A dim future for coal export from the Powder River Basin?

It’s been a rocky ride for coal export proposals out of the Pacific Northwest. Back in 2012, there were six coal export projects in Oregon and Washington state. This month, for the first time in six years, there are zero active proposals to export Powder River Basin coal. Here’s a look at what happened.

Coal Export Terminals Proposed, Withdrawn

Three of the six projects folded under the weight of plummeting international coal prices during 2012 and 2013. All six projects had been proposed near the top of the coal price bubble in 2011.

The three remaining projects were Gateway Pacific near Bellingham, Wash.; Millennium Bulk near Longview, Wash.; and Coyote Island at the Port of Morrow, near Boardman, Ore,

The Gateway Pacific Terminal was rejected by the U.S. Army Corps of Engineers last May. The Corps responded to an assertion of treaty rights by the Lummi Nation. The Corps found the project incompatible with the Lummi Nation’s treaty rights to their long-standing coastal fishing areas. Recently, the company behind the Gateway Terminal project withdrew its application for a necessary county-level permit. Although the company continues to push a pier at the same site, the Washington Dept. of Natural Resources has expanded an aquatic reserve there.

The Millennium Bulk Terminal project suffered a major blow when the outgoing Commissioner of the Washington State Department of Natural Resources denied a crucial approval for the project. That approval would have allowed the sites lessee to sub-lease the site to the company behind the coal export terminal. The Commissioner’s determination is available here. His letter shows that the terminal company’s shaky finances played a big role in the decision to deny the sub-lease. Millennium lost the backing of Arch Coal, Inc. as a partner in the company during Arch’s bankruptcy. Lighthouse Resources, Inc., owned by Cayman Islands-registered private equity firm Resource Capital Funds, is the remaining partner.

The Port of Morrow coal terminal was denied a state-level permit in 2014. Since then, the company has been appealing that decision. Ahead of a day in court last November, the company agreed to drop the appeal. In exchange, the Oregon Department of Lands agreed to withdraw the permit denial. This would allow for a new permit application in the future.

Major Health and Economic Impacts of Coal Export

These projects would have affected the lives of everyday people. Communities all along the rail lines from the Powder River Basin would have seen dozens of additional trains each day.

Many rail towns in Wyoming, Montana, Idaho, and Washington have “at-grade” crossings for automobile traffic. Trains prevent crossings, which backs up traffic for residents. Most trains are more than one mile long, and can take nearly ten minutes to pass. For first responders en route to an emergency, being stopped by a train can be the difference for a patient’s life or death.

Cities and towns are free to build overpasses and underpasses, of course, but would bear nearly all the costs. A price tag of tens or hundreds of millions of dollars is far out of reach for most municipalities.

In addition, massively increased rail traffic would deliver a big hit to property values. The impacts of increased train traffic on buildings include noise, vibration, pollution, safety concerns, and stigma. These factors could drop property values by 5-20% for residential properties within 600 feet of the rail lines.

Then there’s the respiratory health impacts of diesel pollution and billowing coal dust. Very fine particles from diesel exhaust and the continuous disintegration of transported coal is a major health hazard. They can be breathed deep into the lungs, where they reduce the ability to breathe and cause cardiovascular disease. This is especially dangerous for children and the elderly.

Grassroots Opposition Wins the Day

Thousands of people along the rail lines turned out to demand that these serious consequences were studied before project approval. People talked to their neighbors, submitted testimony at public hearings, joined rallies, and more. The victory here belongs to the communities from the mines to the rail routes to the export terminal sites who asked to slow down the process so their voice could be heard.

WORC weighed into the discussion with a series of reports. Heavy Traffic Ahead and its sequel, Heavy Traffic Still Ahead, were drafted by rail traffic analysts. These reports quantified the number of new coal trains induced by the proposed coal terminals. A third report, The True Cost of Coal Exports, summarizes the impacts of massive increases in coal train traffic.

Ultimately, economics have undercut coal exports from the Pacific Northwest. The international price of coal is simply too low for Powder River Basin coal exports to pencil out. Grassroots pressure slowed the review process for a more thorough vetting, and the economics eventually caught up with the projects.

This does not mean that coal exports have concluded, however. Powder River Basin coal exports will continue through Westshore Terminals in British Columbia, as prices allow. Cloud Peak Energy recently reported contracts for 1.9 million tons of export coal from their Spring Creek mine in southeastern Montana.

Several projects in Washington remain mired in legal appeals. Millennium Bulk Terminals has commenced a lawsuit against the State of Washington, seeking to invalidate the disapproval of their sub-lease. SSA Marine, which advanced the Gateway Pacific project, continues to pursue a new pier at the site selected for Gateway. SSA could convert a new pier to handle coal fairly easily once built.

WORC and its member groups will continue to remain vigilant for new, or renewed, coal export projects.

Photo by Paul Anderson

To learn more about coal exports, you can reach Dan Cohn, WORC Regional Organizer, at dcohn [at] worc [dot] org, or by phone at 406-252-9672.