North Coast elected officials opposing coal train proposal on various fronts

Elected officials from Northern California counties and cities are rolling out resolutions and even a statehouse bill opposing a mysterious proposal to ship coal up to Humboldt Bay on both existing and defunct rail lines.

The flurry of measures came even though no new information has surfaced about who is behind the coal shipping proposal, which came to light in late August through filings with the U.S. Surface Transportation Board, a federal agency that oversees freight rail shipping.

U.S. Rep. Jared Huffman, D-San Rafael, and State Sen. Mike McGuire, D-Healdsburg, have said the newly created North Coast Rail Company intends to ship coal from Wyoming and Montana’s Powder River Basin by rail for ultimate international export out of Humboldt Bay.

In California, the lawmakers said, the intention is to use the SMART line and also restore more northerly rail lines overseen by the North Coast Railroad Authority. That defunct railroad runs through sensitive environmental areas earmarked for preservation, like the Grand Canyon of the Eel River. The rail has largely been abandoned since 1998 as a result of unstable soil washing out.

McGuire estimated the North Coast could one day see as many as four trainloads of coal, each a hundred cars long, per day, with four empty trainloads returning. He reached the estimate using current commodity prices to calculate how much coal a company would have to ship to meet a minimum return on investment that would be demanded by federal railroad regulators before they would approve such a venture, he said.

Such trains would run through the crowded North Bay, where the existing railroad right of way cuts through the heart of Santa Rosa, Rohnert Park, Petaluma, Cloverdale, Windsor, Headsburg and other cities.

McGuire called on those behind the proposal to show themselves.

“They’re hiding behind this anonymous (limited liability corporation), and if their proposal is so good, show yourself, come public and make your case,” he said. “Face the community that they propose to do business with.”

Robert Wimbish, a Chicago-based lawyer who filed paperwork on behalf of the North Coast Rail Company with the Surface Transportation Board, said he was not authorized to speak to the media but passed on a Press Democrat request for comment to his client. The company did not reach out to a reporter this week. North Coast Rail Company sprang into existence through a secretive LLC registered in Wyoming just 10 days before it made its filing.

With coal declining as a global energy source and a steep investment required, officials put the minimum cost to rebuild just the rail line higher than $2 billion. That does not include the cost to build out a coal shipping port in Humboldt Bay. It also doesn’t include the expense of fighting an extended legal and public relations battle in a region firmly opposed to coal and dedicated to climate change mitigation politically.

Those factors led at least one energy industry expert to say the prospect was economically unwieldy.

“It’s the longest of long shots,” said Seth Feaster, an analyst at the Institute for Energy Economics and Financial Analysis.

Local elected officials aren’t taking any chances, however.

McGuire has introduced Senate Bill 307 to block any state funding from going to rebuilding the rail line or building a suitable export terminal for coal in Humboldt Bay — one of many major obstacles would-be coal shippers would have to overcome on the North Coast.

“No way, no how are we going to let this happen,” McGuire said.

His statehouse bill is being followed by a wave of resolutions by local governing bodies opposing the proposal. The Transportation Authority of Marin passed a resolution against the idea on Sept. 23. The Novato City Council and the Marin County Board of Supervisors are set to consider similar resolutions in coming weeks. The Mendocino Board of Supervisors passed a resolution in opposition on Sept. 15, as did the Ukiah City Council.

Members of the Windsor Town Council, the Sonoma County Board of Supervisors and Santa Rosa City Council all told The Press Democrat this week they would be bringing their own proposals, as elected members of bodies up and down the SMART line rush to indicate their opposition to even the slightest possibility of long trains of coal chugging through the North Bay.

“There is just no way in hell that citizens of Sonoma County, with it going through the Eel River Canyon and it being coal, with long trains through the heart of our communities all for an outdated carbon fuel source … I just can’t imagine anyone being supportive of this idea,” Sonoma County Supervisor David Rabbitt, the current chair of the SMART board of directors, said Friday.

SMART had not been contacted by anyone from the company, director Farhad Mansourian said at a Sept. 15 board meeting for the passenger rail line. The North Coast Rail Authority also had never been contacted, its executive director said in a statement.

“This anonymous company claims it has detailed plans for the tracks but has not once contacted NCRA, who owns the right of way, or anyone else with any knowledge of the dilapidated state of the line,” director Mitch Stogner said.

The real fight over the proposal, if indeed there is an actually interested, capable and well-financed entity behind the North Coast Rail Company, is yet to come, Rabbitt said.

“We’re speaking to the choir here. We’re all in agreement and we’re going to write very strongly worded condemnations through resolutions,” Rabbitt said. “How does one actually affect real change on this?” he asked.

Opponents would seek to stop the proposal at the Surface Transportation Board, McGuire said, adding that Huffman was coordinating opposition at the federal level. At the state level, he hoped to cut off one source for possible funding with his bill, he said, which would block California from spending taxpayer dollars on reconstructing the rail line to ship coal or on the construction of a coal export terminal in Humboldt Bay “in perpetuity.”

Though the company claimed it had $1.2 billion in funding in its STB filing, it does not have enough financing to put its expensive shipping proposal into play alone, McGuire said.

“No matter how deep their pockets may be, there is no way a corporation can build this out without a government subsidy,” McGuire said. “They’re going to be looking to the state and the federal government for additional funding.”

As the nation and much of the world continues to move away from coal-fired electricity, a shift driven by climate change concerns and the rise of renewable energy and domestically by cheap natural gas, investors are increasingly shy about backing coal schemes, analysts say. The fact that the shipping project here would take several years at a minimum to get off the ground only adds to the challenge.

“You can’t ignore the fact that coal is not getting bigger in the world, it’s getting smaller,” Rob Godby, an energy economist and dean of the University of Wyoming College of Business, said. Powder River Basin coal companies have sought export routes off the West Coast for a decade, Godby said, but efforts to ship coal from Washington, Oregon and even Oakland have all failed. Meanwhile, exports through Vancouver, Canada have never been large and have slowed over the years.

While Japan, China and South Korea have all continued building coal-fired power plants, they have largely met coal import needs through Indonesian and Australian mines. The competition, and the longer distances coal shipped from the United States must travel, have made for volatile markets, Godby said.

“These are very speculative adventures, and if there was a good market case to do this you would see more development than there has been and you would see significant exports out of Vancouver, and you just don’t,” Godby said.

This week, China’s president announced the country would no longer finance the construction of coal plants abroad, though he did not rule out construction at home. Still, for energy market watchers, the announcement was one more significant blow to coal companies’ ability to secure investments.

“Coal companies have increasingly been shunned in financial markets,” Feaster, the analyst with IEEFA, said. Still, he said, “dreams die hard in the coal industry, and the export dream never seems to go away.”

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88.