Montana congressman sweetens a buyout


WASHINGTON, D.C. - Mysterious are the labyrinthine hallways of the Capitol; who knows what spirits lurk therein? Down those twisted tunnels and curved corridors are things that go bump in the night.

Some of those bumps can vibrate all the way to Montana.

One dark, murky night - indeed, it may have been Halloween night itself - something happened to an entity with the prosaic name of the Interior Appropriations Bill as it wandered from House (of Representatives) to house (Senate) to House (White) on its way to becoming the law of the land, which it now is.

Prosaic but hardly noncontroversial, the law includes $98 million for the National Endowment for the Arts, and a total of $315 million, which might be called legal bribery to pay off two companies in return for not digging a gold mine right near Yellowstone National Park and not cutting down all the redwoods near the California coast.

Even earlier in the process, the spirits of politics had infiltrated the bill. That gold mine that will not be dug, for instance, is in Montana, represented in Congress by Rick Hill, a first-term Republican whose hold on the seat is less than secure. Hill's leader, Speaker Newt Gingrich, had held up approval of the bill until it provided a sweetener, something for Hill to take home and wave around and shout, "see what I did." The sweetener was money to improve the Beartooth Highway in south-central Montana.

But that was back in mid-October. At that time, all the interested power-centers - the congressional committees, the White House, the lobbyists for both industries and environmental organizations - saw the final report on the bill by the House-Senate conference, and if they did not all approve, they all understood. Nothing remained but the actual physical process of getting the conference report back to both houses for final approval and then over to the White House.


For reasons which at first glance defy human understanding, a new provision had been inserted, by magic or by Gingrich, before the conference report reached its destinations. So murky were the conditions of its insertion that when it got to the White House, the supposedly knowledgeable officials there were dumbfounded.

(It is worth noting that while excessive attention has been paid to whether the Clinton White House may be corrupt, insufficient attention has been paid to whether it might be incompetent.)

At second glance, reasons for the last-minute amendment become clearer. Hill did it, with help from Gingrich and Montana Republican Sen. Conrad Burns, perhaps because he needed a little more political sweetening. In the interim it had been revealed that he was among the Republicans who benefited from one of those campaign-finance switches in which the Republican National Committee gave money to an "independent" organization which in turn made contributions to several candidates, Hill included.

In its final, final version, the bill gives the state of Montana its choice of (a) $10 million of federal coal in some unspecified location in the state; or (b) $4.26 billion worth of coal in the Tongue River Valley, now a relatively placid land of cattle ranches, wheat farms and small towns in eastern Montana.

Which would you choose if you were Montana?

Well, OK, the bill doesn't actually say anything about $4.26 billion. It says the state may acquire the federal coal tracts known as Otter Creek Sections one, two, and three, which contain some 533 million tons of recoverable coal. Hill's office estimates the in-the-ground value at 2.5 cents a ton, for a total of about $10 million, a reasonable compensation to Montana for losing a gold mine.

But the more common method of valuing coal is by its price at the mine mouth, now about $8 a ton. That's where the $4.26 billion comes from. However it is valued, this amendment transfers those 544 million tons from federal to state control.

So, aside from transferring some $350 million in severance tax revenue over the years from the rest of us to the lucky citizens of Montana, what's the big deal? What's the difference between mining federal coal and mining Montana coal?

Under the Surface Mining Act, whoever leases federal coal must get written permission of the folks who own the land on top in order to do surface mining. Montana had a similar law, but the Montana Supreme Court recently invalidated it. As a result, even though Montana has a hefty coal severence tax, it would be cheaper and easier to mine state coal.

Even in these highly automated, labor-unintensive times, coal mining means development. Miners and their very heavy equipment come in, as do stores and restaurants and bars to serve them. But that's not the half of it. There's no point to mining coal if you can't get it to market, and there's only one way to get coal to market - by rail.

Much of the money in coal is in the transportation of it. Just do the arithmetic: $8 at the mine mouth, $35 at the Midwestern power plant; the railroad gets the difference.

There is now no track running up and down the valley. For years, entrepreneur Mike Gustafson, who also dabbles in federal coal leases, has proposed construction of a Tongue River Railroad, perhaps anticipating exploitation of the coal.

In other words, this last-minute, dead-of-night amendment could very well end up transforming the Tongue River Valley, for good or for ill or both, from placid ranches into ... well, into something else.

Some Montanans are all for it. "We need jobs for our young people," said George Kurkowski, the mayor of Miles City, where the Tongue enters the Yellowstone River. But the mayor acknowledged that some ranchers in the valley want neither a track running along the river nor a big yellow coal-scooping machine in their pastures.

Ranchers in Montana and their allies here are hoping for a last-minute reprieve from Bill Clinton, with the help of his favorite new toy - the line item veto. At this writing, the president still has a couple of days to decide whether to use that veto to strike the coal giveaway and a few other provisions from the bill. He is expected to do so.

It might not work. Republicans on the House Resource Committee staff argue that this amendment just transfers mineral rights, and is not a tax or spending measure. That makes it not appropriate for a line item veto.

Besides, some time next year, the Supreme Court is expected to rule on the constitutionality of the line item veto. Only fools predict what the Supremes will do. Let's just say that a lot of smart lawyers expect them to invalidate it.

If so, every provision which has been lined out is automatically lined back in. The political winners from all this are likely to be Bill Clinton and Rick Hill. Clinton signs the big appropriation, gets credit for saving the mine and the redwoods, then gets more credit from environmentalists for his line-item veto. And if that doesn't stand up? Well, he tried.

As for Hill, he gets to run around Montana next year proclaiming that he is saving the taxpayers millions by arranging for all this revenue to flow into the state's coffers. Revenue without taxation is every state and local office-holder's dream. It's better schools and more roads for free.

Hill must have clout with some of those spirits lurking in the Capitol.

Jon Margolis haunts the halls of Washington, D.C., for High Country News.

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