Like a zombie in a horror movie, the development of the Otter Creek Coal Tracts has once again been re-animated by Gov. Brian Schweitzer in his bid to fuel the nation with Montana coal. But mining Otter Creek coal started out as a bad idea and continues to be a bad idea for many reasons. When the members of the Land Board consider leasing the coal at its monthly meeting next Monday, they would do well to let dead zombies—and Otter Creek’s coal—lie undisturbed.
For those new to Montana, a short explanation of the history of Otter Creek may prove helpful in understanding the decision the Land Board now faces. The story starts back in the ’90s, when Republican Marc Racicot was governor and overwhelming Republican majorities dominated the legislature. A huge, open-pit gold operation dubbed the New World Mine had been proposed for development on the northern border of Yellowstone National Park. The key word here is “proposed,” since no mine was ever developed and no mining jobs were ever created.
Nonetheless, the federal government decided the threat to Yellowstone was untenable, so it paid millions to the owners of the non-existent mine to abandon the project. That should have been the end of the story, but unfortunately, the Republican mindset stepped in.
Racicot, using rather bizarre and theoretical logic, decided the feds owed Montana something for the loss of the non-existent mining jobs that may have been created had the mine ever been developed. The federal government acquiesced to his demand and offered either $10 million in hard cash or, at the request of Racicot and some of his mining cronies, to cede the state the Otter Creek coal tracts.
Now here’s where the story gets real interesting. In testimony before the Land Board, the former head of the Montana Coal Council urged the state to take the money—not the coal. This was a radical position for the state’s leading coal mining association to take, but the logic behind the advice was pretty simple: The coal was already federally owned and could have been leased like other federal coal deposits, but no one had ever bothered to lease it because it was a hugely complicated and expensive proposition. Unfortunately, Racicot ignored what may well have been the best advice ever to come out of the Coal Council and the state took control of the Otter Creek Tracts from the feds in 2002.
But here’s the deal: The Otter Creek tracts are merged with the checker-boarded sections the federal government gave to the railroads about a century and a half ago. Over the years, those checker-boarded sections passed from the railroad to their current owners, Great Northern Properties. Great Northern has tried to push development for many years, but has been met with unrelenting resistance from ranchers and environmental advocates over a number of issues.
For one thing, before Otter Creek can be developed, there has to be some way to move the coal to where it can be used. Rail is the only feasible way to move coal and since there’s no rail line nearby, a proposal to build the Tongue River Railroad arose. Besides being incredibly expensive, the rail line would run through and disrupt numerous ranching operations, hence the ranchers’ opposition, which has recently been joined by Forrest Mars Jr., a billionaire scion to the Mars candy business and owner of a huge Montana ranch.
Further complicating development is that the coal deposits sit literally on the border of the Northern Cheyenne Reservation. The tribe actually sued the state to ensure that its religious and cultural sites would be honored and preserved, that tribal members would be hired if and when mining commenced, and that the tribe’s environmental resources, such as surface and ground water, wouldn’t be degraded. The state settled with the tribe and agreed to the stipulations, which were adopted by the Land Board.
Republican Judy Martz followed Racicot as governor and continued the push for Otter Creek development. In fact, she was so adamant about mining the coal that, at her request, the legislature appropriated several hundred thousand dollars to do an appraisal of the state-owned coal.
That appraisal has now been completed and Schweitzer and others are waving around an estimate that the Otter Creek tracts could produce $1.4 billion in royalty payments to the state over the next 40 years. In this week’s Associated Press story, Schweitzer says he wants the mine developed “but only if the state gets top dollar for its assets.” The story also paraphrases the governor saying “environmental concerns were superceded by the state’s obligation to bring in revenues from its land.” “We can only sell it one time,” Schweitzer is quoted as saying. “We have a fiduciary responsibility to maximize the value of school trust land.”
There are several problems with Schweitzer’s logic on this issue. First, the state’s responsibility to maximize revenue from state school trust lands is counter-balanced with the provision to use those lands to benefit the people of Montana. Plus, the constitutional provisions of Article IX require “the state and each person” to “maintain and improve a clean and healthful environment in Montana for present and future generations.” Hence, neither the governor nor members of the Land Board can supercede environmental protection in favor of revenue generation. Finally, given the state of the economy, global climate change and the uncertain future of coal due to future carbon taxes, what makes anyone think now is the time to lease a billion tons of undeveloped coal “for top dollar”?
Land Board members include Schweitzer, Attorney General Steve Bullock, Secretary of State Linda McCulloch, Superintendent of Public Instruction Denise Juneau and State Auditor Monica Lindeen. For all the reasons listed above, they should say no to Otter Creek leasing and kill this zombie once and for all.
Helena’s George Ochenski rattles the cage of the political establishment as a political analyst for the Independent. Contact Ochenski at email@example.com.