Money pit – Otter Creek coal unlikely to help schools

The Montana Rural Education Association got some bad advice about developing the coal in the Otter Creek Tracts as a source of school funding. Unfortunately, they staked their future on it, submitting an application to lease the coal. What’s really a shame is that they completely missed the abundant opportunities to generate clean, renewable energy from school trust lands which could have been cheaper, easier, and more profitable than trying to dig a massive new coal mine.

For those new to the state, perhaps a little background on the Otter Creek Tracts would prove helpful. Back in the
mid-’90s, a huge, open-pit gold mine was proposed for development right on the border of Yellowstone Park. This very bad idea was named the New World Mine and, understandably, it drove those who value the
irreplaceable wonders of Yellowstone, the world’s first national park, absolutely bonkers.

In a series of high-level political maneuvers, the federal government eventually bought out the gold mine developers, putting an end to their Yellowstone folly. But then-Governor Marc Racicot and the Republican majorities that dominated the legislature decided something more needed to be done. They claimed that Montana had suffered an economic setback because the mine wouldn’t fly and demanded compensation from the federal government to offset the imaginary loss. I say “imaginary” because there was no mine, there were no jobs lost, and no one can say with certainty that there ever would have been a mine developed.

After much wrangling, Racicot and the GOP decided they wanted the Otter Creek Tracts ceded from the federal government to the state of Montana so they could develop the coal deposits and create the mining jobs the New World Mine’s buy-out precluded. And here’s where the story gets real interesting.

The federal government countered with an offer of $10 million cash instead of the coal tracts,

Montanans with long memories may recall Jim Mockler, executive director of the Montana Coal Council back then. As the leading proponent of coal development in Montana, Mockler earned a reputation as someone who valued every last coal mining job above virtually all other concerns. It was a shock, therefore, when Mockler came before the State Land Board, which must approve all decisions on the use, sale, or acceptance of state lands, to tell Racicot and the rest of the Board to “take the money” instead of the coal. Mockler’s logic was simple and direct: Those were federal coal tracts which had been available for lease for decades but no one had so far moved to develop them. Besides, the tracts would remain available for lease even if the state took the money instead.

Unfortunately, Racicot didn’t heed this advice, nor did his successor Judy Martz and, in 2002, Martz triumphantly announced that the new Secretary of the Interior, the infamous Gale Norton, had transferred the land to the state. Martz went on to praise what she called “an historic day in Montana” as the vast coal deposits changed hands.

Now, here we are, half a decade down the road, still clinging to the horrendous idea that somehow these nearly inaccessible coal tracts offer financial salvation for rural education.
The reality of the Otter Creek Tracts is incredibly complex and the hurdles to development are so high that not even our coal-crazy Gov. Brian Schweitzer has found a way around them. First, the land has been pieced into a checkerboard pattern of ownership with Great Northern Properties, so developing a mine would have to be a joint venture. Second, there’s no existing infrastructure to deal with the coal. The proposed Tongue River Railroad has been a pipe-dream for years, and local ranchers continue to fight tooth and nail to prevent coal trains from running through the middle of their cows, crops and pastures. Developing the necessary infrastructure will cost hundreds of millions of dollars, if it ever happens. Third, leasing the land without the necessary infrastructure ensures the coal rights will sell for less than they are worth—something the Land Board, as trustees of state land resources, might be constitutionally prohibited from doing. And finally, national financial institutions have significantly downgraded coal development in the face of an uncertain regulatory and economic future for the fuel, which undercuts the chances of attracting the hundreds of millions or billions in financing required to develop the mine.

Given all the impediments to extracting the Otter Creek coal, why the Montana Rural Education Association would ever hitch their wagon to this dead horse remains a baffling question. The answer, sadly, might have come from none other than the Superintendent of Public Instruction, Linda McCulloch, who at a recent Land Board meeting, ended her discourse on the importance of school funding by squawking: “All I have to say is Otter Creek, Otter Creek, Otter Creek.”

Ironically, at the same time the rural educators were trumpeting Otter Creek as their fiscal salvation, Madison Valley Renewable Energy and its partners were moving ahead with leasing state lands near Norris for a wind energy project they say will eventually cover some 14,000 acres. Their test towers are going up now and if all goes as planned, 150 megawatts of clean wind energy will be available for sale with 3.1 percent of the revenue going to—you guessed it—Montana’s schools. A similar wind development near Judith Gap produced $50,000 last year from land leases and will continue to do so into the foreseeable future.

The rural educators should smarten up, abandon their coal plans post-haste, and get on with looking at the opportunities for developing cleaner, easier, and cheaper renewable energy on school trust lands. As for the coal, well, it otter not happen—and if the recent past is any indication, it most likely won’t. 

Helena’s George Ochenski rattles the cage of the political establishment as a political analyst for the Independent. Contact Ochenski at opinion@missoulanews.com.
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