BILLINGS — The state of Montana and Arch Coal, Inc. will line up together in state court Tuesday against environmental groups seeking to derail the company's plan to mine a 1.3 billion ton reserve within the most productive coal region of the country.
St. Louis-based Arch has paid $159 million to the state and Great Northern Properties to lease the Otter Creek coal tracts, located near the Northern Cheyenne Reservation.
The deal has received strong backing from Montana Gov. Brian Schweitzer, a Democrat who wants to capitalize on the vast coal deposits in the Powder River Basin along the Wyoming border. The proposal has been fought by anti-coal groups and some local landowners who say it would industrialize a rural part of the state and help accelerate climate change.
Otter Creek holds more coal than the United States consumes annually. Arch's plans include exporting the fuel to Asia through ports on the West Coast.
At Tuesday's hearing in Broadus, attorneys for the Sierra Club and other groups will ask state District Judge Joe Hegel to cancel the 10-year state lease. They want studies on mining impacts and the consequences of releasing huge volumes of the greenhouse gas carbon dioxide when the coal is burned.
State officials and representatives of Arch say those environmental studies will come later, during the mine permitting process. They want Hegel to dismiss the case.
But opponents say the proposal already would have enough momentum by the time Arch applied for a mining permit that it would be difficult or impossible to turn back, regardless of the impact. That runs counter to the state's obligation to fulfill the Montana constitution's guarantee of a "clean and healthful" environment, attorneys for the opponents said.
"We're very concerned about the burning of this coal, whether it's burned in the United State or whether it's burned in China," said Jenny Harbine, a Bozeman attorney representing the Sierra Club and Montana Environmental Information Center.
"The decision to lease triggered a chain of bureaucratic steps that makes it increasingly impossible for the state to choose not to allow development of the Otter Creek tracts," she added.
Schweitzer has said Arch wants to have its permits by 2013 and begin mining by 2016, although company spokeswoman Kim Link said it would be premature to set a timeline.
The company has received a coal prospecting permit from the state and begun preliminary work assessing the site.
Arch, the nation's second largest coal company, paid $86 million plus future royalties for rights to the state's share of the reserve. The company earlier reached a $73 million deal with Great Northern Properties to lease the remaining coal.
The state lease sale was approved last year by the Montana Land Board, a five-member panel chaired by Schweitzer.
State Attorney General Steve Bullock also is a member of the land board and voted against the sale. Attorneys in the case said Bullock's prior opposition was not expected to have any bearing on the state's defense of the lawsuit.
In January, Judge Hegel handed down an initial ruling that sided with the environmental groups. He said they had a reasonable claim that waiting until later to do more environmental studies could be too late.
The state's reasoning "would allow the Land Board to convert public property rights to private property rights, stripping away its special protections before even considering possible environmental consequences," Hegel wrote.
Attorneys for the state refuted that conclusion in legal briefs filed in advance of Tuesday's hearings.
"The fact that Arch Coal paid nearly $86 million for the leases does not transform them into property rights to engage in mining," Assistant Attorney General Jennifer Anders wrote. "Under the lease terms, Arch Coal acquired nothing more than the exclusive right to apply for permits from the State ...There is no risk of environmental harm until development occurs. Until there is a proposal for development, there is no way to evaluate the potential impacts of the project."
Jennifer McKee with the Attorney General's Office said state officials would not comment further pending the hearing in Broadus.
Two lawsuits filed in the wake of the lease sale have since been consolidated into a single case. The other plaintiffs appearing Tuesday will be the National Wildlife Federation and the Billings-based Northe