One of the state’s largest environmental lobbies is questioning a series of coal studies released by the University of Montana, saying the research is too closely tied to industry and lacks independence because of it.
Over the past few months, the Bureau of Business and Economic Research at UM has released a series of studies covering everything from the rise of Montana’s craft brewing industry to the state impacts of the economic recovery.
But to the dismay of the Montana Environmental Information Center, the bureau also has released several reports highlighting the economic benefits of coal production. The studies have focused on the Otter Creek and Spring Creek mines in eastern Montana.
“These guys keep putting out fundamentally flawed ‘economic studies’ that are just PR pieces for the coal industry,” said Anne Hedges, program director for MEIC. “If they’re going to do these studies, I want to see the other side of the story, but they’re not offering it.”
In its latest study, the Bureau of Business and Economic Research, or BBER, reported that continued production of the Spring Creek mine would boost income for Montana households by more than $58 million while adding $55 million to the state’s tax base by 2018.
Even if the Spring Creek mine weren’t expanded but continued to operate as is, the study found, it would create 1,421 permanent jobs over the next five years. Those jobs would benefit a range of industries and occupations across the state.
The study did not look at the environmental or social impacts of coal production.
“The important thing about our work, I believe, is that we’re not asking what’s good or bad about coal,” said BBER research director Patrick Barkey. “We’re simply asking the ‘what if’ question. This is a view from 30,000 feet. It’s not an attempt to give the whole scorecard.”
Barkey said the Montana Contractors Association approached BBER and funded the Otter Creek coal study. The Montana Chamber of Commerce funded the Spring Creek coal study.
The cost of the studies ranged from $30,000 to $50,000 to complete, Barkey said.
“In that, there are budgets for indirect costs, charges for overhead, and the university has a rate for all that,” Barkey said. “The university’s resources were used and the university was compensated (for the study).”
MEIC disagrees with the results of the coal studies, saying BBER has “never seen a downside” to natural resource development. MEIC is writing a rebuttal of the findings and is questioning whether BBER should accept industry money to conduct industry research.
Hedges called it a potential conflict of interest, suggesting that UM has a duty to represent both sides of the issue when researching coal – exploring the environmental costs alongside the economic benefits.
Accepting money from an interested party that could benefit from the research, such as the Chamber of Commerce, Hedges added, brings into question the fairness of the findings, especially when the Chamber plans to share them with the Montana Legislature.
“The Bureau of Business and Economic Research isn’t an independent, unbiased entity doing research on behalf of the university,” said Hedges. “I want to see a balanced approach from our universities. Their (coal) reports are all pro-industry and pro-extraction.”
Montana Chamber of Commerce President Webb Brown said the organization sought out BBER for the study because it trusts the university’s work. He also believes the Montana public generally supports development of the state’s coal resources.
Brown added that BBER’s research on the Spring Creek coal mine was something the Montana Chamber of Commerce will take to the Legislature as it lobbies for future development of the state’s resources.
“Our purpose is to understand the possible effects for Montana’s economy,” said Brown. “We’ve heard figures thrown around by the companies, but we wanted hard data. There are significant impacts we could see here, and we want to take the findings to the public as a whole.”
Barkey said BBER doesn’t directly accept funding for its studies, whether they’re paid for by the Montana Chamber of Commerce or the craft brewing industry. Rather, he said, it’s the university that’s paid for the work.
He also disagreed with MEIC’s criticism that the study overlooked the social and environmental impacts of coal development. He said research on any far-reaching subject, such as coal and the economy, must first prioritize the economic issues before taking an objective view of the impacts.
“We do business research in the School of Business,” Barkey said. “Our goal is to do things as transparently as possible. But the truth is, research does cost money, and the university should be compensated for its work.”
Judy Fredenberg, director of UM’s Office of Research and Sponsored Programs, said research conducted by the university is reimbursed on a cost basis. She said the arrangement is the same at other research institutions across the country, where the university serves as the contractual entity, not the department doing the work.
“Money doesn’t go directly to BBER,” Fredenberg said. “Contracts are written to the university, which serves as the contractual entity.”
Fredenberg’s office of roughly 15 employees submits between 600 and 700 research proposals each year. In fiscal year 2012, figures show that the office handled roughly $61 million in research funding, marking a 3.6 percent decrease from FY11.
When a research agreement is reached, Fredenberg said, it arrives at her office where it’s then negotiated. She said her office serves as the middleman, protecting university researchers from accusations of impropriety.
“What we do is not unique,” she said. “It’s not like we’re making money on these activities. Almost all of it is cost-sponsored reimbursement.”
The future of coal in Montana looms large in politics and energy circles, and it has become a source of social debate. Montana has much larger coal deposits than does Wyoming, though Wyoming outpaces Montana in production.
But with Asian markets expected to consume roughly 80 quadrillion BTUs of coal by 2020, according to BBER, the potential economic boon to Montana has some pushing for expanded production. It also has environmentalists on edge.
While BBER’s studies on coal have noted the potential increase in state tax revenues with continued development and extraction, Hedges said the bureau’s research has failed to address the environmental costs surrounding extraction.
MEIC has taken particular issue with the bureau’s Otter Creek study, saying it failed to explore the impacts mining could have on neighboring agricultural activities. Hedges said the organization will soon release a rebuttal to BBER’s research.
“We know the surrounding agricultural operations will absolutely be impacted,” Hedges said. “The valley is an alluvial valley and it’s been in agricultural production for generations. But they (BBER) don’t talk about that in their research.”
Barkey said he welcomes MEIC’s scrutiny and says BBER stands by its research and its overall mission to provide economic data to sponsors who ask for it.
“What the research does, it’s a hypothetical issue of how the economy should react to a sizable investment, and the investment of a raw resource (coal) down the value chain,” he said.
“There are always additional benefits and costs that could be added to these studies. But we have to prioritize, by order of magnitude, what’s most important to the Montana economy, and I think we do a balanced job.”
Bob Seidenschwarz, an investment adviser with SG Long in Missoula and president of the Montana World Affairs Council, said both sides of the coal debate have valid arguments. He’s considered all angles for many years.
“Coal production in Montana isn’t unique to Montana,” he said. “It’s a global issue. The coal produced here, for the most part, is going to China. If you’re going to have the discussion, you need to consider who the end user is, and what their current, intermediate and long-term needs are.”
Whether Montana coal is mined and delivered or not, Seidenschwarz said, coal likely will remain a primary source of electrical generation in Asia for years to come. The environmental impacts, along with the economic necessities, must both be weighed, he said.
It’s a discussion that must take place on a global scale.
“That’s the catch-22 we face,” he said. “Before we start saying you can’t do this or you should do this, let’s talk about what this global economy faces over the next 10 to 20 years, as well as our domestic economy. It’s about a lifestyle issue as well.”
Reporter Martin Kidston can be reached at (406-523-5260, or at firstname.lastname@example.org.