Rosebud mine owner, union ask for veto on Colstrip fuel source bill

Westmoreland operator: ‘It means that our mine will shut down’

Colstrip power plant in Colstrip, Montana (Photo by Larry Mayer/Getty Images).

The mining company that supplies the Colstrip power plant with coal is requesting that Gov. Greg Gianforte veto legislation that would exempt the plant operator from compliance with certain state environmental regulations if it seeks to alter fuel sources used at the plant, meaning that Colstrip would circumvent environmental and economic impact reviews, among other requirements.

Westmoreland Mining Chief Operating Officer Joe Micheletti wrote Gianforte on May 7 asking him for a veto on House Bill 648, a bill initially introduced to fund energy studies that lawmakers quietly amended late in the last session to exempt large electric generation facilities from the requirement that they request an amendment to their air and environmental certificate under the Montana Major Facility Siting Act if they pursue an alternative fuel source, including coal from other sources.

In plain language, Micheletti wrote, this would essentially allow Talen Energy, the firm that operates Colstrip, to acquire coal from a source other than the Rosebud Mine — likely in Wyoming, where Colstrip owners have looked to in the past — that has supplied the plant for years “without any administrative or regulatory process examining not just the environmental impacts, but the social and economic impacts of that decision.”

The bill would “force the state to make a predetermination that no matter where the operator sources their coal, no matter the chemical composition of the replacement coal, no matter how they transport the coal, no matter how or where they site their coal pile(s), and no matter what ancillary facilities need to be constructed on or off-site, those activities will result in no ‘material increase in the environmental impact of the facility,'” Micheletti added, citing the language of the MFSA.

These changes inserted into the bill have spurred opposition from a series of factions who themselves are often at odds: Westmoreland, the labor union representing most of the Rosebud mine’s workforce and environmental groups.

VETO HB648 Gianforta 05-07-21 Signed Copy

Colstrip and the Rosebud mine have a symbiotic — and largely exclusive — relationship. The agreement reached between the Montana Department of Natural Resources and Conservation, what was then the Montana Power Company and several other regional power companies in 1976 under the MFSA stipulates that the power plant will use only coal from Rosebud.

Rosebud conveys almost all of its coal to Colstrip. If Talen were to stop buying coal from the mine, it could close entirely, a distinct possibility in the coming years even without HB648 due to Colstrip’s general volatility. With it would go jobs and $40 million in annual coal severance tax revenues, said the letter to the governor, not to mention boons to the local tax base and economy.

It means that our mine will shut down,” said Steve Gross, business manager for International Union of Operating Engineers Local 400. “Basically, we don’t have any outside coal contracts. We’ve supplied the plant for years and years. I have 250 to 275 union miners, plus the company has another 50 to 100 people that work at that mine. You’re looking at 350 people out of work.”

Emissions control systems at the plant were designed specifically for the alkalinity in the fly ash of Rosebud coal, the 1976 MFPA certificate says.

“It’s not just economic, the power plant was designed to burn Rosebud coal, which is a very specific type of coal, low in sulfur, has a certain level of salt and ash and contaminants,” said Anne Hedges, director of policy and legislative affairs for the Montana Environmental Information Center. “When you switch your coal, you may have to adjust your pollution controls.” 

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The meat of HB648, sponsored by Rep. Joshua Kassmier, R-Fort Benton, funds a series of investigations into natural resource use in Montana. One determines the location of oil and gas deposits, another seeks commercial usages for coal ash, waste produced by coal-fired power plants. The bill received minor amendments in the Senate, and returned to the House on April 27. Kassmier asked his colleagues not to support the Senate amendments, which sends the bill to a free conference committee, in which a select group of lawmakers debate amendments to a bill ostensibly to reconcile differences between the two chambers.

In theory, the scope of a free conference committee is such that only amendments that fit within the original title of the bill can be introduced. However, the committees are often the venue for last-minute changes to legislation that might radically alter its substance, and often without substantial — if any — public feedback.

The language responsible for Westmoreland’s veto request was added via a Kassmier-sponsored amendment in one such free conference meeting. The process took place in a matter of seconds, and opposing lawmakers didn’t raise concern — or didn’t realize exactly what was happening — until the amended bill again hit the floor.

Where does the public and ratepayers have the ability to participate in anything in this bill,” said Senate Minority Leader Jill Cohenour, D-East Helena, during debate on the free conference amendments. Ultimately, the Senate voted 31-19 in favor.

Rep. Geraldine Custer, R-Forsyth, a vehement defender of the mine in the Legislature, said the fast-and-furious nature of the amendment process was such that she didn’t know entirely what she was voting for until she received phone calls warning of the effects of the bill after the fact.

They did it with so many bills this time. You didn’t have very much time to look at these amendments,” she said. 

Micheletti’s letter to Gianforte described the process as “constitutionally questionable as it intentionally evaded public scrutiny.”

“It also appears to have violated the rules of the Legislature itself, in that the amendments far exceeded the original scope of the title of the bill, which was to generally revise ‘Natural Resource’ laws, and specifically addressed only portions of Title 90 of (Montana statute).” the letter reads. “The free conference committee went much further, amending environmental laws under Title 75, ‘Environmental Protection.'”

The letter threatens legal challenges to this process “barring an administrative remedy.”

Kassmier did not return a request for comment, nor did Talen Energy or their lobbyist at the Montana Capitol, Mark Taylor.

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Two years ago, in the 66th Legislative Session, the Legislature passed Senate Bill 252, which contained essentially the same language as the HB648 amendment. The bill, marketed as a way to allow Colstrip to buy coal at a lower price, was ultimately vetoed by then-Gov. Steve Bullock, a Democrat.

At the time, Westmoreland pushed back on the bill in part because it was negotiating a contract with Talen, a holdout among other owners of the plant who had already negotiated arrangements with the mining company.

It was certainly a pressure tactic in 2019,” said Darryl James, a political consultant who works for the firm. “We were within weeks of signing with all the West Coast owners and NorthWestern Energy. Talen was the single holdout. They were clearly trying to leverage that and force the price of the coal down.”

Eventually, Westmoreland and Talen reached a contract that extends out to 2025.

When the bill failed, Talen in 2019 successfully sought an amendment to its environmental paperwork authorizing “construction of a coal unloading facility to accommodate the use of coal obtained from certain mines other than the Rosebud Mine.”

Westmoreland pushed back in a proceeding before the Montana Board of Environmental Review and in a civil suit alleging that the Department of Environmental Quality violated the Montana Environmental Policy Act in approving the requested amendments. The parties settled and reached an agreement in 2020 under which Talen rescinded its amendment request and the department reverted the plant’s MFSA standing to its prior state.

Under current law, Talen would have to seek a new amendment to its MFSA certificate or permits if it wanted to pursue the same step. If HB648 becomes law, Colstrip would not have to take that step if it seeks fuel from a different source or seeks to “make modifications to be able to accept such fuel,” said a spokesman for the Department of Environmental Quality.

Lawmakers who supported the amended version of HB648 this year were clear that the bill became a vehicle to reignite this discussion.

“This is the fuel mix bill from last session,” Sen. Steve Fitzpatrick, R-Great Falls, said on the Senate floor during debate of the amended bill. “This allows plants at Colstrip to buy coal from different options, and that allows them to buy coal at cheaper costs. 

“We are passing a vetoed bill right here.”

Exactly why, however, is a question with an answer that eludes many of those opposing HB648.

What’s the play?” James said. “I don’t get it. Who’s trying to leverage what?”

One theory that James and Hedges both referenced is that another mining company with stake in Wyoming or another neighboring state with access to coal is trying to shoulder its way into the mix. Another is that the amendment language would allow the plant to make use of a profitable tax credit slated to expire this year for plants that burn refined coal — which would constitute an alternative fuel source under the bill.

James said that Westmoreland has reached out to Talen and a separate company with possible interest in supplying coal to the plant for an explanation to no avail.

In Micheletti’s letter, he writes that, while Westmoreland is not negotiating a coal purchasing agreement as was the case two years ago, the firm is still engaged in a broader conversation with the plant owners around “long-term ownership operations of the plant and transmission capacity.”

The amendments, he said, have unnecessarily “stirred the pot” among the parties.

“HB648 circumvents important environmental protections to import Wyoming coal and displace Montana mining jobs and tens of millions of dollars in severance taxes paid to the state of Montana every year,” the letter says.