Coal industry at odds with Montana ranchers

May 20, 2013

A proposed rail line to service coal mines near the southeast Montana community of Colstrip has drawn harsh criticism from landowners along the prospective route, many of whom claim the project is an unacceptable encroachment of their private property rights.

The debate pits the ranchers not only against the coal mines and railroads, but also against the state government and countless other groups, including the state Farm Bureau, who view coal development and transport as a major economic boon for the state.

Coal has long been an economic staple to the region, and area ranchers have lived cheek by jowl with mining for decades. Colstrip itself is home to a major mine, as well as four coal-fired power plants. For area rancher Clint McRae, disagreements with the coal mines, as well as the government entities that appear to support them, are also nothing new.

For years, McRae and other area ranchers have battled the industry over losses to water quality resulting from mining activity, contending that the state Department of Environmental Quality has done little or nothing to address the situation. Even the proposed railroad is an old fight, says McRae, who indicates that previous iterations of the same idea have been argued over since the 1980s.

“The purpose keeps changing,” says McRae. “In the ’80s, it was supposed to run from the Montco mine site to Miles City. That has completely changed now.”

Shortly after the railroad was permitted, the Montco mine permit was revoked by the federal government. Tongue River Railroad (TRR), the owners of the line permit, then turned south to Wyoming, seeking to bring coal from the Powder River Valley to Miles City. Though the railroad was permitted for that purpose in the 1990s, it was never built.

With the purchase of the Otter Creek mine permit by coal giant Arch Coal in 2009, the railroad idea was again revived. Ranchers along the route, however, contended that the Environmental Impact Statement (EIS) used to permit the rail line was no longer valid, and the process needed to be started over. Federal courts agreed, and TRR was sent back to the drawing board last year. The new EIS, currently undergoing review, changes the proposed route the rail will take.

If constructed, the 42-mile line would carry coal from the Otter Creek deposit to the town of Colstrip. From Colstrip, it is unclear where the coal would be shipped. That destination, says McRae, is at the center of the current debate.

Historically, the TRR line was meant to deliver coal to coal-fired plants in the upper Midwest. With domestic demand diminishing, however, landowners contend that the coal is more likely headed to the Pacific Coast for export to Asia. The destination is key, they say, in determining the validity of any attempts to condemn land for the road using Eminent Domain.

Eminent domain was originally designed to allow the government to condemn private land for public use, such as transportation routes. However, the practice of awarding that land instead to other private entities with an eye to increasing tax revenues, while controversial, has become commonplace in many states, Montana included. It is a step the landowners indicate will be necessary if the railroad is to be forced across their property.

Under the law, in order to condemn private property, the Surface Transportation Board (STB), a three-person federal committee, must determine that the proposed taking is a matter of “public convenience and necessity,” something that the landowners say is missing if the proposed line is intended to haul coal to Asian markets. Additionally, they point out, for condemnation to take place, the rail line must be for multiple uses, not just to service one mining company.

“If it isn’t a common carrier, legally, they should not have the right to condemn land,” says McRae. “We think this is going to the ports in the west and on to China, and that is a game changer. This is not public convenience.”

Regardless of these concerns, the ranchers worry that condemnation via eminent domain will proceed.

“They’ve never denied a permit in the history of the STB,” says McRae. “These people have never been to Montana or seen the area, but if they can cite public convenience and necessity, the pressure is on us to prove otherwise.”

TRR is jointly owned by Arch Coal, Burlington Northern Santa Fe Railroad (BNSF), and candy magnate Forrest Mars Jr. According to BNSF spokesman Matt Jones, worries about eminent domain are premature at this point. “There is no eminent domain being pursued at this time. It’s far too early to speculate as to whether that would be necessary.”

According to Jones, the EIS that must be finished in order for the rail line to be permitted is still in the draft phase, and the route has not even been officially selected, though TRR has expressed its preference for the Colstrip option. “We’re at the beginning stages of the EIS, the STB has not determined which alternative they are going to select,” he says.

Given the track record of the STB, however, the ranchers argue that the proposed route is all but a foregone conclusion. Additionally, landowners last fall noted TRR surveyors trespassing on their properties, further solidifying their belief that the Colstrip route was a certainty.

Jones, however, indicates that the surveying was done as a normal part of the EIS process, though some trespassing did take place.

“There was some confusion by TRR contractors with regard to public and private property lines,” he admits. “Going forward, we will be getting explicit permission before we enter private property.”

With regard to where the coal is headed, neither Arch Coal nor TRR have ever publicly stated the eventual destination of the coal once it reaches the main rail system. However, they contend that this should not stop the permitting process from proceeding.

“The permitting process is going to take some time, and it would take two to three years to construct a mine following that,” says Jones. “It’s impossible to know where the markets will be at that time. Looking at the markets today, the vast majority of Montana coal is consumed in Montana, or in the upper Midwest.”

While that may currently be the case, opponents argue that U.S. coal consumption is on the decline, down onethird since its peak in 2007.

Furthermore, they point out, several of Arch’s competitors in the coal industry are already scrambling to ship coal from Wyoming and Montana to the West Coast for export to Asian markets.

Arch itself ships a portion of its Wyoming coal holdings to the Gulf Coast for export. But the recent acquisition by Arch of shares in a new coal port proposed in Longview, WA, says McRae, is the final nail in the coffin for the notion that Otter Creek coal is intended for domestic use.

“I don’t think that Arch Coal would be sinking money into ports in Washington if the coal was headed for the upper Midwest,” he says. “If Arch Coal cannot tell the public whether the coal is going east or west, they are basing this purely on speculation,” he adds.

“Why in the hell are we facing public condemnation of our private land, by a private for-profit corporation, so that they can ship coal to China? It’s ridiculous that (the government) would even consider this.”

Not everyone in Montana is against the project, however. “Coal development, since the early 1970s, has paid for a lot of beneficial things in every corner of the state,” says Jim Atchison, director of the Southeastern Montana Development Corporation. “There’s a tremendous opportunity for our state to benefit from the coal that is at Otter Creek, because of the taxes that are involved.”

Several other groups, including the state Farm Bureau, have spoken out in favor of coal development in the region. Even McRae has indicated that he is not against coal development per se. The problem, he says, is not in the use of coal, but in the way the industry treats its neighbors.

“Coal development has an opportunity to work in tandem with agriculture, but they have not done it here,” he says. “Instead, they’re passing the cost on to agriculture. I am just sick and tired of being a pawn in this thing so that some corporation can make a profit.” — Jason Campbell, WLJ Correspondent