Has the State of Montana kept track of Arch Coal’s Otter Creek spending?
In 2010, Arch Coal leased the Otter Creek coal tracts from the state of Montana. If you are interested in how the proposed Otter Creek mine came to be please read my short Otter Creek play that I wrote,”Once Upon A Mine”. There is supposed to be a part II but I’m having a hard time making it funny since whole debacle is so goddamned depressing.
However, I am not writing today to talk about the leasing or the corporate pandering by our elected officials or the lack of vision for economic development in our rural communities. Today I am writing about a provision in the Otter Creek lease agreement. There is a stipulation regarding the expenditures that Arch Coal is required to make during the first five years of the lease agreement.
The “Diligence” provision in paragraph 28.A of the lease provides that the Lessee, Ark Land Co. (a subsidiary of Arch Coal), must spend at least two million dollars per lease year for the first five years of the lease on a work program to develop the Otter Creek coal tracts. The lessee, Ark Land Co., must document all expenditures by providing the state of Montana (i.e. you and me) with an accounting of the work performed within 120 days following the end of each lease year. You can read the exact provision at the bottom of this post and download the entire document if you are interested.
If Ark Land Co. (Arch Coal) doesn’t spend two million dollars per year on the work program, they must pay the state of Montana the difference in the amount between what they spent and the two million. For example, if Arch Coal spent $500,000 the first year on salaries related to the mine and some ground water monitoring they would have to pay the state of Montana the difference, in this case, $1.5 million dollars. There are numerous activities that could qualify as expenditures such as environmental baseline studies, exploratory drilling, permitting actions, acquisition of surface and access rights, market studies, compiling mine economics, feasibility studies and staff time.
Has Arch Coal spent $2 million per year on the Otter Creek mine?
Arch Coal still does not have a permit from the state of Montana but we are on the fifth year of the lease which means that Arch Coal should have spent, at minimum, $8 million dollars total on the Otter Creek mine. Each year $2 million should have been spent and it can’t be a cumulative $8 million over the five years. Considering the quality of work that they put into their first permit application I’m pretty sure that if they have spent the entire $8 million they should reassess how they are spending their cash.
But what we don’t know the answer to the question. Has Arch Coal spent the required amount of money and has the state of Montana been keeping track?
In order to find out, the folks over at EarthJustice sent a public records request to the Montana Department of Natural Resources (DNRC) on October 3, 2014 for any documents pertaining to the diligence provision in the lease. They asked for the following documents:
(1) each accounting submitted by the Lessee since April 20, 2010; (2) internal or external correspondence involving Land Board members or their staff and/or the Department of Natural Resources Conservation, including correspondence to and from the Lessee, pertaining to the requisite accounting(s); and (3) all evaluations or memorandums prepared by Land Board members or their staff and/or the Department of Natural Resources Conservation pertaining to the requisite accounting(s). Please provide the documents in electronic format where available.
As taxpayers and Montanans, we have a right to know if the lease stipulations are being honored by Arch Coal. As soon as the Montana DNRC turns over the requested documents, I’ll let you know what we find out. On a related note, wouldn’t it be so much simpler for everyone if all correspondence from corporations to our state government was uploaded to a database instead of citizens having to request documents that are ours to begin with. You receive an electronic file, you click on a button that says upload into a folder labeled Otter Creek Mine and boom, you’re done. I realize it is a little more complicated than that but it should be the type of relationship with the public that our government strives for. That, my friends, would be a huge step toward government transparancy and accountability that I would think both Republicans and Democrats could get behind and in the long run would take a lot of pressure off individual government employees.
To download the lease, click here. There are rumors swirling that Arch Coal will be re-submitting their permit application soon to the Montana Department of Environmental Quality (DEQ). I’ll let you know when and if that happens. Regardless, the DEQ’s projection that the draft environmental impact statement will be out in sometime in early 2015 is completely unrealistic.
Otter Creek Valley.