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Four draglines

The Western Energy Company runs four huge draglines at its Rosebud Mine operation. 

Conservationists are warning Montana regulators against permitting a 10-square-mile coal mine expansion in southeast Montana for bankrupt Westmoreland Coal Co.

Opponents to the expansion question whether Montana should be giving Westmoreland a green light to break new territory at the Rosebud Mine near Colstrip, given the company’s poor financial condition. The Colorado-based mining company has already notified a bankruptcy court that it will sell the mine at auction Jan 22. Its debts are listed as $1.4 billion.

With Westmoreland’s finances in doubt and a new mine owner for Rosebud not yet identified, it’s best that Montana’s Department of the Environmental Quality wait until more is known, said Anne Hedges of the Montana Environmental Information Center. MEIC and the Western Environmental Law Center laid out the legal grounds for their argument to DEQ this week.

DEQ took a big step toward permitting the mine expansion Oct. 5. Three days later, Westmoreland filed for bankruptcy, and by mid-month announced it would sell the mine. The proposed 10-square-mile expansion would open up 70 million tons of coal, according to state documents, enough to keep the mine running until 2030. The permit would be transferable to a new owner under state law. DEQ has said it was unaware Westmoreland was filing for bankruptcy. It has also repeatedly said that it would have been prejudicial to hold the bankruptcy against Westmoreland.

“Just to reiterate, section 525 of the Bankruptcy Code restricts all governmental regulatory authorities from denying any permit to a bankruptcy debtor solely because the debtor is in bankruptcy,” said Kristi Ponozzo, a DEQ spokesperson.

The Western Environmental Law Center frames its argument not around the stigma of bankruptcy, but whether Westmoreland can prove show it has the finances to mine and reclaim the property and protect water flowing through the area. Any new owner’s poor mining record should be revealed before the permit is granted.

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It wasn’t a secret that Westmoreland was in financial trouble, Hedges said. The company publicly notified the Securities and Exchange Commission in April that bankruptcy was likely. That should have alerted DEQ that the coal company might not be able to pull off the expansion, which it now seems to be selling to an unknown buyer with an unknown environmental record.

“If they’re not aware, then they’re not doing their job," Hedges said. "The state agency should be aware, first and foremost, of their legal obligations. Second, they should be protecting public resources, the financial resources and the water ways of the people of this state. If they’re so ignorant they didn’t understand that this company had previously said it was probably going to declare bankruptcy, if they didn’t see that, then they’re not doing their job and protecting the public.”

The Rosebud Mine employs about 340 people and produces roughly 9 million tons of coal annually. Since opening in 1968, it's produced a cumulative total of almost a half-billion tons of coal. Its customer is Colstrip Generation Station, a four-unit power plant in a town of the same name.

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Agriculture and Politics Reporter

Politics and agriculture reporter for The Billings Gazette.