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WASHINGTON, D.C.-A federal appeals court said environmental groups cannot sue to block expansion of a coal mine owned by the Navajo Transitional Energy Co. (NTEC), because it is an arm of the Navajo government and thus immune from civil suits.

The Monday ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals upheld a lower court's dismissal of the suit by several environmental groups, on and off the Navajo Nation.

The courts said NTEC has to be part of any lawsuit because of the millions in revenue the mine produces every year for the Navajo Nation. But because tribal sovereignty prevents the company from being sued, the lawsuit has to be dismissed, the court ruled.

Conservation groups that brought the suit said they were assessing next steps in light of the ruling they said will "cause harm on and off of the Navajo Nation."

"Practically speaking, this ruling invites the worst polluters to set up shop on tribal lands where they can operate without public oversight," said the Center for Biological Diversity's Taylor McKinnon in a statement Tuesday.

But an official with NTEC welcomed the ruling.

"We are pleased with the well-reasoned decision of the court affirming Navajo self-determination," said NTEC CEO Clark Moseley in a statement, adding that the company is "always concerned by outside influences attempting to force their views on the Navajo."

The Navajo mine is a 33,000-acre strip mine that has been operating since the 1960s. Its only client is the Four Corners Power Plant, which was built at the same time as the mine, and is jointly owned by several power companies but operated by Arizona Public Service Co. (APS).

The mine had been BHP Billiton Navajo Coal Co. until 2013 when the Navajo Nation created NTEC to buy the mine.

In 2011, the Navajo Nation extended the lease for APS to operate the power plant through 2041 and, at the same time, BHP Billiton began the process of getting federal approval to renew the lease on the mine and move mining to a new section of the lease area.

In 2015, after NTEC took over ownership of the mine, the federal government approved renewal permits after review by several Interior Department agencies, including the Bureau of Indian Affairs, the Bureau of Land Management and the Fish and Wildlife Service, among others. The department also consulted with the Army Corp of Engineers, the Environmental Protection Agency and the Navajo and Hopi tribes during the process.

Since then, NTEC and APS claimed to have made hundreds of millions of dollars of plant upgrades and required conservation measures, according to court documents. The court also said that operations at the mine and the power plant are expected to generate between $40 million to $60 million a year for the Navajo Nation.

But in 2016, the conservation groups challenged the permit for the mine. They charged that the government did not take a hard enough look at the mine's environmental impact, did not consider alternatives and conducted a faulty Endangered Species Act review.

The suit did not include either APS or NTEC, which asked to be added as defendants because of the impact the case could have on them. For NTEC, it asked to be joined for the sole purpose of having the suit dismissed on grounds of sovereign immunity.

A district judge agreed, and the appeals court upheld that decision Monday.

Judge Michelle T. Friedland wrote that the NTEC was a required party because "the Navajo Nation would lose a key source of revenue in which NTEC has already substantially invested" if the mine permits were lost. The court rejected other arguments that would have let the case proceed without NTEC, because of the potential impact.

Friedland conceded that requiring NTEC to be part of the suit, then ruling that it could not be sued, could create a situation where "no one could obtain such a review unless the tribe were willing to waive its immunity and participate in the lawsuit.

"This result, however, is for Congress to address, should it see fit, as only Congress can abrogate tribal sovereign immunity," she wrote.

McKinnon said the decision "threatens to continue the U.S. government's shameful legacy of disregard for the health of tribal people, land, water, and wildlife."

"FCPP (Four Corners Power Plant) is the prime example," he said. "It is causing widespread harm to the public on and off the Navajo Nation, yet the court's ruling deprives the people suffering from this pollution from any redress."

The ruling comes as northern Arizona faces the loss of hundreds of jobs at the Kayenta Mine and the Navajo Generating Station it supplies with coal, with the power plant slated to close at the end of this year. Those job losses are expected to hit particularly hard on the Navajo and Hopi reservations.

"With this decision, NTEC can continue to provide economic opportunities for the Navajo people, create wealth for the Navajo Nation, and promote transitional energy opportunities," Moseley said.

This story is part of Elemental: Covering Sustainability, a new multimedia collaboration between Cronkite News, Arizona PBS, KJZZ, KPCC, Rocky Mountain PBS and PBS SoCal. This story is also supplied by Cronkite News. For more stories from Cronkite News, visit cronkitenews.azpbs.org.