Montana coal swap revised to make deal more even

BILLINGS, Mont. (AP) – Hoping to placate critics of a proposed three-way coal swap involving a Montana American Indian tribe, U.S. Sen. Max Baucus is offering new legislation to make the deal more balanced.

Revised terms of the deal call for the federal government to give 110 million tons of coal worth tens of millions of dollars to Houston-based Great Northern Properties.

In exchange, the Texas company would transfer an equal amount of coal to the Northern Cheyenne Tribe, which lost rights to the fuel beneath its reservation last century and hopes to regain ownership.

Prior legislation from Baucus called for Great Northern to receive 40 million tons more coal than the tribe. The Interior Department and Massachusetts Democrat Rep. Ed Markey criticized that lopsided arrangement.

The federal coal includes tracts in the path of Signal Peak Energy's Bull Mountain mine near Roundup. Signal Peak could begin mining in that area as early as 2013. Under the terms of the coal swap, the tribe and Great Northern would evenly split future royalties.

In addition to those tracts, Great Northern would gain control over coal reserves just east of the Northern Cheyenne Reservation, in an area of southeastern Montana known as Bridge Creek.

The Congressional Budget Office estimated potential royalties on the Bull Mountain tracts at $26 million over the next decade, based on the prior version of the bill. Absent the coal swap, the royalties would be split between the state and federal government.

Baucus and other backers said the swap is needed to fix a mistake made by the federal government in 1900. That's when President William McKinley and Congress expanded the Northern Cheyenne Reservation but failed to acquire the privately held rights to the underlying minerals.

Rights to the coal remained in control of the Northern Pacific Railway Company, which originally attained them through a government's land-grant program meant to encourage development of the West. The rights were acquired by Great Northern Properties in 1992.

“They forgot to give it back to the tribe in the 1900s,” said Northern Cheyenne President Leroy Spang. “They gave us the top surface and forgot to transfer the minerals.”

The revised legislation was introduced by Baucus Wednesday, according to his office. It includes concessions for landowners in the Bull Mountains who opposed the deal, including a prohibition on strip mining and a study of land subsidence caused by Signal Peak's mining.

But those changes were not enough to garner support from some landowners and a Billings-based conservation group, the Northern Plains Resource Council. Steve Charter, a rancher near the mine, said the swap is a “giveaway” to Great Northern.

“They keep giving this coal away and it should stop,” Charter said. “Sweetheart deals like this for Great Northern Properties, it's not a whole lot of difference from when they first gave it to the railroad.”

Great Northern president Charles Kerr said the changes in the bill increased the benefits to the Northern Cheyenne.

“Everybody's had to give some concessions, and who's going to benefit hopefully will be the Northern Cheyenne,” Kerr said. “At the end of the day, if this deal doesn't go through, we still have our coal. The Northern Cheyenne have zero.”

Tribal president Spang said the Northern Cheyenne have been in preliminary discussions with five companies about mining the coal beneath the reservation.

Once a company is selected, the question of whether to proceed with mining would be put to members of the tribe through a referendum, he said. In the past, the tribe has resisted development of its coal and natural gas resources.