Could Coal Development Ease Property Tax Burden While Funding Montana Schools?

HELENA — Governor Greg Gianforte and state agencies are invoking Montana’s Constitution to argue for expanded federal coal leasing, claiming restrictions have cost schools billions in funding. The lost revenue has implications for property taxpayers who have faced repeated mill levy increases to fund school operations. Voters have been rejecting many of these new levies in recent years.

In letters to the Bureau of Land Management, Gianforte and two state departments argued that federal coal restrictions violate Montana’s constitutional mandate to maximize revenue from state trust lands for public education.

“The State of Montana has a constitutional mandate to maximize the value from State trust lands for the benefit of Montana schools and other public institutions,” wrote Erin Weisgerber, deputy director of the Department of Natural Resources and Conservation.

Article X of Montana’s Constitution establishes that state lands “shall be held in trust for the people” for educational purposes and requires the state to obtain “full market value” from any land transactions. The Board of Land Commissioners has authority to “direct, control, lease, exchange, and sell school lands” for the benefit of educational institutions.

State officials argue that federal coal restrictions prevent Montana from fulfilling this constitutional duty by making state coal deposits economically inaccessible, even though the lands must generate maximum revenue for schools.

The constitutional argument represents a counter-narrative to environmental groups’ frequent use of Montana’s constitutional right to a “clean and healthful environment” to oppose coal development.

The financial stakes are substantial. DNRC estimates that Biden administration restrictions removed more than 338 million tons of federal coal from consideration, resulting in a $4.32 billion loss to state trust lands that fund K-12 education.

The Biden administration’s Miles City Field Office Resource Management Plan Amendment severely restricted coal development across 11.9 million acres of federal mineral estate. Under the most restrictive alternative, zero acres would be available for coal leasing.

Even the least restrictive Biden-era alternative would have allowed coal development on only 1.21 million acres—just 10.2% of the total available coal estate.

“Any limitation to coal leasing in the MCFO will have a direct impact to the funding of public education and other public institutions in Montana, that will be felt by students, parents, and teachers,” Weisgerber wrote.

That funding shortfall has translated into increased reliance on local property taxes as school districts across Montana have sought voter approval for mill levy increases to maintain operations.

State coal tracts in eastern Montana’s Miles City Field Office region account for an estimated 95% of Montana’s mineable coal reserves, according to DNRC. However, federal and state coal deposits are often located adjacent to each other and cannot be developed unless both parcels are accessible.

“When federal coal is taken off the table, nearby state coal resources are left stranded and inaccessible for development,” Gianforte wrote to BLM State Director Sonya Germann.

The governor emphasized coal’s role in powering emerging technologies, particularly artificial intelligence.

“If the United States is going to win the global race for AI dominance, we will need the reliable, baseload energy provided by Montana coal,” Gianforte wrote.

Sonja Nowakowski, director of the Department of Environmental Quality, warned that restricting coal leases would impact Montana’s electricity supply.

“If new federal coal leases are precluded, there are significant, potential impacts on the future operation of coal mines that supply Montana-based generating resources,” Nowakowski wrote. “Coal-fired generation remains a significant component of Montana’s electricity supply mix.”

The Trump administration is now revising the Biden plan following executive orders aimed at “unleashing American energy production.” In April, Gianforte joined President Trump at the White House for the signing of an executive order directing federal agencies to remove barriers to coal development.

Congressional Republicans have introduced resolutions to overturn the Biden restrictions. Senator Steve Daines introduced Senate Joint Resolution 61 and Congressman Troy Downing introduced House Joint Resolution 104 in July.

As Western Montana News previously reported, Montana’s entire congressional delegation joined to support the Congressional Review Act resolution, which would nullify the BLM plan that prohibits new federal coal leasing on 1.7 million acres in eastern Montana. The plan threatens to force Spring Creek Mine to close in 2035 rather than continuing operations through 2062 as projected with additional federal leases.

DNRC has called for eliminating multiple “coal screens” that remove millions of acres from leasing consideration. The screens address various environmental concerns, from critical habitat to air quality, but state officials argue they prevent coal companies from using their expertise to determine which areas are economically viable for development.

“The removal of these screens would allow coal companies with the knowledge and expertise to evaluate and explore all of the mineable coal reserves throughout the MCFO to decide for themselves which coal is economically viable to mine, while mitigating potentially impacted resources,” DNRC stated.

The state argues that proper environmental oversight can occur during the permitting process without blanket restrictions on leasing.

“DEQ is well positioned to implement an option that allows for the development of mineable coal reserves in Montana, while providing environmental oversight and protection,” Nowakowski wrote.

The constitutional debate reflects broader tensions over Montana’s economic future as the state balances energy development with environmental protection. While environmental groups invoke Article IX’s environmental protections, state officials counter with Article X’s education funding mandates.

“Impacts to State trust lands must be taken into account as BLM considers amendments to the RMP out of respect to our state constitution,” Weisgerber concluded.