Coal-export plans turn into a running battle
by Floyd McKay
Shipping coal to Asia has become a major business in Canada. Credit: Port Metro Vancouver
The nation’s largest coal mining companies had hoped for quick approval of plans to export Powder River Basin coal from Wyoming and Montana to the endless power plants and factories of China. But summer settles into fall with permit applications in abeyance and growing resistance in Pacific Northwest communities, not only ones adjacent to but also some far from the ports that hope to ship the coal.
Two export terminals filed permit applications earlier this year, only to be sent back to the drawing board by regulatory agencies. The proposed Gateway Pacific Terminal at Cherry Point, north of Bellingham, would export some 48 million tons of coal a year and the Millennium Bulk Terminal at Longview applied for 5.7 million tons but later admitted to plans for seeking 60 million tons once a permit was granted. Neither has given a timeline for a new application. The ports, if allowed, would be the only coal export facilities on the U.S. Pacific Coast, and larger than any Canadian port.
This week a growing coalition is regrouping to widen the scope of opposition in communities all along the roughly 1,100-mile line from the coal fields to the Northwest Washington. The Power Past Coal coalition will directly connect with Pacific Northwest communities that have been targeted by the coal industry as export sites or fear the health and economic impact of new railroad traffic.
The coalition will be able to combine small local groups that can provide volunteers with the substantial finances and lawyering expertise of national environmental organizations. Earlier this year the Sierra Club’s Beyond Coal Campaign received a four-year $50 million grant from New York Mayor Michael Bloomberg’s charitable foundation; none of the grant will go directly to Power Past Coal, leaders say, but efforts are certain to overlap. Some of the new group are also involved in the NW Energy Coalition, formed in the 1980s.
Ross Macfarlane of Climate Solutions said the non-profit organization, based in Seattle but with offices around the Northwest, would handle much of the organizational work but rely on local partners in their communities; the coalition, he noted, would avoid duplication and provide unity in fundraising. “We have groups that are concerned about health and environmental issues, and also about transportation and the impacts on the ultimate consumers.” Partners will be listed on a remodeled Web site for Power Past Coal, which is expected to be open Thursday.
“Coal companies stand to make huge profits,” the coalition said in announcing its partners. “China would get the energy. The Northwest would pay the price. We can do better than coal export to build our states’ economies. Washington and Oregon have long and proud histories of economic innovation, and already support thousands of high-tech and clean energy jobs. We should focus on building those industries — not supporting old industries like dirty coal.”
As of Tuesday (Sept. 20), Power Past Coal boasted some 50 organizations, ranging from small community activist groups, such as Safeguard the South Fork in eastern Whatcom County, to larger groups, such as the Washington Environmental Council and the Sierra Club. Much of the campaign leadership is from Climate Solutions’ headquarters.
Power Past Coal brings together anti-coal forces with community groups primarily concerned about rail traffic. BNSF trains run through most of Western Washington’s major cities, and from Spokane and Tri-Cities along the scenic Columbia River Gorge. In Spokane, a major rail hub, Mayor Mary Verner has joined several Western Washington mayors in expressing concern. A 2010 study of the large Spokane railyard pointed to a higher cancer risk for residents living near the rail switching facility; the risk is primarily linked to diesel fumes. In Bellingham, a coalition of some 160 physicians has cited that risk in a statement opposing the Cherry Point facility.
In addition to objections to diesel fumes and coal dust from open-hopper coal cars, opponents cite the disturbance of train horns, particular during nighttime hours, as the mile-and-a-half unit trains pass through residential corridors. Currently, BNSF is running six daily coal unit trains through Western Washington, to and from Westshore Terminal south of Vancouver, B.C. The Cherry Point terminal would add 18 more trains, bringing the coal train count to 24 daily, in addition to about 10 Amtrak and regular freight trains, some of which are as lengthy as the coal trains. In the busiest corridors in the Seattle-Everett-Tacoma area, the rail traffic is even higher due to Sound Transit and additional freight and Amtrak trains.
The concern over added train traffic brought the Port of Skagit to call on Gateway Pacific Terminal to include in its cost of doing business the impact of trains on local communities. The Port noted that many additional rail overpasses and signalized crossings will be needed because of the added train traffic, and said the export terminal should pay those costs. “The notion of he who benefits pays is considered fundamentally fair in America,” the Port stated, “and we believe it is fully applicable to the Gateway project’s effect on our community.” Gateway Pacific has in the past rejected the idea of helping pay for off-site mitigation, and did not elect to respond to the Skagit statement.
SSA Marine is hoping to combat local concerns about coal trains with a series of four public presentations sponsored by the Bellingham-Whatcom Chamber of Commerce and Industry, which has endorsed the Gateway Pacific Terminal; two of the four sessions directly concern railroad issues. The first session was Sept. 20.
Power Past Coal begins its community organizing at a time when the leading contenders for export terminals are recovering from procedural setbacks that have forced them to return to the drawing board to create new permit applications.
Ambre Energy, an Australia-based coal giant, hoped for quick action at Longview and gained early approval in November of a shoreline permit from Cowlitz County. But opponents hastily organized and forced a review of the permit by the State Shoreline Management Board and in the process turned up a series of emails in which the company stated plans to quietly enlarge its original exports from 5.7 million tons a year up to as much as 60 million tons, after a permit was granted. A red-faced company was forced to withdraw its application in March, but it has promised a new filing. Joe Cannon, CEO of Millennium at the time of the filings, resigned in August after only 10 months on the job and was replaced by an executive of Arch Coal, which has a minority interest in Millennium.
At Cherry Point north of Bellingham, SSA Marine and its subsidiary, Pacific International Terminals, began community organizing last year, lining up political support before the plans had been widely aired in Whatcom County. But by the time an actual permit application was filed in May, activists were pushing back and county planners rejected the first set of plans for Gateway Pacific Terminal. SSA Marine had tried to file its application as only an extension of an approved 1997 shoreline permit; but the county noted that the earlier permit was much smaller and did not mention coal as a commodity. SSA Marine is also planning a new application.
As the process was proceeding, the Washington Supreme Court in August affirmed that the state has the final word on shoreline permits, a key element in any export terminal application. Also, over the summer, the Department of Ecology accepted a co-lead role in reviewing environmental statements at Cherry Point, sharing the responsibility with Whatcom County planners. Terminal opponents had urged the state to expand its role because of the complexity and size of the project.
SSA Marine has not announced a target date to file a new application, but it is not expected to be prior to the November local elections, in which key county positions are on the ballot. Millenniam Bulk Terminal in Longview has not indicated a timeline for a new application.
Despite the setbacks, the combined power of the companies at play is massive, and they have obtained support from a variety of politicians, including U.S. Rep Rick Larsen, a Democrat representing the Cherry Point area, and several legislators and local officials, along with major labor unions (SSA Marine is a union employer). Peabody Energy, the nation’s largest coal company, Ambre Energy, and Arch Coal bring deep pocket to the table; SSA Marine is part of a holding company, Carrix Inc., that is 49 percent owned by Goldman Sachs. The Burlington Northern Santa Fe Railroad (BNSF) was acquired last year by Warren Buffett’s Berkshire Hathaway.
At both sites, proponents’ talking point is simple: jobs for a depressed economy. Gateway Pacific Terminal lists up to 430 full-time jobs for terminal operations and in shipping and railroad when the project reaches capacity. SSA Marine estimates an additional 2,200 jobs would be provided during the two-year construction phase, and indirect jobs would be provided by project and employee spending in the area. Only the direct jobs figure is firm, however; indirect jobs are necessarily estimates.
In Seattle last week, BNSF CEO Matt Rose said his company plans to hire new railroad workers — almost all union — because of growth in exports, and he endorsed the terminal at Cherry Point. Rose cited Canadian rail improvements as posing competition for American carriers. Earlier this year, Microsoft founder Bill Gates became the largest shareholder in Canadian National Railway, with 10 per cent of the railway’s shares. CN coal trains can be seen on BNSF tracks in Western Washington, carrying coal to Canadian ports.
Their confidence is certainly shared by Peabody Energy, the nation’s largest coal miner. In a major speech last October, Chairman and CEO Gregory H. Boyce termed the market for coal exports growing and inevitable. “A major global build out of coal generation is under way. Generation will nearly double by 2035. China, India, and the rest of Asia make up more than 85 percent of this increase. Globally, 88 gigawatts are expected to come on line this year, and we see nothing unique about 2010. If coal were to continue to grow at its current pace, we can expect more than 1 billion tons of new demand every three years,” Boyce predicted. “What is powering the world’s factories, farms and homes? It is clear what is not: renewables. Renewable sources are growing rapidly; yet they’re expanding from a small base. Peabody alone has seven coal mines that each power more electricity than the entire U.S. solar and wind industries combined.”
The Millennium Terminal planned by Ambre Energy at Longview stated 70 jobs in its initial application to export of 5.7 million tons, but the figure appears moot due to withdrawal of the application this spring after secret documents showed plans to build a much larger terminal. The company plans to file another application, perhaps later this year, but its size is uncertain. An additional factor emerged when two community groups announced intent to file a lawsuit charging Ambre has failed to clean up its site; the groups have until Oct. 12 to file or drop the lawsuit.
Despite their setbacks, the Cherry Point and Longview proposals are the only firm players in the field. But the market for coal exports has attracted a number of other would-be players, with varied prospects. Only Cherry Point could accommodate the massive “capesize” ships that are preferred for bulk cargo to Asia. The Gateway Pacific site has an 80-foot draft without dredging; other ports in consideration go only as deep as the 43-foot channel on the Columbia, and some small ports do not go that deep.
Even considering the availability of a huge export market, coal and energy experts have warned that a West Coast project should be carefully thought out. Previous West Coast ports have foundered on a volatile commodities market.
“Is the Asian economic engine moving so fast we had better hurry up and jump into the Pacific Rim with new supplies of coal, no matter what kind of coal we have to sell?” asked industry consultant David Gambrel in Coal Age last November. “Should we hurry up and build the first new coal terminal on the West Coast since 2006, when a U.S./Japanese consortium finally closed their nearly new $150 million terminal (LAXT) in the Port of Los Angeles? If that super terminal failed so quickly, what should we do to make sure our new terminal will not fail? Do we have any idea how Australia and Indonesia are gearing up to meet new demand? We have lots of work to do before we book our first flight to the West Coast.”
Environmentalists, trying to blunt the industry’s selling point of new jobs, cite the failure of the Los Angeles terminal, and one in Portland in 1983 after investment of some $60 million. Others speculate an actual loss of jobs because of impacts of rail traffic on existing or proposed businesses; as in the case of indirect jobs fueled by export terminals, much of the data is speculative, however.
As now, smaller ports were trying to get into the coal-export game in the 1980s, including at the time Astoria, Kalama, and Vancouver on the Columbia River and Coos Bay in Southwest Oregon. None of their plans proceeded to development, but the idea of big money from Big Coal has not banked in the region, and several small ports still have a gleam in their eyes, if not a contract in their pocket.
The most unusual is the Port of Morrow, in wheat country upriver of the John Day Dam on the Columbia. The Port signed an agreement earlier this year with an Ambre subsidiary, to accept coal trains and offload the cargo for trans-shipping on barges, through locks at the the John Day, Dalles, and Bonneville dams, to Longview or another river port, where the coal would be loaded onto ships for the Asian market. Ambre has announced no specific intent, but observers believe the plan is a backup in case the railroad lacks capacity to ship coal to both Longview and Cherry Point. The BNSF line on the Washington shore is tightly pinched between the river and Highway 14, and most of the line is single track with sidings.
Another destination could be the Port of St. Helens, midway between Portland and Astoria. Coal companies have contacted the Port and it has a large industrial area that could handle storage. Earlier this year a project to dredge the Columbia to 43 feet, from its previous 40, was completed, making the river acceptable for Panamax ships (a size of ship smaller than capesize and able to fit into the Panama Canal). St. Helens is also served by a short-line railroad, The Portland & Western Railroad, which runs from Portland down the south side of the Columbia. The line carries only one train a day at present, according to the Oregon Department of Transportation, and would likely need upgrading to handle a large volume of coal.
Short-line railroads, a much smaller relative of the big national lines, come into play in two other export prospects, at Grays Harbor on the Washington coast and Coos Bay on the Southwest Oregon coast.
The Port of Grays Harbor appears to be the more likely prospect, but it would not be as large a facility as either Longview or Cherry Point. RailAmerica, the parent company of the Puget Sound and Pacific Railroad, the short-line company proposing the terminal, said it would plan for about 5 million tons a year, or about one coal unit train per day. The PSPR line originates in Centralia and runs a small freight Monday through Friday to the coast. The targeted terminal, at Hoquiam, has a large storage area but can’t load capesize vessels. The Port has expanded its operations in the last few years, imports automobiles, and is the site of new industrial operations, making the coal concept less attractive than it was when Port activity was stagnant. Nevertheless, coal remains viable, if at a low volume.
Coal exports have been considered at Coos Bay for many years, but the present prospect appears to be a long shot, depending upon major upgrading of a short-line track that was closed from 2007 to 2009, running from Eugene to Coquille on the Oregon Coast. The Port of Coos Bay is investing $24 million from state and federal grants to bring it to standard for heavy trains. Coal unit trains would need to run through major cities in the Willamette Valley, including Eugene with its large environmental presence. The Port is also working on a major dredging project to deepen its channel to handle larger ships, and has a partner to develop a LNG (liquefied natural gas) import terminal.
Other Washington and Oregon ports once thought to be prospects for coal exports have opted out of the game for a variety of reasons. Kalama and Vancouver are both big-scale grain shippers, and Vancouver earlier this year decided it would contract for potash shipments rather than pursue coal. Astoria has radically transformed its waterfront into a tourist destination, including a cruise terminal, which creates an unlikely partner for a coal yard. Portland, heavily influenced by environmentalists, has not actively considered coal since its terminal failed a quarter-century ago. Seattle and Tacoma have rejected entreaties from coal exporters.
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