Proposed Montana coal mine facing delays

BILLINGS, Mont. (AP) – A major new coal mine proposed for southeastern Montana has fallen more than two years behind its original permitting schedule.

State Department of Environmental Quality officials say they need more information from St. Louis-based Arch Coal Inc. to complete their environmental study of the proposed Otter Creek coal mine.

The study must be finished before Arch can get a permit to mine an estimated 1.4 billion tons of coal it has leased southeast of Ashland near the Northern Cheyenne Indian Reservation.

Company executives had once predicted the mine could open next year. But the permit decision date was recently bumped back from last August to late 2015. It could take years more to develop the mine and an associated rail line needed to ship the fuel out of Montana.

The company continues to work with state officials and plans to submit a revised permit application later this year, Arch spokeswoman Kim Link said. A draft environmental study is scheduled to be completed by November.

Timeline changes are not unusual for such a large project, state officials said.

Arch already has overcome initial court challenges from environmental groups who warned that burning so much coal would make climate change worse.

Yet, the delay underscores the continuing challenges faced by the coal industry as it struggles to increase export volumes in hopes of offsetting a steep decline in domestic demand for the fuel over the past several years.

While U.S. coal exports surged to record levels in the past few years, much of that growth was driven by coal shipped out of the East and Gulf coasts. For now, tight port capacity is limiting further exports from the Powder River Basin, a region straddling the Wyoming-Montana border that produces the bulk of the nation’s coal.

As a result, success for Otter Creek and another large mine proposed on the nearby Crow Indian Reservation is dependent not just on what happens in Montana, but on the fate of proposed coal export terminals on the West Coast. Among those projects is an export terminal in Longview, Wash., that includes Arch as a partner.

Some state officials in Washington and Oregon have joined environmentalists in opposition to the ports. The terminals have strong backing from many elected officials in Montana and Wyoming.

Arch is also a partner in the proposed Tongue River Railroad that would link the mine at Otter Creek with outside customers.

Approval for the railroad is pending before the U.S. Surface Transportation Board.

After members of the Northern Cheyenne Tribe raised concerns about the railroad’s potential impact on American Indian cultural sites, federal officials said recently that they would conduct additional cultural resource surveys along the route beginning next month.

A draft environmental study of the railroad is due in late summer.