Arch Coal is bankrupt, what does it mean for the Otter Creek Valley?

Arch Coal LogoBy now you know that Arch Coal declared bankruptcy. We all knew it was coming. At first I didn't think there was much to say about it beyond what the news articles were reporting but then I read Tom Lutey's recent story in the Gazette and I think it is worth addressing the comments by John Tubbs, the director of Montana's Department of Natural Resources (DNRC). Tubbs told Lutey that it was unlikely that Arch Coal would let Otter Creek collapse given the amount of money they had invested so far.

“If I were the court, I probably wouldn’t let them abandon it,” Tubbs said. "There’s value to the Otter Creek development that for the sake of its shareholders and creditors Arch Coal shouldn't walk away from," he said.

Tubbs isn't a bankruptcy court - which I think we can all be grateful for - and unless it is a personal hobby of his study the bankruptcy proceedings of coal companies, he has no idea what is in the best interest of Arch Coal's shareholders and creditors. Furthermore, Tubbs works for the public. He should be commenting on what is in the best interest of the people in the state of Montana, not Arch Coal. Tubbs could have commented on some facts about Arch Coal and their bankruptcy. Here are some:
  1. Arch Coal owes the state of Montana $67,000 for work completed on the draft environmental impact statement.
  2. Arch Coal has $450 million dollars in reclamation liabilities across the country. This is a conservative estimate.
  3. According to University of Montana's Bureau of Business and Economic Research, Arch Coal would need almost $1 billion dollars to construct a greenfield mine in the Otter Creek Valley, not to mention their share of the $400 million dollar cost to build the Tongue River Railroad.
  4. The Tongue River Railroad Company has asked the Surface Transportation Board to stop all work on the permitting and environmental impact statement process.
  5. Arch Coal is already trying to reduce their reclamation liability under the bankruptcy proceeding. Arch asked a bankruptcy judge on Monday to put aside $75 million for future clean-up costs far less than the $450 million that regulators foresee needing.
  6. As Arch Coal was hemorrhaging money, their CEO's compensation package almost doubled. He made $7.3 million in 2014, double what he made in 2013.
Tubbs seems to be saying that an enormously expensive potential coal mine with a bankrupt owner, no market, no permit and massive local opposition, that is tied to a railroad company who has voluntarily ceased all work on the project, is worth something to someone. No reasonable person would come to the conclusion that the Otter Creek mine is a sound investment based on, what I like to call, facts. If Director Tubbs really believes that the Otter Creek coal mine and Tongue River Railroad is a bright spot for Arch Coal's investors then they are in bigger trouble than anyone thought. BONOGOFSKY-5523-150608          

4 Comments on “Arch Coal is bankrupt, what does it mean for the Otter Creek Valley?

  1. not to mention these co. bankrupts usually abandon pensions and health care of workers

  2. Maybe State Senate Majority leader Jeff Yesman R can tell us where the $1 million taxpayer dollars his bill appropriated for the private entities involved in the Otter Creek debacle went?

  3. Well, as usual you just nailed it. You and your ‘facts’! I always enjoy your posts and this one made me laugh out loud a couple of times. We’ve gotten some good news lately about increased scrutiny of coal mining on federal lands [with pathetic royalties charged]. It’s also a potential win that Arch and BNSF pulled their permit application for the Tongue River RR and that Arch has declared bankruptcy. There are alert citizens who have fought these harebrained schemes for decades and will continue to do so. As Brock Evans put it: “Endless pressure, endlessly applied.”

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