The Montana Supreme Court, in a case brought by environmental groups, ruled Oct. 23 that the state Board of Land Commissioners acted properly in agreeing in March 2010 to lease coal reserves in the Otter Creek region of the Powder River Basin to Arch Coal (NYSE: ACI).
Arch had, in separate actions, leased from the state part of the coal reserves in the area, and leased the rest, checker-boarded around the state tracts in blocks, in November 2009 from private landholder Great Northern Properties Ltd. That gave it a total of about 1.5 billion tons of coal reserves. Arch recently applied for a state mining permit on a planned 20-million-ton per year strip mine on these reserves and has also taken an ownership position in the Tongue River Railroad project, which would be built to give this coal direct access to a BNSF Railway main line.
The Northern Plains Resource Council, the National Wildlife Federation, the Montana Environmental Information Center and the Sierra Club had appealed to the state Supreme Court from a District Court’s memorandum and order of Feb. 3 granting summary judgment to the Montana Board of Land Commissioners, Arch’s Ark Land Co. subsidiary and Arch Coal itself. The Supreme Court affirmed that lower court finding.
The issue was whether the Land Board properly issued leases to Ark Land without first conducting environmental review under the Montana Environmental Policy Act (MEPA). In 1997 the state of Montana obtained the mineral rights to these lands from the U.S. government, and they are part of a larger coal reserve covering almost 20,000 acres. That land is checker-boarded with mineral interests that are 82% privately owned; 10% state owned; and 8% owned by the U.S.
The Arch Coal leases do not authorize or permit any mining activity, and do not authorize or permit any degradation to any land or water. The leases do not allow any significant surface disturbance without acquisition of all required permits from the state of Montana, the high court noted. So any mining here will get an environmental review within the mine permitting process. The leases also require Arch Coal to implement written operating plans in agreement with the Northern Cheyenne Tribe before any mining commences.
“The State contends that environmental review under MEPA will occur at least twice before any coal is mined,” the court pointed out. “First, Arch Coal will have to obtain a prospecting permit under the Montana Strip and Underground Mine Reclamation Act, Title 82, Chapter 4, MCA, prior to gathering information about the coal reserves. Second, prior to any mining Arch Coal must obtain an operating permit under § 82-4-221, MCA, which will include detailed plans for mining, reclamation, revegetation and rehabilitation of the disturbed land. Further, as the parties stipulated in District Court, the mine operation and reclamation plan must be reviewed and approved by the State Land Board.”