Orient Express 

Will Montana become a coal colony?

Page 3 of 4

Fix drives on a wooden bridge over the Tongue, through a floodplain that earned its name this spring, and up onto the backside of a butte overlooking the Tongue River and his house and barns. This butte is part of the proposed path of the Tongue River Railroad. Fix says it would come over the butte and continue along his land to the south and then follow the river in the same direction. About 60 miles from here the spur line would connect to the Otter Creek tracts.

"When it goes across the place, it would just form a wall for the cattle," says Fix, his tanned face shaded by a tattered cap. "Right now the cattle come to water to drink, but they'd have that wall, and if there's a road there, too, it'll have to be a fenced corridor. I'll have to figure out how to move cattle back and forth across it...It's kind of ridiculous."

Fix is still getting his head around how the railroad would change his land. He hasn't quite made sense of how the Asian coal market could be responsible for bringing it here. Months ago he read about Arch investing in coal export terminals, "and I'm saying, 'What the hell? They're going to take this coal to China?' How can that be cost effective, to take the coal from Otter Creek, go across all those mountain passes, and put it on a boat and ship it? That doesn't make any sense at all."

click to enlarge Mark Fix ranches south of Miles City, along the Tongue River. A proposed railroad to get Montana coal to market would cut through his property. - PHOTO BY MATTHEW FRANK
  • Photo by Matthew Frank
  • Mark Fix ranches south of Miles City, along the Tongue River. A proposed railroad to get Montana coal to market would cut through his property.

Here's Gov. Schweitzer's rough math: Coal plants in China are paying about $115 a ton, delivered, for sub-bituminous coal, the kind under the Otter Creek Valley. That coal is worth about $15 a ton in Montana. The freight cost on the rails would run about $35 or $40 a ton, and across the Pacific about $50 to $70. "So the way it stacks right now, it works," Schweitzer says. "It would compare economically with the coal they're bringing in from Australia and Indonesia."

The other part of the equation is that the coal China imports is cleaner than the coal they mine in the south and east of their territory. Their higher-quality coal lies in Inner Mongolia and other provinces to the north and west, but there's no railroad connecting those coal reserves to where the huge demand is along China's coasts.

The math in Montana doesn't pencil out without the Tongue River Railroad. It was first proposed in the early 1980s, when it was intended to connect to the Montco coal mine near Ashland and mines to the south in Wyoming. Montco was permitted but never developed. Meanwhile, the effort to build the railroad has quietly proceeded. The first stretch was approved in 1986, the second in 1996 and the third in 2007. Together the three sections make up today's proposed coal route.

Fix bought his property in 1991. A year or two later, he says, land men from the railroad came to him and said they had the power to take part of his ranch under eminent domain. He's been fending off the railroad ever since. The battle intensified last year when the land board leased the Otter Creek tracts. A few months later, the Northern Plains Resource Council and Fix, who serves on the organization's board of directors, petitioned the Surface Transportation Board to re-open the environmental impact statement process, claiming that it didn't consider the cumulative impacts of the railroad and Otter Creek coal development.

The panel rejected the petition last month. Last week, Northern Plains filed a motion for the STB to reconsider that decision. A 9th circuit panel heard oral arguments in Portland, Ore., two weeks ago on a separate legal challenge to the railroad dating back to 1997.

click to enlarge More than a billion tons of coal in Otter Creek Valley could be mined and shipped to Asia. - PHOTO BY MATTHEW FRANK
  • Photo by Matthew Frank
  • More than a billion tons of coal in Otter Creek Valley could be mined and shipped to Asia.

The Tongue River Railroad's counsel, Betty Jo Christian, used to serve as a commissioner on the defunct Interstate Commerce Commission, whose functions were transferred, in 1995, to the STB—that bespeaks "the incredibly cozy relationship between the regulated community and the regulators," says Northern Plains attorney and UM law professor Jack Tuholske.

The railroad needs a total of 2,675 acres of right-of-way. Mike Gustafson, owner of Billings-based Wesco Resources, and of the railroad permit before Arch and BNSF acquired the Tongue River Railroad Company a month ago, says of the effect on private landowners: "That is what it is."

"What we've attempted to do from the Tongue River Railroad's point of view, over those years that we were involved, is follow the guidelines that were set forth by the STB," Gustafson says. "There was a very extensive [environmental review process], we encouraged participation and comment...Most of what we're hearing today [from opponents] is all in the record, it was all considered by the agencies, and it was taken into consideration in the designs."

Gustafson says the full length of the railroad would cross the property of 55 private landowners. He adamantly refutes the allegation that his company has ever threatened to take land by eminent domain. "In fact, we haven't even started negotiations with the private landowners down there," he says. "That's the facts." He adds that he believes the railroad will be able to "negotiate a resolution" with most of the affected landowners.

Fix can't imagine any agreeable resolution that involves a train barreling through his property. "When you're out here you forget that the rest of the world exists," he says. "Not with a railroad running through."

Those railcars would head west on the state's northern or southern rail routes, or both. University of Montana economist Tom Power calculates that if the coal export terminals on the West Coast realize an export capacity of 140 million tons per year, as some estimate, it would require about 30 loaded coal trains, 125 cars long, to cross the state every day. Then they'd come back. That's 60 trains a day. If the trains were split evenly between the northern and southern routes, the coal trains would pass through Missoula—and every other town along the routes—about once every hour.

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