House committee approves coal swap for Northern Cheyenne

By Matthew Brown
Billings, Montana (AP) July 2011

A proposed coal swap involving Montana’s Northern Cheyenne Reservation was approved by congressional committee Monday despite lingering questions over the value of deal.

The House Committee on Natural Resources unanimously passed the measure sponsored by Montana Republican Rep. Denny Rehberg. The bill now goes before the full House.

The swap calls for Texas-based Great Northern Properties to receive 232 million tons of government-owned coal split between two locations in Montana. The company would give up 130 million tons of coal beneath the Northern Cheyenne Reservation.

Interior Department officials have said they want an appraisal of the coal reserves to make sure the deal is fair. Rep. Edward Markey of Massachusetts, the ranking Democrat on the House committee, highlighted the administration’s stance prior to Wednesday’s action on the bill.

“We support the aim of the legislation,” he said. “We do continue to have some concern to appraise mineral rights involved in the trade to ensure all parties, including the tribe, receive fair value.”

Not all of the federal coal could be mined. The tribe also would receive 40 percent of royalties on future sales of the coal acquired by Great Northern, with the company getting the remaining 60 percent.

A similar bill is pending in the Senate.

Great Northern acquired rights to the coal beneath the reservation from Burlington Northern Railroad in 1992. Tribal leaders say those rights should have been turned over to the Northern Cheyenne in 1900, when the reservation was expanded to include the land above the underground reserves but not the coal itself.

The deal is backed by leaders of the impoverished tribe, Montana’s congressional delegation and Signal Peak Energy, a 2-year-old underground mine near Roundup owned by Ohio-based Boich Group and power company FirstEnergy Corp.

Great Northern would receive coal reserves sitting in the path of the Roundup mine and additional reserves near Ashland. 

Signal Peak wants to begin mining the Roundup reserves within the next two to three years. Separate from the Northern Cheyenne Deal, the company has been attempting to lease those reserves through the Bureau of Land Management. 

Conservation groups challenged that lease sale. But if the exchange goes through, the challenge would become meaningless.