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Land Board takes pass, delays Otter Creek coal decision

Land Board takes pass, delays Otter Creek coal decision

HELENA - HELENA — The state Land Board on Monday delayed until next month its decision whether to lease millions of tons of state-owned coal for possible development in southeastern Montana.

The board said more time is needed for the public to examine the proposed bid-letting.

“I think it is appropriate for us to have a little more time to look at this,” said Secretary of State Linda McCulloch, who made the motion to delay action on leasing the Otter Creek coal tracts until the board’s Dec. 21 meeting.

The five-member board, chaired by Gov. Brian Schweitzer and composed of the top state officeholders, voted unanimously for the delay. All members are Democrats.

Supporters of leasing the coal said now is the time to get bids from potential coal developers, so that rural Eastern Montana can look forward to some economic development and jobs.

Opening a door

“You hold the keys to opening up the economy in southeast Montana,” Powder River County Commissioner Don McDowell of Broadus told the board. “You hold the keys that would bring good-paying jobs to our county. Please open this door to us.”

Opponents, however, said the lease proposal prepared by state lands officials needs a closer look — especially when it could lead to massive strip mines and burning of coal for electricity production.

“The bid package could result in a lease that will bind the state for decades to come,” said Anne Hedges, program director for the Montana Environmental Information Center in Helena.

“It will determine how the land is developed, what authority the board will retain over the property and the amount of compensation the state will receive for the complete depletion of this resource.”

Opposed to development

Others said they’re simply opposed to coal development at Otter Creek, as well as the accompanying Tongue River Railroad, and that the state shouldn’t encourage either.

“We are opposed to these tracts ever being strip-mined,” said Beth Kaeding of Bozeman, who chairs the Northern Plains Resource Council in Billings, a landowner-environmental group.

“We are unyielding in our opposition to the Tongue River Railroad.”

McCulloch and other Land Board members said that plans to consider development of the Otter Creek tracts have evolved for nearly a decade and that another 30 days won’t make or break development prospects.

The 30 days will allow public comment on the proposed bid package, which was released this month, and allow natural-resource staffers for Land Board members to examine it and see if any changes are needed, McCulloch said.

The state owns 572 million of the 1.3 billion tons of coal in the valley, interspersed with coal owned by Great Northern Properties, the largest private owner of coal in the United States.

Last week, Great Northern announced that it has agreed to lease its 730 million tons of Otter Creek coal to Arch Coal Inc., one the nation’s largest coal firms.

Chuck Kerr, president of Great Northern, told the Land Board on Monday that “the timing is right” to lease the coal, including the state tracts, and begin the process of possible development of the coal.

Developers believe markets for coal will be good five to 10 years from now, and that’s the lead time needed to develop a mine and accompanying infrastructure, he said.

The bid package proposed by state lands officials called for a $3-per-acre rental and an upfront “bonus payment” of from 10 cents to 35 cents per ton of coal —which is $57 million to $200 million. Developers also would pay a royalty to the state if mining begins, at 12.5 percent of the mined coal’s market value.

The Land Board must approve the lease terms before the coal would be offered for bid. The board also would have to approve any mining plan on state land.



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