Corporate Welfare Reigns Supreme: Land Board Votes Yes to Lower Bid Price on Otter Creek Coal

by jhwygirl

In a 3 – 2 vote (Schweitzer, McCulloch and Lindeen voting yes), the Land Board voted to lower the minimum bid price on the Otter Creek tracts from .25/ton to .15/ton.

I’ve yet to stomach a viewing of the entire hearing – but thanks to my DVR (and since the Land Board doesn’t archive its audio and video like the legislature has been able to do for quite a number of years), I’ll be watching it tonight.

Superintendent of Public Instruction Denise Juneau and Attorney General Steve Bullock both voted against the project. For that, I am deeply grateful.

I hope to transcribe the testimony and comments of at least two individuals from today’s hearing. AG Bullock spoke to the corporate welfare that he saw about to be dispensed. Another opponent spoke to the corporate money of Arch Coal – where they put it and the return they would get if the leases were approved.

Those words – like Juneau’s “no” vote in December – need to be out there so that people can be reminded of precisely what was at stake when Otter Creek becomes the disaster that will be.

And make no mistake, those that voted yes were keenly aware of that impending disaster. Lee reporter Mike Dennison captured that awareness by referencing Governor Schweitzer’s promises to Montana’s water resources prior to the yes vote by he and Lindeen and McCulloch. I’ve gone ahead and transcribed them word for word. Read them and ponder why the taxpayers must forego $5 million in coal revenues to the general fund or to the school trust (he didn’t say where he planned to take that $5 million) to protect Montana’s water resources.

I’m going to instruct my budget director, to put in my budget that we take to the legislature, $5 million so that every high school in Montana will either have solar panels or a wind turbine at their school and in order for them to receive this money – which is approximately $32,000 per school – they’ll have to sign a contract with the Department of Commerce that they will spend a minimum of 5 hours teaching time in each of those classrooms with every high school student in Montana explaining to them how this alternative energy works and how it is the energy of the future. I’m also going to instruct the budget director to put $5 million in the budget to protect those that live in Otter Creek and their water. I don’t know who the director of DEQ will be 8 years, 12 years, 20 years from now. I’ve no idea who will be seated on this land board…who will be responsible at the DNRC. We can’t control that – the people of Montana will elect those positions, and the rest of ’em will be appointed. So that’s why whether the DEQ or the DNRC has the fortitude to make sure that the mining companies are protecting the water assets of the people that live there and farm there and ranch there and raise children will not be in doubt – because there will be $5 million put aside. And those monies – $5 million and $5 million – would come from this bonus bid.

While the “people that live there and farm there and ranch there and raise children” can’t take that $5 million to the bank – only the legislature can appropriate – what they can take to the bank is proof, given to us today by the 3 yes votes, that corporate coal money reigns supreme over their water, their lives, their farms, their ranches and their children.


  1. problembear

    welcome to western kentucky, southeastern montanans.

    • Lucky

      And daddy won’t you take me back to Rosebud County
      Down by the Tongue River where Otter Creek lay
      Well, I’m sorry my son, but you’re too late in asking
      The Tongue River Railroad has hauled it away

      Apologies to John Prine

  2. Bugle Editor

    “I’ve no idea who will be seated on this land board…who will be responsible at the DNRC. We can’t control that – the people of Montana will elect those positions… So that’s why whether the DEQ or the DNRC has the fortitude to make sure that the mining companies are protecting the water assets of the people that live there and farm there and ranch there and raise children will not be in doubt – because there will be $5 million put aside.”

    Whoa! $5 million to rebuild the Tongue River Valley and put back hundreds of feet of topsoil. What a guy! Can you say Mike Horse Dam?

    And daddy won’t you take me back to Rosebud County
    Down by the Tongue River where Otter Creek lay
    Well, I’m sorry my son, but you’re too late in asking
    The Tongue River Railroad has hauled it away

    Apologies to John Prine

    • Aside from the underlying acknowledgement that comes with putting aside (or proposing to) any amount of money to preserve the resources, what makes $5 million sufficient?

      It’s completely arbitrary. If you own property and you ranch, you rely on water. Depending on the size of what you own and what, exactly, you are doing, the loss of water for just one ranch could far exceed that $5 million bucks.

      More: Is $5 million the price for water resources in the Tongue? Who knew! How does that compare to the profits of both Great Northern/Arch and yes, even the State of Montana in tax revenue?

      If flies in the face of our constitutional guarantee to a clean and healthful environment. Now we have to watch out for not only just for any number of industries that crap all over the place and leave, we’ve got elected officials willing to sell our right to a clean and healthful environment for a price.

      Not only that, they’ll sell our right and make us pay for it!

      Unbelievably arrogant. Unbelievably.

      I wonder what the water quality of Lincoln and upper Blackfoot are worth? Maybe that’s worth more – they’ve got all that TNC conservation land up near that ways. I’m thinking it might be, at least, double. What do you think?

      • Lucky

        $5 million, hey that’s nearly a half-percent of what the state will clear on this deal. I bet Miles City will get a new Walmart and better tennis courts.

        Cleanup at Mike Horse is estimated to run around $30 million and it’s far, far smaller than the proposed Otter Creek mines. But then you should factor in the cleanup involved with burning all that coal, but that will be way over in the Far East, so it won’t affect Montana. If you want, you could factor in the destruction of the Tongue River by the railroad, but that’s Eastern MT. Nobody really cares.

  3. Pogo Possum

    Here is an interesting perspective:

    http://billingsgazette.com/news/state-and-regional/montana/article_0311ec24-1b61-11df-9230-001cc4c03286.html

    “Union representatives turned out in force to support the coal lease, saying their members need work, that a project like Otter Creek can provide those jobs, and that coal mining is not going away anytime soon.

    Al Ekblad, a Great Falls organizer for Local 400 of the International Union of Operating Engineers, said his union members would love to work on alternative-energy projects, but that such projects can’t provide all the power that society needs.

    “The reality is, folks, that everyone in this room, unless you have the economic ability to pay for green-energy credits, used some type of coal-generated energy in the last 24 hours,” he said. “And the idea that we’re not going to continue to develop it just doesn’t seem logical to me.”

    • Smoking crack isn’t going away anytime soon either. Should we just hand people the keys to a bunch of public buildings and let them expand shop? Because they want the money?

      Why is it OK for taxpayers to subsidize an industry that’s been around for ages and still isn’t able to support itself?

      What are you, a socialist or something?

      • Pogo Possum

        “. . . What are you, a socialist or something?”

        You do realize that you are calling Al Ekblad, a union organizer for Local 400 and his fellow union members socialists………..don’t you? I am just printing his quote vertabim.

      • Pogo Possum

        Your comment that the coal industry is “unable to support itself” is an emotional response not a financial one.

        Inspite of a down turn in electrical demand last year due to the recession, the coal industry is doing quite well financially. A review of the top publicly traded coal companies shows each reported positive Return On Equity in each of the past 5 years. The worst of the companies had positive Earnings Per Share numbers in 21 of the past 24 quarters.

        I have no problem with someone arguing whether Montana should hold out for a better price when negotiating a coal contract. Let’s just base our arguments on facts instead of emotion.

        • Lucky

          If the coal companies are doing so well, why am I the one putting up $billions to prove that sequestration is not just a pipe dream? Wouldn’t it seem more likely that Big Coal would want to pour more of their exorbitant profits into proving Clean Coal really exists?

        • Your comment that the coal industry is “unable to support itself” is an emotional response not a financial one.

          No. it has nothing to do with emotions and 100% to do with financial. The coal industry has been perpetually shored up by tax dollars forEVER. The lowering of the bid price can be shown by the numbers to be corporate welfare.

          Arch is paying .79/ton for Wyoming leases. They, too, pay severance. When they get the railroad that will come with the Otter Creek mine, they will save $2.49/ton on every ton of Wyoming coal that they ship to market because of the railroad (and the condemnation of private land).

          They will get a 300% return from the millions of dollars that was taken from the Montana taxpayers by that drop in lease price while increasing their profits by billions for not only the increase in profit by our lease drop, but the money they will save moving coal from Wyoming to faster closer more direct rail lines in MT.

          You can believe what you want, but the facts speak differently. Montana taxpayers got played – and as I point out – we got electeds already ALREADY passing off the degradation of the water quality as something the taxpayers will picking the tab up on.

          • Pogo Possum

            And now I know why today’s children have such a poor understanding of a market economy and supply and demand.

            Answer me one question, jhwyGirl, who were the other bidders offering to pay more for the coal leases that the state turned down?

            When you are selling something that only one bidder wants to buy (for multiple reasons) you don’t always get the price you want. That is not a tax subsidy. That is simply supply and demand.

            You can make a number of legitimate arguments that the state should:

            A. Not offer any coal leases in Otter Creek to protect private land owners or to conserve the land,

            B. Withdraw the lease until there is more demand to generate a better price

            C. Try to find more bidders to drive up the lease price.

            It is bogus to say that the state is providing a tax subsidy by negotiating a lower price than you want with only one bidder at the table. That is like saying I am giving a tax subsidy to the meat industry when I want $1.10 a pound for fall calves and the feed lots only want to pay me 95 cents. Or, conversely, I am not giving a tax subsidy to the pizza industry when the pizza delivery boy wants $4.95 for that large cheese pizza and I only want to pay $1.

          • “And now I know why today’s children have such a poor understanding of a market economy and supply and demand.”

            Boy, why’da have to go get rude, condescending and ignorant?

            Arch/Great Northern and their subsidiaries landlock the state’s holdings through ownership and other coal lease holdings, Einstein. Practicably speaking, there is only one bidder: Great Northern/Arch.

            The same bidder that pays upwards of 5-6 times more for coal down in Wyoming.

            The same bidder that will save $2.49/ton shipping it when they get the railroad that will come with this abominable behemoth. Which translates (trying to this clear to the economic genius corporate lapdog that is you) to huge profits to Arch/Great Northern.

            So while (still trying to make this clear to you, Chuck) Great Northern/Arch (which, because of coal lease and mineral rights ownership, is the only practical bidder) is whining about the high bid price of Montana’s coal, it’s actually absorbing billions in additional profits on the backs of Montana’s taxpayers.

            That 40% cut in that fabulously touted but now defunct bonus bid of McCulloch/Schweitzer translates to a monster shot in the gut to Montana taxpayer’s wallets while the savings translates to exponentially larger profit to Arch/Great Northern.

            Lately, the newest argument I’ve seen floated is that it isn’t getting burned here, it’s all going to China. If that’s the case, why does Montana give a shit if we’re driving up the price of coal to China? Don’t they own enough of the U.S.A. already? Now we gotta cut our prices and sell America to them even cheaper?

            And just in case my 20 or so posts over the last 2 years mentioning the ills of Otter Creek and coal aren’t getting through to you – I didn’t support this thing in the first place. So I didn’t support the drop, and until coal can be made clean, I don’t support it any way, no how.

            One more thing – while you might be willing to tear up the Montana Constitution to give it all away to Great Northern/Arch, I’m not. I’m also pretty friggin’ reluctant to tromp on private property rights just so some coal company can make billions in profit to sell cheap coal to China.

            It’s your right to be OK with that. As for me, count me out.

            Loved your story on the pizza guy. It made about as much sense as that story the Coal Cowboy Governor gave everyone about the couch and the auctioneer.

          • Pogo Possum

            Where to begin.

            Your , “ . . . tear up Montana’s Constitution” argument, is without merit. Take all the Democrats on the Land Board to court and prove your case if you feel that way. I am certain there are plenty of left leaning environmental organizations in the state who will be happy to help you. Let the judicial system resolve it, if it has merit.

            Your whole argument that the Montana tax payers are getting the shaft is just a disingenuous straw dog. If you had your way, (and yes, I am very aware of your long held opposition to coal mining) Montana would not lease or mine any coal and would receive no coal lease money, no coal royalties and no land lease money. In your view, zero dollars are better than the one billion dollars plus in Federal taxes and Montana State and Tribal taxes and royalties paid by the coal industry. But, let’s dive into some facts just for the fun of it.

            If you check further, you will see that the original bid price of 25 cents was only part of the equation and reason there were no bidders the first time around.

            Montana’s bidding requirements included a minimum bid of $143 million, or 25 cents a ton; royalties of 12.5% of the mine price of the coal prepared for shipment; and a $3-an-acre annual rental fee. A number of analysts said requiring a company to pay $143 million up front was a deal breaker for this project. Great Northern leased its coal tracts to Arch Coal Inc. for a bonus bid of 10 cents a ton. Arch would pay the $73 million in five installments over the next five years, a much better deal for Arch than Montana was asking.

            Your conspiracy theory of Great Northern and Arch doesn’t hold water. Give us some proof. (You condescendingly called me ‘Einstein’ – a little rude isn’t it?)

            You talk about Great Northern and Arch Coal as if they are one in the same. They are not. Great Northern (a privately owned land management company based in Houston) holds the leases you are talking about. Arch Coal Inc. (a publicly traded company based in St Louis) leases from Great Northern. It competes with other coal companies for Great Northern’s coal leases. Like any good company, Great Northern is trying to maximize its profits by getting the highest bids it can from those who lease its coal tracts. From all appearances, Montana’s recent bid solicitation of 15 cents per ton is in the market range of the 10 cents per ton Arch is paying Great Northern.

            Please correct me if I am wrong, but I thought I read that Montana hired an independent third party appraiser who originally said Montana’s coal should command a bonus bid of 5 cents to 10 cents per ton. The discrepancies in lease prices between different coal tracts in Montana and Wyoming can be a result of different market variables such as geography (Wyoming is closer to more key markets), transportation costs, access to rail lines, taxes, cost of production, etc.

            Coal to China ? – good for Montana. It is more money in the pocket of the state and more people employed in eastern Monana. I have not seen any solid evidence that any of the Otter Creek coal is headed to China however. Signal Peak (the new name for the Bull Mountain coal mine in Roundup) announced plans last fall to send several trial cargoes of coal to Asia by the end of the year. I have not heard of any planned coal shipments of Otter Creek coal to Asia so let me know otherwise if you have any concrete news. There is probably a reason for this. The coal in the Roundup mine (10,300 Btu bituminous coal) has greater international export demand because of its higher Btu/lb quality. The Otter Creek tracts, by comparison, contain 8,500 Btu sub-bituminous coal. China has lots of sub-bituminous coal but less higher Btu bituminous deposits. The bulk of the Signal Peak/Bull Mountain coal is headed to its new owners in Ohio.

          • Pogo Possum

            As for your comment: “. . . Boy, why’da have to go get rude, condescending and ignorant?”

            Before you start throwing stones at others, jhwyGirl, you might want to take a look at your own comments and backhanded slaps at opposing commentors.

            I have discovered that the key authors and moderators for a blog or forum have a tendency to set the tone of discussion and debate for other participants. If a moderator gives attitude it tends to come back at him/her from one’s readers and participants.

            I deeply respect your tireless dedication, hard work and endless contributions as editor and moderator on 4&20blackbirds. I have stated this in the past and still believe it. I have deferred to you on occasion as a sign of respect. However, while you are sometimes quick to criticize others, you can, at times, be the queen of condescension and rudeness.

            If you think I have crossed a boundary, then I apologize to you and the other readers. However, if you believe this, then it is a boundary you cross on a regular basis. Your recent comment quoted above is just one example.

          • You got rude and ignorant with me. Which is when I used the term Einstein and where this conversation started the downhill.

            Look – you believe what you do, and I believe what I do…you’ve failed to explain to me why we should give the stuff away as compared to what they’re paying for leases right next door. That’s some pretty basic economics there that have yet to be explained.

            That appraisal? Started before any of those people there were even elected. There is serious dispute there on the quality of that coal, which call the value into question.

            As for the constitution thingy? Did you hear the AG speak? Cause he kinda talked about the lawful obligations – and how they included that other pesky clean-and-healthful environment guarantee (my emphasis). So, being AG and all, that kinda means something, I’d say.

            We’ll go round and round on this Pogo. You are not going to convince me on this one, and I’m darn sure I’m not going to do that for you. I, too, value your opinion and I do have respect for your participation here. So with that I will agree to disagree, shake your hand, buy you a drink, and say that we will both live to fight another day.

            Life is too short to fight to the death for something like this.

  4. Just so you know: When you criticize Lindeen and Schweitzer for their votes on this matter, you are really working for Sarah Palin.

    • Oh Good Goddess, how absolutely dense or intentionally obtuse can you be?

      (For those wanting a full understanding of the ignorance that is Mark Tokarski, please check this thread out from Left in the West.

      I won’t waste that much of my time on you Mark, so I’ll be brief: Perhaps you miss the part where I express gratitude to Juneau and Bullock for their vote?

      (Of course, now I suppose that make me a Democratic party tool?)

      Which is it? Or am I both a Democratic party tool and a tool for Sarah Palin? Because you know Sarah Palin would have said “NO” to Otter Creek, right?

      This comment further illustrates that you are a jackass. You are without logic, and you use a hell of a lot of space to do it.

      • Hint: I’m not the obtuse one. End of hint. As you were. Obtuse.

      • Lizard

        i read the comments in the thread you linked to, j-girl, and i think your conclusion that mr. tokarski is a logic-less waste of time jackass palin enabler is a rather harsh, subjective opinion.

        while i don’t necessarily agree with the way he articulates his political frustrations, i’ve come to similar conclusions about how utterly useless our current two party political system has become.

        democrats will never stop wars. pelosi absorbed and then totally screwed over the sad remnants of the anti-war left in 2006 to do…what exactly?

        so i understand the political nihilism mark espouses. obama is vilified with insane accusations from the lunatic right while retaining such wonderful executive privileges, like ordering the extra-judicial murder of american citizens abroad.

        when you say corporate welfare reigns supreme, i agree 100%. and i still believe there are good people fighting political battles, that government needs to exist and can be run competently, and that humans are capable of evolving beyond the greedy animal meanness that consumerism encourages.

        thank you for the attention and work you bring to local issues you believe in.

        • problembear

          i agree with a lot of mark’s nihilism too liz, but there is no fine line between espousing one’s beliefs and insulting everyone around you to do it. what mark does is derail threads with obsessive arrogant remarks that are akin to poking a finger in everyone’s chest just for the sake of being heard.

          many of us here in montana are daily fighting to make things better. i don’t take kindly to insults from some nobody who lives in colorado telling us it is hopeless with a relentless boring tirade that only succeeds in angering anyone within earshot.

          i cannot for the life of me see what anyone in their right mind could possibly see as positive in his commentary.

        • Lizard: I am a Colorado resident as of 11/13/09, having moved there in August. I spent the previous 59 years, 4 months in Montana. I lived in Billings/Bozeman for most of my life, and in 1996 ran for legislature as a Democrat. It was in 1996 that I first tried to come to grips with the pointlessness of the Montana Democratic Party. At that time the party was run by the Baucus people, the most cunning, disingenuous, and right wing group of Democrats I had ever met. Prior to that time, as a wilderness activist, I came to understand that while people loved to rail against Burns and the Republicans for thwarting efforts to protect Montana wild lands, the man most responsible for stopping us was Max Baucus. And yet, while he did this, he also gained the support of many in the wilderness movement.

          I tried to understand this dynamic – why do people support the man who undercuts them? I write at length about this at my web site, the problem of Democrats. I am constantly told that I am a nihilist (I am not), that I am rude (they don’t listen otherwise), that I seek the perfect instead of the good (this is perception management – Democrats are actually able to accomplish more for the right wing than Rrepublicans, witness the health care bill), that I should be happy with incremental progress (if only there were any).

          Yes, I understand that it is proper to let them have at their silly behaviors, but beleived that I have raised awareness of the problem of Democrats – seldom do you hear anyone here or at other Democrat sites sing praise for Baucus or jump for joy at some right wing initiative generated by a Democratic source. Though I am but one lonely voice, I take credit for part of that – I an others have raised awareness of the problem of Democrats.

          But if we don’t keep at it, they slip right back into their trance.

        • PS: On the “rudeness” factor – I would not be perceived as such were I simply to use the same intonations to support the party. I character named “Wulfgar” in fact does bring a similar attitude to the table, but is rabidly Democrat, and is therefore not the object of scorn. It is the message more than the messenger that riles them.

          • Pogo Possum

            At last, Mark has said something with which I completley agree.

          • No, it’s pretty much the messenger. Your claim, Mark, has the same sensibility to it as wingnut claims that the LeFt FEARS Sarah Palin.

          • No, Wulfy. My message is pointed and clear. Democrats are the problem. Can I state my case with more clarity?

            You’re an asshole. You routinely go off on people, often invoking the f bomb. Not that I mind – I would much rather endure that than your tedious pseudo intellectual crap.

            Wulfgar invokes tedious syllogisms >> syllogisms are linear arguments >> linear arguments don’t apply well in complex society with many unknowns >>> Wulfgar’s use of syllogisms is faulty reasoning >>> Wulfgar is full of shit.

          • JC

            If * says:

            “My message is pointed and clear. Democrats are the problem.”

            And since that is a tedious syllogism, then the following should be true:

            IF * invokes tedious syllogisms AND syllogisms are linear arguments AND linear arguments don’t apply well in complex society with many unknowns THEN *’s use of syllogisms is faulty reasoning AND * is full of shit.

            Do I have that right *?

          • Your point? Are you tapping the PBR’s?

          • JC

            My point? Using your own reasoning, you just called yourself full of shit.

          • Hard not to kick a man when he is down, or judge him when he is at his worst. But that was lame.

          • Though I know this to be a great waste of time, I’m going to explain this once more. The rudeness you exhibit, Mark, is that you consistently draw on your fantasy to tell others what they believe; just as the wingnuts, desperate and drooling, tell us all how we fear the Power Of The Palin.

            You’ve invoked Occam’s Razor before, Tokarski, so perhaps you’ll get out of your victim complex long enough to solve this puzzler: Which is the simpler explanation? That people are angry at you because we are all deluded Matrix-living Democrats and feel the pain of your reasoning, or that we’re pretty pissed off that you keep telling us all how stupid we are based on nothing but what *your* mythology says we think?

            Mark, the source of the anger directed towards you? Yeah, pal, that’s all you.

  5. See what I mean by derailing threads?

    I’m tired of mark’s act. Time to pull the lever on his trap door…

  6. Lizard

    let’s take things a little closer to the topic of the thread. this decision is a slap in the face for the people who think and believe that long term environmental stewardship is more meaningful and ultimately will be of more value than the other side who claim short term (lucrative?) extractive decimation of that environment should outweigh the destructive impact of coal extraction.

    when all other avenues are taken away by the interests of the coal industry, then what should you do? at some point the only way to stop this degradation is to make extraction cost prohibitive. maybe those who will be directly affected should examine how locals in el salvador stopped mining interests from exploiting their immediate environment.

  7. Another country heard from. North of the 49th water concerns of our neighbours have a habit of becoming ours.
    Big Coal spent $80 million to push Clean Coal – an oxymoron – when Obama was setting the new energy agenda for America last spring.
    JanforGore heads a discussion/news sharing group on water concerns at Current TV. The whole fracas is a bigger deal than is commonly realized : with Sourcewatch posting notes on Coal Ash and its danger both to water supply and flood problem as a ‘secret’ of epic proportions.
    I’ll set myself up for aghast exclamations that I’m going overboard with my eclectic collection of articles relating to water…except people stop laughing when they have a hard look at what’s going on.
    That’s Why ‘Home – by the Home Project’ on YouTube heads a few of my enviro collections : it’s only one of a few alerts that seem to hit home.
    http://opitslinkfest.blogspot.com/2009/07/water-wealth-power.html

  1. 1 Land Board waffles, more high school protests. « Northern Rockies Rising Tide

    […] he was confronted about his corrupt business affairs such as the $100,000 campaign contribution he reportedly received from Arch Coal Co., the primary corporate interest in Otter […]

  2. 2 The Schizophrenia Within Our Montana Coal Cowboy Governor Brian Schweitzer « 4&20 blackbirds

    […] He lays out the hypocrisy of saving the Flathead from coal mining, while approving Otter Creek, knowing darn well it will destroy that valley. […]

  3. 3 Otter Naught « 4&20 blackbirds

    […] changed his mind, seeing through the corporate welfare that was, eventually, approved – a 40% drop in price (and let’s not feign that this was in any way a “bid” given that only one entity […]

  4. 4 Does Coal Cash Turn Protestors into Hippiecrites? | 4&20 blackbirds

    […] Corporate Welfare Reigns Supreme: Land Board Votes Yes to Lower Bid Price on Otter Creek Coal […]




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