KATIE OYAN Associated Press Writer HELENA
The state Land Board voted unanimously Monday to move forward with an appraisal of the state-owned Otter Creek coal tracts in southeastern Montana. The appraisal will cost between $25,000 and $50,000 and take two to three months to complete, the Montana Department of Natural Resources and Conservation said. Money for the appraisal will come from the agency's basic operating funds. Initiating the appraisal process is the first step toward offering leases on the vast Otter Creek coal tracts, near Ashland, for bid. The state owns the rights to about 550 million tons of coal in the area, which it gained in a 2002 exchange with the federal government. Houston-based Great Northern Properties owns about the same amount in tracts of land interspersed with the stateowned coal. The two parties have an agreement to jointly develop the coal. State officials have been under pressure to sell leases by a London-based investment bank, a company that wants to build a Railroad into the area and from school officials who want the additional state revenues a sale would entail. The state Land Board is mandated by the state constitution to manage the Otter Creek coal tracts and other state school trust lands for their maximum return. The board is composed of five statewide elected officials: the governor, attorney general, secretary of state, state auditor and superintendent of public instruction. Attorney General Mike McGrath said Monday's action was just the first step in a long, complicated process that involves working in concert with Great Northern. "We have a fiduciary duty to manage lands that we hold in trust for all the people, and part of that process is to evaluate what we have," McGrath said. "There's still a long way to go here." He added that until there is a way to access the Otter Creek coal tracts, the state's coal rights are basically worthless. In 2006, Great Northern told the Land Board that the lack of infrastructure around the reserves, along with the high sodium content of the coal, created sizable hurdles to developing the Otter Creek tracts. Today, the state is receiving "substantive and credible expressions of interest" in leasing the property, the DNRC said in a report to the board. One factor driving the interest is an October decision by the Federal Surface Transportation Board to grant final approval for the remaining section of the Tongue River Railroad, the department said. Other factors include "rising potential in alternative energy markets such as dedicated facilities that convert coal to gas, liquids or electricity," and emerging market interest in Otter Creek's high-sodium coal, the agency said. Joe Lamson, deputy director of the DNRC, said coal from a mine near Decker has the same sodium levels as the Otter Creek coal, and "they're actually expanding their market." He credited new technology designed to handle the higher sodium levels. Several conservation groups, including the Northern Plains Resource Council, and some Otter Creek area landowners have voiced opposition to both a mine and the Tongue River Railroad. They say the industrialization of the region's rural landscape would damage water supplies used by farmers for irrigation. Beth Kaeding, chairwoman of the Northern Plains board, asked the Land Board not to have the Otter Creek coal tracts appraised. She said the money for the appraisal should instead be invested in renewable projects that would bring "sustainable monies" into the school trust fund.