Land Board leases 12M tons of coal to Roundup mine

BILLINGS — The Montana Land Board leased 12 million tons of state-owned coal to a mine near Roundup on Monday, despite concerns about its worker safety record and potential environmental impacts.

The five-member land board voted unanimously to accept a $3.6 million upfront bid for the coal from Signal Peak Energy. The owner of the Bull Mountain Mine offered the sole bid on the 640-acre tract.

State officials estimated the 10-year lease will bring Montana more than $15 million in royalties and other revenues.

Union representatives unsuccessfully sought provisions in the lease to protect worker safety, pointing to hundreds of safety citations and violations issued to the mine by federal inspectors over the past several years.

Signal Peak President John DeMichiei acknowledged past safety problems, due in part to worker inexperience, but said that conditions have improved and the rate of violations has fallen.

"There's no mine, surface mine as well as underground, that has a zero violation history," DeMichiei said.

Land Board member and state Securities and Insurance Commissioner Monica Lindeen said she was "very disturbed" by the mine's safety record. But she voted in favor of the lease sale after DeMichiei offered reassurances that the mine has been increasing training.

Conservation groups said Signal Peak's bid was too low and that burning the coal would contribute to climate change. The state did not appraise the coal before deciding if Signal Peak's bid met the legal requirement of fair market value.

Instead, the Department of Natural Resources and Conservation relied on a comparison with another lease sale to Signal Peak by the federal Bureau of Land Management.

The board is chaired by Gov. Brian Schweitzer and includes Attorney General Steve Bullock and other statewide elected officials.