Tribe, company revise lopsided Mont. coal swap

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BILLINGS, Mont. (AP) — Backers of a proposed coal swap involving a Montana Indian tribe say they have reduced the amount of fuel the government would turn over to a Texas company as part of the exchange, after federal officials criticized the arrangement as lopsided.

Legislation from Montana's congressional delegation originally called for Houston-based Great Northern Properties to gain control over about 150 million tons of publicly owned, recoverable coal in the deal, from locations in central and southeastern Montana.

In turn, the company would have transferred 110 million tons of coal it controls on the Northern Cheyenne Indian Reservation to the impoverished tribe.

But the company and tribe now say they have revised the terms so that both sides would receive 110 million tons.

"We're now more on a level playing field," said Tracey Robinson, a member of the Northern Cheyenne Tribal Council.

The three-way exchange is meant to address a longstanding grievance over an expansion of the tribe's southeastern Montana reservation in 1900. The expansion left the underlying coal reserves in private hands, a result that has been described as a mistake on the part of federal officials at the time.

Great Northern Properties acquired the rights to that coal from previous owner Great Northern Railroad in 1992.

Officials with the federal Bureau of Land Management still are analyzing the revised terms and have not determined if the deal is an even exchange.

Even if the volumes are identical, that does not necessarily mean the coal is of equal market value because of differences in quality and mining costs. Also, the federal government stands to lose tens of millions of dollars in potential royalties — possibly a tough sell given the rising angst on Capitol Hill over the massive federal deficit.

But backers say the exchange is the right thing to do, and that the new terms should make the deal more palatable by addressing directly concerns that Great Northern Properties would reap the greatest benefit.

Robinson said the tribe's primary interest is "to ensure that our land is intact and stays whole."

"The government made this error. We're asking the government to fix it," he added.

The original arrangement ran into criticism from Interior Department officials and Rep. Edward Markey of Massachusetts, ranking Democrat on the House Natural Resources Committee. They said they supported the tribe's goals but were concerned with whether the deal was equitable.

Jamie Connell, BLM director for Montana and the Dakotas, indicated the revisions to the deal were encouraging: "If the numbers are getting closer, that's a good thing," she said.

A spokesman for the Interior Department, which oversees the BLM, declined comment.

Great Northern president Chuck Kerr said the focus on the benefits to his company had clouded perceptions of a deal primarily meant to help the tribe.

The deal is supported by mining company Signal Peak Energy, which hopes to extract some of the coal that Great Northern would receive near Signal Peak's Bull Mountain mine near Roundup.

Another revision to the deal would prohibit surface mining on the Bull Mountain tracts, a scenario that has raised concerns among local landowners, said tribal attorney Steve Chestnut. Still in the deal is a provision for the tribe to receive 40 percent of royalties on future sales of the coal acquired by Great Northern.

As for the coal the Northern Cheyenne would receive, tribal officials said no decisions have been made on whether it will be developed.

There are no mines on the reservation. Despite an unemployment rate topping 60 percent the Northern Cheyenne historically have opposed natural resource extraction.

But development pressures have increased since the nearby Otter Creek coal reserves were leased last year to mining giant Arch Coal Inc. by the Montana Land Board. Great Northern also has leased tracts at Otter Creek to Arch, and the St. Louis coal company has partnered with BNSF Railway Co. on a proposed rail line that could be used to ship the coal to Midwestern or Asian markets.

Northern Cheyenne Tribal President Leroy Spang is a former coal industry worker who advocates mining as a means to generate jobs and inject new revenues into the tribe's coffers. He said he intends to negotiate future leases with companies interested in mining the reservation's coal, but that no agreements would be finalized until members of the tribe vote on it through a referendum.

Chestnut said meetings with one mining company have been scheduled for the near future. He would not offer specifics.

"It doesn't mean they're going to develop, but we're trying to do it the right way," he said.

On Wednesday, the BLM announced that 35 million tons of coal that would go to Great Northern under the deal will be subject to a public lease auction on Nov. 16. If those leases at Bull Mountain are sold before Congress acts on the pending legislation, it could complicate the exchange but not preclude it, according to BLM officials.

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