The Gristle

Of chains and links

Wednesday, April 10, 2013

OF CHAINS AND LINKS: “Here’s a quick summary of the Terrible, Horrible, No Good, Very Bad Fortnight for would-be Pacific Northwest coal exporters,” Sightline analyst Clark Williams-Derry reported last week. The Seattle-based public policy research group combed through two weeks of hazy, gauzy news on regional coal exports to conclude “when you string together all the new developments, there are more and more signs that coal export proposals are on the ropes,” Williams-Derry reported.

First up was the remarkable request by the governors of Washington and Oregon, asking the Obama Administration to review the climate-change consequences of leasing and exporting Western coal. As the Gristle noted last week, Governors Jay Inslee and John Kitzhaber urged a comprehensive analysis of the impacts of long-term investment in coal generation in Asia; raised questions about low lease rates on federal lands; and argued that the pollution and climate impacts from the expansion of coal leasing on federal lands would “dwarf almost any other action that the government could take in the foreseeable future” related to climate.

Their request is the most prominent sign the political landscape in support of coal export has shifted markedly. But it is not the only sign, as agency after agency have called for more rigorous and wider review of the impacts of coal export, as detailed in the summary of scoping comments released last week by the lead agencies overseeing the environmental impact statement being prepared for the proposed Gateway Pacific Terminal at Cherry Point.

“State-agency scoping comments reveal as much in what was unsaid as what was said,” journalist Floyd McKay commented for Crosscut. “When Gateway Pacific Terminal surfaced in 2010, it appeared to have the support of Gov. Chris Gregoire, who had ties to some SSA Marine lobbyists. She did not join Kitzhaber in requesting an area-wide review and her directors of Agriculture and Commerce publicly promoted the terminal.”

The scoping report summarized the approximately 124,000 comments collected online, in writing, and at in-person scoping meetings—the bulk of which were skeptical of or hostile to the merits of the project.

“The release of the scoping report signals that the EIS process is moving forward,” Williams-Derry commented, “yet the summary clearly demonstrates just how much public opposition the Gateway proposal faces.” And that opposition translates into political and legal difficulty.

The latter came into focus last week as the Sierra Club and other groups, including Bellingham-based RE Sources for Sustainable Communities, announced they intended to take Burlington Northern Santa Fe Railway (BNSF) and several coal companies to court for violations of the federal Clean Water Act, the first of many expected legal challenges to coal export proposals.

Figures from BNSF itself suggest that coal trains traveling through Washington currently lose 120 tons of coal dust every day. Significantly increased volume of coal trains would only boost that pollution.

Oregon Public Broadcasting (OPB) released a complementary report earlier this month on the rail capacity and congestion issues related to coal exports. The headline—”Northwest Railroads Will Need Improvements To Handle Coal Trains”—speaks volumes.

The report draws on information from a 2011 WSDOT rail capacity assessment; raises concerns about conflicts and congestion—particuarly the conflicts between coal trains and other rail cargo; and itemizes costly infrastructure upgrades that would be needed to handle a massive boost in rail traffic.

The political difficulty was teased out in two stories out of Oregon last week.

In the first, Ambre Energy, a financially troubled Australian startup, complained that Oregon’s Department of Environmental Quality was unfairly delaying permits that might allow the company to move forward with coal exports out of that state. In its public statements, Ambre signaled that it needs those permits to attract investment: “If we move forward with the DEQ permit, we can show to our investors that there is a regulatory (system) in this state that moves forward, that has clarity.”

The concern was echoed in a newsletter produced by the sponsors of the Gateway Pacific Terminal, warning that 40 percent of Washington jobs are tied to trade, implying that permitting delays could harm the state economy. The sponsors claimed GPT at full capacity will generate 4,430 jobs in the region’s economy, a number greatly inflated over past projections.

More notable was the second story. California-based Metro Ports announced the company has abandoned a proposed coal export terminal at Coos Bay. Last month the other two proponents, Japanese-based Mitsui Company and Korean Electric Power Corporation, backed out of the project. Metro Ports—the last remaining partner—allowed its exclusive negotiating contract with the Port of Coos Bay to expire.

Taken together, the stories underscore the fragility of the international coal export market, volatile in its own right as an energy commodity among many, but also terribly dependent upon investor confidence. The latter in turn are primed and pumped by assurances that government oversight may be limited and permits will be speedy. And these require that the public (and the courts) view the merits favorably. Instability in any single one of these variables renders the whole chain uncertain.

As other proposals fall to the wayside, Cherry Point looks all the stronger as the last pier left standing. It all comes down to Whatcom County, where an elected council may make the final call. Four of the seven face reelection. The stakes have become very political indeed.

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