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CROW TRIBE WANTS TO EXPLOIT RESERVATION'S LIMITED COAL RESERVES

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By Matthew Brown
Associated Press

CROW AGENCY, Mont. --- They tried casinos on the Crow Indian reservation.
The one designed to bring in the biggest crowds --- Res-a-Vegas --- went bust within a year and is now a fireworks stand in the summer.

But now the Crow are convinced a really big jackpot lies below their lands: coal.

With energy prices soaring, the poverty-stricken Crow want to tap the vast deposits underneath their 2 million acres of land. The tribe estimates the ground contains 9 billion tons of extractable coal, or enough to meet the nation's needs for almost a decade.

"We're not just trying to help ourselves today," said Joanie Rowland, who directs the 12,000-member tribe's nascent energy program. "We want to set up the reservation so that it will prosper and help the future generations."

But no one know what the tribe will do after the coal runs out in ten or 20 years.

Federal red tape, turbulent tribal politics that can scare off big business, and environmental worries have prevented some of the West's impoverished tribes from fully exploiting their oil, gas and coal deposits.

But now, rising demand for energy --- along with new federal laws giving Indians more say over their mineral resources --- could help the Crow and other tribes get their way.

"There's a misconception about Indian tribes that they all have big gaming revenues. We don't have that," said tribal Chairman Carl Venne. "But we do have vast resources." He added: "The window of opportunity is open."

The Crow reservation lies about 60 miles from the nearest city of any consequence, Billings. It is on the remote northern edge of the Powder River Basin, which produces nearly half the nation's coal and hundreds of billions of cubic feet of natural gas annually.

Life on the reservation, however, is defined by a different set of numbers: 47 percent unemployment; a per capita income of just $7,400 (one-third the national average); and federal health care subsidies that run dry six months into the year.

Much of the land on the reservation is used to grow wheat and sugar beets and raise cattle.

The tribe is looking to extract the coal and build a multibillion-dollar, coal-to-liquids plant that would process the rock into diesel and other fuels. Tribal leaders say if they could tap their underground riches, they could expand their clinic and upgrade the reservation's aging roads and water system.

Not all the tribe's coal remains buried. An outside company has been extracting coal since 1974 from a mine just off the reservation. Since the tribe owns the mineral rights, it has been receiving royalties --- about $10 million last year alone.

But tribal leaders say that is not enough to relieve the reservation's poverty. And rather than just leasing land and collecting royalties, they want to become an actual partner in such projects.

The reservation also has natural gas and oil deposits, and the tribe is working to exploit those, too, but the coal is believed to hold a much bigger potential.

Around the country, at least a dozen Indian tribes are pushing for agreements with the government that would help them exploit their oil, gas and coal, said Robert Middleton, director of the Interior Department's Office of Indian Energy and Economic Development.

Nationwide, energy royalties paid to tribes have doubled over the past five years, to $475 million in 2007, according to the government's Minerals Management Service. The increase was driven primarily by rising oil and gas prices, not by new projects. Actual production remained flat.

Two million acres of tribal land have so far been developed for oil, gas and coal, according to the government. Estimates show an additional 15 million acres have the same potential.

The Crow and other tribes received a big boost when laws governing energy development were rewritten in 2005 to give them more autonomy. The changes were meant to streamline federal approval of projects, though some tribes say they still face a two- to three-year wait for permits.

The Crow, for example, waited two years for a batch of mineral leases to win Interior Department approval. The payoff is now in sight: Nine of 10 exploratory wells drilled on the reservation this year hit natural gas.

Sen. Byron Dorgan, D-N.D., has accused the federal Bureau of Indian Affairs, which must review permit applications, of "demonstrated incompetence."

"These areas are in such desperate need of economic development," said Dorgan, chairman of the Senate Indian Affairs Committee. "And instead of being helpful, the federal agencies are going into their typical shell game of interminable delays."

The BIA referred questions to the Interior Department's Middleton, who defended the government, saying, "We think we're making significant headway now."

In addition to navigating the bureaucracy, tribes must reassure private companies that deals will not be sidetracked by internal politics. In the past, the Crow needed the consent of the tribe as a whole before pursuing major projects. Often, projects were approved, only to be shelved months later when public sentiment shifted.

The Crow have since amended their constitution to allow the tribe's leadership to broker deals independently.

"A lot of outsiders are worried about going on a reservation," said Jason Frankenberg, vice president of Ursa Major, an Oklahoma company now drilling for natural gas on the Crow reservation. But the Crow "separated politics from business development, and that created stability for development."

Still, it is almost certain the tribe will meet further opposition: Coal plants are a key source of greenhouse gas emissions, and the Sierra Club has challenged many coal projects around the country.

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