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Coal railroad backers seek state action


September 17, 2009

MATT GOURAS Associated Press Writer HELENA

The company seeking to build a 121-mile coal r a i l r o a d i n s o u t h e a s t e r n Montana told the governor in a meeting Tuesday that the state needs to make the first move in the development of the Otter Creek coal tracts. But Gov. Brian Schweitzer countered in an hourlong meeting that all the private companies that could be involved with development of coal in that area want the state to sell its coal cheaply to facilitate their projects. Mike Gustafson, developer of the long-delayed Tongue River Railroad, said coal companies won't commit until they have economical deals in place for both the coal and transportation. But Schweitzer said those coal companies want the state to sell its coal for 10 cents on the dollar to put the wheels in motion for everyone else making state officials look like a bunch of rubes down the road. “ P e o p l e are going to s t a n d u p a n d s a y, Wh o a r e these jackasses that sold it too cheap?'” the governor said. “I don't want to be in a position of people saying, What were you doing? Why did you sell it so cheap?'” Schweitzer said private companies that own coal rights in the area would later get far more for the coal. The meeting comes in advance of a state land board meeting next week on the issue. The board is looking at ways to maximize the state's coal asset. Gustafson has so far been stymied in his efforts to build the line, which would run from Miles City south through Otter Creek to the Wyoming border and cost up to $600 million. The Otter Creek tracts hold more than a billion tons of coal co-owned by the state and the privately held Gr e a t No r t h e r n Pr o p e r t i e s. Development could open the door to a dramatic expansion of the region's coal industry. It also could facilitate construction of the Tongue River Railroad rail line. The projects are fiercely contested by environmentalists and some Montana property owners, including billionaire Forrest Mars Jr. Of the Mars candy business. Montana's 610 million tons of coal are spread over 9,500 acres near Ashland. Schweitzer said the state is really just a bit player in the deal, and argued that private companies that own coal in the area could put together a full deal if they so chose. Gustafson said the state is uniquely positioned to be a catalyst because it would reap the benefit of all development in the area because tax revenues would increase.


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