Cloud Peak seeks 198M ton coal lease in Montana

Cloud Peak seeks 198 million ton coal lease in Montana amid debate over government program

Associated Press

BILLINGS, Mont. (AP) -- Federal and state officials will weigh in this week on a Cloud Peak Energy Inc.'s application to lease 198 million tons of coal adjacent to a southeastern Montana mine, amid an emerging debate over whether the industry is paying its fair share on such projects.

Gillette, Wyo.-based Cloud Peak is seeking to expand its lease at the Spring Creek Mine near Decker by more than 1,600 acres.

Wednesday's initial decision on the application comes on the heels of a U.S. Department of Interior Inspector General's report that said the agency may be losing tens of millions of dollars by undervaluing coal from public lands.

As a result, the Bureau of Land Management agreed to make significant changes to its leasing program, although agency officials disputed the scale of the losses claimed by inspector general investigators.

Environmentalists who want a moratorium on new leases called for Wednesday's decision to be postponed until outstanding questions about the program are addressed. They highlighted the millions of tons of coal annually that Cloud Peak ships overseas, where it is sold at higher prices than on the domestic market.

The push to derail the lease is part of a concerted effort by coal's detractors to put the brakes on an industry considered one of the primary contributors to global warming due to greenhouse gas emissions from coal-burning power plants.

But the mining industry argues such critics ignore billions of dollars in government revenues and thousands of jobs in Montana and Wyoming from coal mining.

The Bureau of Land Management said Monday that it would be several years before a value was placed on the lease sought by Cloud Peak. But BLM regional coal coordinator Greg Fesko acknowledged the leasing program is under added scrutiny in the wake of the report.

Another report on the federal coal leasing program is pending from the Government Accountability Office.

"We're right in the bull's-eye now," he said. Fesko said it wouldn't be appropriate to discuss the value of the coal lease sought by Cloud Peak because Wednesday's vote is just the first step in a process that would include environmental and economic studies.

Representatives of Cloud Peak declined immediate comment.

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