Sen. Carmine Mowbray (R-MT 6th District), a first term, governor appointed, state senator in Montana's legislature, offers a fine example of how it sounds when you are bought, fully bought, in her article, "
Capitol Letters — 'It's All About Business'," in the Lake County Leader, a local paper
she owns in her district. She advocates
strip mining Otter Creek, where the state
cut land lease auction rates from $0.25 to $0.15 per ton (
which is between two and six times lower than Wyoming rates) when Arch Coal said the rates were too high. Arch Coal subsequently bid on the rights to strip mine Otter Creek, and won. The land was leased to them for coal mining by the state without first performing an environmental impact statement. Earth Justice and the Sierra Club sued Montana and Arch Coal over that gesture, and
in January a judge denied Montana and Arch Coal's motion to dismiss the case, saying the case had merit.
Senator Mowbray cheer leads for coal strip-mining like I've never seen coal strip-mining cheer led for before...
I jumped at the chance to join several legislators in
Billings for Arch Coal’s field trip in August. We boarded our bus
early for a full day of economic education. We observed Montana’s
Otter Creek proposed coal tract, with the potential to provide
hundreds of millions of dollars in revenue and several hundred
Montana jobs. Looking over the beautiful country, I asked Senator
Jim Peterson, “How would YOU feel if Arch came to your ranch and
told you they were going to displace you and your neighbors for up
to 20 years so they could gouge out the coal beneath your
land?”
He said, “I could temporarily relocate and they’d
leave the land as good or better than they found it, or I’d take
the buy-out money and go elsewhere to ranch.”
We continued south of Gillette to the Black Thunder
mine, the largest surface coal mine in North America. We entered
the control house of the huge drag line, mesmerized by the
garage-sized bucket, colossal pulleys and cables the diameter of
fence posts.
Our guides explained their approach to responsible
resource development. The mine produces roughly 81 million tons of
coal per year and employs over 1,600 people. Average wage is over
$77,000. In 2009 the coal industry provided over $1 billion to
Wyoming’s state and local governments. After development, the
disturbed land is reclaimed, which we saw as wildlife and cattle
grazed.
The pride the men and women take in these jobs was
obvious. Arch has an admirable safety record, and they have no
problem finding good people to fill positions. Montana stands to
gain greatly by responsible coal development.
With a healthy economy, more folks are likely to
stroll through their local farmer’s markets, stimulating trade with
businesses, small and large.
Senator Mowbray is just so happy about strip-mining coal. And that fellow senator, Jim Peterson, if they wanted to strip mine his land, why he'd just go elsewhere to ranch. Sure. It's that easy, I bet. These folks are leading their constituents into the abyss, and I suspect their constituents -- most anyway -- have no idea what's in the abyss.
Ms. Mowbray was appointed in 2011 to replace
Senator John Brueggeman, who resigned. But, look at the money contributed by the mining industry to Montana's candidates the year Mr. Brueggeman was first elected to the senate:
Montana 2004 Mining Contributions
I reckon Ms. Mowbray can expect some generous contributions from coal mine operator Arch coal, seeing how she so enthusiastically supports strip mining Otter Creek -- and permanently destroying Otter Creek.
I write about this case because it is such an egregious example of politicians working to promote the interests of industry over the interests of their constituents. They destroy public land in exchange for campaign contributions, and
$250 million a year in state tax & royalty revenue. The strip mine will create a few jobs
(about 250 at each of two mines for 40 years, and 500 to construct the Tongue River Railroad, for 2-3 years), but the cost of dealing with the ensuing environmental degradation will surely exceed the tax & royalty revenue, which incidentally must be used to
finance state education programs. Other state money will undoubtedly be used to subsidize mines with new roads and increased road maintenance, power lines, and perpetual treatment of polluted groundwater -- and in Montana, groundwater is dear.
By the way, Arch Coal will need new rail lines along Tongue River to get the coal out. That requires rights of way and more land ruined for other uses.
Ranchers are fighting this in court.
Folks in Montana won't get much for the destruction of their land. And the costs have not even been calculated since Montana didn't bother with an environmental impact study before leasing the land. Not to mention the intangible moral cost of pristine land and the animals and plants that inhabit it destroyed forever for something we do not even need -- Arch intends to
export this coal. Besides, renewable energy and efficiency could easily, cost-effectively, job-intensively, immediately replace this coal, and
create
4.5 million jobs, over and above those lost by coal miners, and other
dirty-energy workers. And it would add $4.3 trillion of domestic revenue
to our economy.
The Northern Cheyenne Tribe, just to the west of the Otter Creek tracts, will be done to by the mining companies, too. They already have mines to the north and south, and dirty, dusty, noisy, constant coal trains on all sides. So this is just one more insult added to a long list of injuries. These people, like common American wage-earners, are relegated to third class status -- "shut up and take what we give you," is the corporate party line, and Arch Coal will stick with that party line to great effect. The Cheyenne did get a
settlement from the State of Montana, but the reality is that not much is settled in the Cheyennes' favor. The Cheyenne fought for redress, and their effort warrants praise, but they are aligned once again in opposition to formidable if not impervious forces. Here is a summary from the MMB FAQ:
Prior to the federal conveyance of the Otter Creek tracts, the Land Board entered into a February 19, 2002, Settlement Agreement with the Northern Cheyenne Tribe (NCT). The NCT had concerns over potential impacts to the NCT from development of a mine at Otter Creek. They filed suit against the federal government opposing the transfer, but withdrew that suit after entering into an agreement with the Land Board. Key provisions of the Settlement Agreement include:
LAND BOARD SUPPORT FOR:
- Federal impact legislation;
- Improvements by the state of key off-Reservation roads;
- Cooperative enforcement agreements among the Tribe, counties and, if appropriate, the State Highway Patrol.
REQUIRED OPERATING PLANS FOR:
- Otter Creek related training and employment opportunities for members of the Tribe and other local residents;
- Otter Creek related contracting opportunities for the Tribe and its members;
- Environmental monitoring of air, water and biological resources on the Northern Cheyenne Reservation which may be affected by mining operations;
- A cultural resource program addressing Northern Cheyenne historic, cultural, religious and burial sites or items, including plants having cultural or religious significance.
If the Land Board issues any coal leases in the Otter Creek project area, these leases will expressly require the lessee to comply with the provisions of the Settlement Agreement.
One day, Montana's residents will find themselves living in a toxic wasteland, dying of mysterious ailments, and wondering why nobody warned them. Well, you've been warned.
If you want more detailed info about Otter Creek, and western coal mining, and coal exporting in general, have a look at this exceptionally well done white paper from the
Northern Plains Resource Council:
Exporting Powder River Basin Coal: Risks and Costs
I'll end this with Montana's Minerals Management Bureau FAQ that can also be found here:
http://dnrc.mt.gov/Trust/MMB/OtterCreek/Default.asp
Otter Creek Coal Proposal
Fact Sheet
June 25, 2009
Prepared by Montana DNRC
What is the coal leasing process? How do my comments fit into the process?
The department and Governor’s office have received significant interest in having the Otter Creek state coal tracts put forth for public bidding. In May 2008 the Land Board authorized the department to prepare a coal leasing appraisal to assist the board in its review of whether or not and upon what terms to place the state school trust coal rights up for lease. The department is now making the appraisal available for review and public comment, as provided by state statute. (77-3-312, MCA)
If the Land Board decides to solicit competitive bids on state coal leases at Otter Creek, the board will utilize the appraisal and public comments received to design a bid package to secure fair market value for the coal leases. If a bid or bids are received, the Land Board will evaluate whether to accept or reject the bids. If the Land Board determines it has received an acceptable bid, it would then direct the department to issue coal leases to the successful bidder.
How much coal exists at Otter Creek? What is its development potential?
State recoverable coal totals 616 million tons, or about one-half of the total 1.3 billion ton reserve.
Of that, 572.3 million tons of state coal is not leased.
What revenues could be generated from leasing and development of the Otter
Creek property?
State coal leases generate two types of revenue for the school trust beneficiary – rentals and
royalties. Rentals are payments made by the lessee to hold the lease. Rentals may include bonus payments, which are amounts offered through a competitive bid process over and above the first year base rental. If the coal lease is developed, royalties are paid on each ton of coal removed from the lease. Royalties represent the state’s share of the gross revenue generated when the coal is sold. Royalties constitute the overwhelming majority of gross revenue generated from a producing coal lease.
The appraisal yields the following estimated value for the state property that may be considered for lease and development.
Minimum Bonus Payment: $37.3 million ($57.2 million if rail line is separately financed)
Annual Rentals ($3/acre): $1.0 million (over 40 years)
Royalty Payments (12.5%): $1.4 billion (over 40 years)
Since the state’s Otter Creek property is school trust land, these revenues would help support K-12 education in Montana.
If a mine were developed, the state and Powder River County would receive the following additional estimated tax payments over the life of the mine:
State of Montana Severance Tax: $2.7 billion
Gross Receipts Tax: $0.9 billion
RIT Tax: $0.072 billion
Powder River County Property Tax: $1.09 billion
Why does the appraisal analyze a coal mine project both with and without railroad
development costs?
Appraisal methodology requires an estimate to consider the development costs needed to get the production from the proposed project to market. Therefore, the base appraisal does incorporate financing costs for that portion of the Tongue River Railroad from Otter Creek to Miles City. For years state Land Boards have established a policy that all transactions involving state trust land resources be valued as if access is in place. The railroad should be viewed as if it had separate financing.
Therefore, the appraisal also calculated the net present value of the proposed mine operations
without any capital investment required for railroad construction. This calculation yielded the higher forecast bonus bid of $0.10 per ton.
What is the Settlement Agreement between the Northern Cheyenne Tribe and Land
Board?
Prior to the federal conveyance of the Otter Creek tracts, the Land Board entered into a February 19, 2002, Settlement Agreement with the Northern Cheyenne Tribe (NCT). The NCT had concerns over potential impacts to the NCT from development of a mine at Otter Creek. They filed suit against the federal government opposing the transfer, but withdrew that suit after entering into an agreement with the Land Board. Key provisions of the Settlement Agreement include:
LAND BOARD SUPPORT FOR:
- Federal impact legislation;
- Improvements by the state of key off-Reservation roads;
- Cooperative enforcement agreements among the Tribe, counties and, if appropriate, the State Highway Patrol.
REQUIRED OPERATING PLANS FOR:
- Otter Creek related training and employment opportunities for members of the
- Tribe and other local residents;
- Otter Creek related contracting opportunities for the Tribe and its members;
- Environmental monitoring of air, water and biological resources on the Northern Cheyenne Reservation which may be affected by mining operations;
- A cultural resource program addressing Northern Cheyenne historic, cultural, religious and burial sites or items, including plants having cultural or religious significance.
If the Land Board issues any coal leases in the Otter Creek project area, these leases will expressly require the lessee to comply with the provisions of the Settlement Agreement.
Does the issuance of coal leases authorize a mine to be developed?
No. A coal lease establishes the operating, rental and royalty provisions that the lessee must comply with, but does not authorize mining activity. The mine lessee/operator must submit detailed operating and reclamation plans to the Department of Natural Resources and Conservation (DNRC) and the Department of Environmental Quality (DEQ) for permitting review pursuant to the Montana Environmental Policy Act (MEPA). This environmental review process includes opportunity for public review and comment. The lessee/operator cannot commence mining activities unless the DNRC and DEQ issue approvals.
Is coal mining and reclamation regulated in Montana?
Yes. The Montana Department of Environmental Quality (DEQ) is charged with regulating coal
mining operations on federal, state and private lands in Montana. The DEQ reviews proposed mine operating and reclamation plans in detail pursuant to MEPA. DEQ staff inspect and monitor all phases of exploration, mining and reclamation. DEQ also calculates and requires full reclamation bonding from the mine operator.
A significant portion of the surface estate above the coal resources owned by the
state school trust is privately owned. How are surface owners compensated for
their property ownership?
While ownership of the coal estate carries with it the right to explore and develop the coal resource, the surface estate owner is entitled to compensation for the impact to their property. It is not uncommon for the operator of a surface coal mine to either purchase or enter into a long-term lease agreement with the split-estate surface owner. Where the state owns both the coal and the surface estate, the state’s surface lessee would be entitled to compensation for lease improvements on any acreage withdrawn from the surface lease.
Is there an estimate of how many jobs this project might create?
A briefing packet prepared during the Federal process of transferring the Otter Creek tracts to the State of Montana provides the following job estimates:
• Construction of Tongue River Railroad (2-3 years): 500
• New mine 1 (40+ years): 261
• New mine 2 (40+ years): 225
