The 2012 Montana Gubernatorial race is going to be a launching point for several very important issues. Among these issues, Otter Creek Coal is going to be on the forefront. In a time that Montanans stand to gain or lose billions in state revenue, Treasure State Politics.com wants you to be as informed as possible about the opportunities that stand for the state in advancing the Otter Creek Coal lease and natural resource development in Montana.
Otter Creek Background
Otter Creek Coal tracts 1, 2 and 3 were acquired by the state of Montana from the Federal government in the late 90′s when the state selected the tracts after the Federal government took control of the “Crown Butte-Mine,” located near Yellowstone. The acquired coal tracts had an appraised value of $10 million at the time. The estimated value in state income from the Otter Creek Coal tract’s leasing today is about $5 billion.
The Otter Creek Coal tracts are half-owned by the State of Montana, with the other half being owned by Great Northern Properties. It’s important to keep in mind, the half of Otter Creek owned by Great Northern Properties is private land, free of many barriers that the State of Montana is subjected to in the leasing of state land for mining purposes.
Since the state’s acquisition of the coal tracts, legislation has been enacted to ensure that the revenue from the coal mine be set aside for state education. 2oo3 Montana Senate Bill 409 commenced exploration of the coal tracts and allowed for data gathering that would assist in the leasing process of the tracts. Senate Bill 409 was introduced by then Billings State Senator Corey Stapleton (R-Billings), now a candidate for the 2012 race for Montana’s governor. Stapleton can also be credited for introducing legislation in 2001 (Senate Bill 510) that requires proceeds from the Crown Butte-Mine exchange (state’s acquisition of Otter Creek Coal tracts 1,2 and 3) be used for K-12 and higher education in the state.
The development of Otter Creek Coal, including the construction of the Tongue River Railroad, would create about 986 jobs upfront.
The Leasing Process:
The Montana State Land Board, comprised of the Governor, Attorney General, Superintendent of Public Instruction, State Auditor and Secretary of State, is charged with the task of managing state lands and leasing lands when necessary. Currently, the State Land Board is comprised of all Democrats. The Land Board, through a series of negotiations, decided to lease the Otter Creek Coal tracts in December of 2009. The board set the initial minimum bid price for the tracts at 25 cents per ton. This price was agreed to with a 4-1 vote. State Attorney General Steve Bullock argued that this rate was too low and suggested that the board raise the minimum to 35 cents per ton. The consensus of the board was to remain at 25 cents per ton.
It’s important to note that the privately owned tracts, owned by Great Northern Properties, were leased at 10 cents per ton, possibly revealing the private market value of the coal tracts.
The State Land Board received no offers at the minimum bid of 25 cents per ton. In response, the board set the minimum bid at 15 cents per ton. At this point, Attorney General Steve Bullock and Superintendent of Public Instruction Denise Juneau opted to oppose leasing the tracts. Bullock argued that the state wasn’t getting maximum value from the lease. Juneau states that the short-term benefits don’t outweigh the long-term impact of a coal mine.
Arch Coal of St. Louis offered to lease the tracts from the State at the rate of 15 cents per ton. Arch also leased the tracts owned by Great Northern Properties for ten cents less per ton. The lease brought an immediate $85,845,110 into the state.
Current Status of Otter Creek: Environmental Litigation
Currently, the State Land Board’s leasing of the Otter Creek Coal tracts is being challenged with litigation from several environmental groups questioning the Land Board’s interest in protecting Montana’s environment. Progress has been halted due to this litigation.
In TSP’s interest of promoting economic growth, and supporting candidates and public officials who support development and job creation, we want our readers to know all of the facts. In the coming months, TSP will be keeping you updated on Otter Creek Coal development and will keep tabs on candidates and officials directly related to the progress of the Otter Creek tracts. The above is a summary and general time-line of Otter Creek progress. Since we’re completely devoted to giving you the facts, we urge you to visit the DNRC’s site dedicated to Otter Creek. Here you can link to important documents including meeting transcripts, environmental impact reports, projected revenue reports, legislation and much more. As stated at the beginning of this report, Montana stands to gain or lose billions in the coming months and years and it’s important that voters have a source for information on important issues regarding resource development free of environmental hype. The TSP Team wants you to know the facts and use them to advance Montana.