually improved over prior years. At the same time, however, BNSF significantly reduced the percentage of trains available to NTEC and significantly increased the percentage of train service to NTEC’s competitors on this route.

BNSF’s actions have caused NTEC to lose over $150 million in revenue and to incur over $15 million in demurrage penalties for 2022. These actions have also impacted NTEC’s relationships with its export coal customers, and for the first time in its history of exporting Spring Creek Mine coal, NTEC was compelled to declare force majeure with its customers.

NTEC took many actions to try to rectify the lack of service and catch up on delivery commitments to its customers, including meeting with BNSF executives and seeking assistance from the Surface Transportation Board’s Office of Public Assistance. Despite these efforts, BNSF refused to restore NTEC’s service levels. Instead, BNSF reduced NTEC’s service levels to their lowest point of the year.

“BNSF is, simply put, abusing its monopoly power and picking winners and losers. And it’s not only at the expense of our business and our customers, but at the expense of the Navajo Nation,� said Matt Babcock, NTEC’s VP of Sales and Marketing.

The Navajo Nation created NTEC in 2013 expressly to “support and improve the economic, financial, tax, and revenue interests of the Navajo Nation and the Navajo People through management and development of the Navajo Nation’s resources and new sources of energy, power, transmission, and attendant resources and facilities.� With this focus, NTEC provides direct economic support to the Navajo Nation of roughly $50 million per year. This financial support is only possible when NTEC can rely on its partners to fulfill contractual obligations, including BNSF’s commitment to move export coal by rail from NTEC’s mine facilities.

As NTEC’s sole shareholder, the Navajo Nation depends on NTEC for over thirty percent of its general fund on an annual basis. The deficient service issues with BNSF negatively impact NTEC’s ability to deliver on contracts, make revenues as forecast, and support the Navajo Nation as intended.

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NTEC is an autonomous single-member limited liability company, organized under the laws of the Navajo Nation, that owns mines in Montana, New Mexico, and Wyoming. The mission of NTEC is to be a reliable, safe producer of coal, while diversifying the Navajo Nation’s energy resources to create economic sustainability for the Nation and the Navajo people. NTEC’s sole shareholder is the Navajo Nation. NTEC is a recognized leader in safety and reclamation and was recognized as such with the Sentinels of Safety award from the National Mining Association, the Safety Award for Large Surface Mine from the Rocky Mountain Coal Institute, and the National Award for Excellence in Surface Mining Reclamation from the Office of Surface Mining Reclamation and Enforcement in 2022. For more information about NTEC, visit www.navenergy.com.

Fiona Gwozdz Mancill for
Navajo Transitional Energy Company
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