Port officials wondering about RailAmerica’s coal intent

The Port of Grays Harbor’s executive director says it’s been months since he’s heard anything from RailAmerica about its interest in building a shipping terminal for coal, and Port Commission Chairman Chuck Caldwell says maybe the time has come to move past the controversial coal terminal and think about using Terminal 3 in Hoquiam for another purpose.

RailAmerica has had an exclusive access agreement with the Port to study Terminal 3 for a potential coal export facility, but has let that agreement expire.

“The terminal doesn’t have to be about coal,” Caldwell said. “The purpose of the access agreement was to allow RailAmerica to study the terminal. My personal opinion is that they’ve done this and maybe it’s run its course now. It’s time to move on and move forward.”

The railroad first received the access agreement on Jan. 11, 2011, and received three extensions to the original agreement continuing without any lapses until April 9 of this year, when the contract expired. But despite initial conversations in March with Port officials about moving on to a fourth extension of the agreement or a more elaborate memorandum of understanding, Port Executive Director Gary Nelson said he hasn’t heard anything from RailAmerica officials in months.

RailAmerica had said it was interested in building a $100 million coal export facility at Terminal 3 to ship 5 million tons of coal annually from the Powder River Basin of Montana, Wyoming, and the Dakotas, primarily overseas to China. Documents turned over by the Port of Grays Harbor as part of public records request show that RailAmerica first approached the Port about a coal terminal in the spring of 2010. Over a year’s worth of negotiations, the company pitched a “specific proposal” to Port officials in August of last year and again in September, until the access agreement was signed in January, according to the records. The deal wasn’t made public until July of last year.

The idea of a coal terminal at the Port of Grays Harbor has spurred objections from around the region. The Port is often mentioned in the same breath as other proposed coal terminals in the Northwest. Should all of the proposals move forward, 146 million pounds of coal could be shipped annually from Grays Harbor, Longview, Bellingham, Coos Bay, Ore., Port of St. Helens, Ore. and Port of Morrow, Ore.

The Daily World has attempted for two months to interview someone with RailAmerica to get an update on their plans and answer criticism related to how the company specifically would address coal dust and other environmental concerns posed by a local opposition group called Citizens for a Clean Harbor. The company has declined interview requests.

Paul Queary, who works for Seattle-based Strategies 360, hired by RailAmerica to do public relations work, emailed a statement on behalf of RailAmerica Thursday afternoon, but couldn’t answer any questions.

“We have not completed our due diligence on the best use of the property and have not filed for any permits on Terminal 3,” Queary wrote. “We value our longstanding relationship with the port and we will continue to work closely with the commissioners and staff to bring jobs and economic development to Grays Harbor.”

CONCERNS RAISED

Citizens for a Clean Harbor has hosted two town hall meetings to discuss the potential ramifications of coal on the Harbor. A meeting in Elma in May drew nearly 100 people. Elma Mayor Dave Osgood spoke and said he was concerned about coal trains moving through his city. A meeting in Hoquiam on Wednesday drew about 55 people, according to organizers.

Organizer Arnie Martin of Hoquiam said the group has invited Port officials and RailAmerica officials to attend their meetings, but no one has been there. Martin said it appeared a consultant with Strategies 360 attended the meeting on Wednesday.

“We have serious concerns about health impacts and coal dust and we aren’t getting any answers,” Martin said. “RailAmerica is not being proactive in telling the community what’s going on. We don’t have an exact picture of what’s going on.”

Martin, a member of the Grays Harbor Audubon Society, said he’s particularly concerned about the impacts coal dust could have on the shorebirds and on the ecology at the Grays Harbor National Wildlife Refuge, which would be located a stone’s throw from the potential coal operations.

In a position statement written by Nelson on the concerns posed by Citizens for Clean Harbor, he writes that a coal terminal would need to go through all federal, state and local environmental regulations. And while the opponents think a coal terminal could endanger the marine industry, Nelson said the Port would never allow that to happen.

“Mitigation of impacts focus on strengthening these natural resources,” he wrote in May before the Elma town hall. “The Westport Marina and our many commercial fishing and seafood processing tenants rely on these resources for their livelihood. To imply the Port would pose a threat to these industries is unfounded. …

“RailAmerica’s investment would increase the local property tax base, employ local workers and increase shipping activity on the Harbor,” Nelson added.

Last month, when gubernatorial candidate Jay Inslee met with officials at the Port of Grays Harbor, coal opponents attended the public meeting and gave him a home-made button that read, “The only good Coal Train is John Coltrane,” the musician. Inslee told The Daily World that he’s not “in a position to say yay or nay” to coal export facilities right now.

Nelson, the Port Executive director, told Inslee at the time that he was not entirely convinced the coal export terminal will move forward. But, he said that the terminal still may be a good home for exporting sulfur or fertilizer or something else.

That’s a message Caldwell embraced during an interview on Thursday.

“I think the terminal has a lot of other uses and we need to do our best to find one,” he said.

TERMINAL USES

Willis Enterprises currently has a wood chip operation at the site occupying about 40 acres. It would need to be relocated if the coal terminal was developed. Records turned over by the Port show that Willis Enterprises would like to expand even more. The Port’s long-term strategy at Terminal 3 favors development that would bring in more ship traffic and industrial economy. Ideas such as liquid bulk and large containers have been explored. But dry bulks would work better, such as coal, prilled sulfur (sulfur in a pellet form), cement and other minerals, according to the Port.

The property consists of 150 acres of Port-owned waterfront in Hoquiam. The property used to be owned by Rayonier, but was sold to the Port after the timber company closed its mills in Hoquiam.

The Port commissioners have never had to take a public vote on whether to use Port land for coal.

The access agreements to let RailAmerica study the project were signed by Nelson, the executive director. In 1995, commissioners delegated that authority to the executive director.

But in October of 2010, an email from Nelson to RailAmerica said that he would schedule an executive session with the Port Commissioners “with the intent of gaining the commissioners concurrence for you to move forward with the lease/lease option negotiations on Terminal 3.”

Nelson signed the access agreement in January of last year. For seven months, the Port and RailAmerica kept the agreement to themselves.

Records turned over to The Daily World show that in early July of last year, the environmental group Sierra Club did a public records request with the Port of Grays Harbor looking for signs that the Port was a candidate for coal exports. Per the access agreement, RailAmerica was notified by the Port of the plans to release the documents.

By the end of the month, the documents were released and then RailAmerica went public with its plans, meeting with community leaders and sitting for an interview with The Daily World. At the time, RailAmerica said it would use the latest technology to suppress coal dust and protect local water sources, although no specifics were provided.

The access agreement gave RailAmerica the exclusive rights to conduct feasibility studies at the terminal. In return, RailAmerica was to provide to the Port with a site plan for its proposed facility, showing the work plan; a description of any possible berth improvements and a time line showing the work place, a public access plan and a description of any relocation plans or how they could operate with Willis at the site. The access agreement also mandated RailAmerica turn over feasibility studies related to soil and the environment, studies related to dredging, zoning and land-use issues as well as aerial photographs.

Everything was to be turned over to the Port within 30 days after the agreement expired.

The Daily World did a public records request specifically seeking all of those documents, but RailAmerica has turned no such documents over, according to the Port.

Commissioner Caldwell said RailAmerica has been forthcoming about the rail improvements needed to improve the project.

“We now know that we’ll need to improve the rail bridge in Hoquiam and the approximate costs of what a functional line into Hoquiam will cost,” Caldwell said. “We wouldn’t have known that if we hadn’t done the access agreement. And that’s what access agreements are for. And I’m grateful that RailAmerica has put in the time and money to study the terminal.”

Although RailAmerica has had the access agreement for 16 months, lately, Caldwell points out, “it’s just sat there, like a car in idle.”

“I think in my own personal opinion, it’s time to move on and move forward,” Caldwell said. “Maybe we can still work with RailAmerica. Maybe they have other ideas.”

LOTS OF INTEREST IN COAL

Records turned over by the Port of Grays Harbor show that the Port was first approached about a potential coal export facility in January of 2010 by someone with the consulting firm Marston, which specializes in mining.

Records show that between 2010 and 2011, the Port also fielded inquiries by numerous other mining, shipping and coal companies. Cloud Peak Energy was seeking a Port to export coal and wanted to set up a tour at the terminal. Shipping Company Seastar International made inquiries wondering if the Port could handle coal exports without any facility improvements. An owner of Rhino Resources Partners, a coal company from Kentucky, inquired about the possibility of shipping coal. Other coal interests that contacted the Port included RailAmerica, Emery Mine of Idaho, Coal Link, Inc; and Arch Coal Inc., which has ties to the Powder River Basin. Arch Coal actually sent three people to tour facilities looking to invest $250 million into an export facility that would have had 200-plus employees, according to Port records, but the deal didn’t pan out.

Either the Port or the potential companies decided against the deals, according to records released by the Port.

“There is no shortage of proposals for coal export facilities,” Nelson wrote in a email at the time. “… It could still be on the table but you have to weigh the time it might take to get permitted and developed against an alternative less controversial use.”

However, in August of 2010, Marston teamed with RailAmerica to pitch their plan for a coal terminal. In September, RailAmerica hosted a power point presentation in executive session with the Port commissioners and Port staff.

A printed copy of the presentation labeled “privileged and confidential information” showed that RailAmerica optimistically hoped to get permits and start construction by 2011 with the first shipment to occur the 4th quarter of 2011 and full capacity achieved by 2013. The plan called for a facility with room for two 110-car trains, unloading 32 trains per month for 5 million tons of coal per year. That worked out to 13,700 tons of coal per day.

The plan included pictures of several piles of coal and conveyors. There was mention of “advanced pile dust controls,” and “zero-discharge water control,” which would convert the Hoquiam sewer lagoon into a pond and be used to spray water. The lagoon has since been filled in by the City of Hoquiam. In fact, RailAmerica — as part of its access agreement — had to sign off to allow Hoquiam to store fill dirt at the Terminal 3 site so the lagoon could be filled in.

In July of last year, RailAmerica said they were prepared to invest $45 million. But, when company officials made another presentation before the Port commissioners in February of this year, they said the investment would actually be about $100 million. The concept could generate 60 full-time jobs and an initial 160 construction jobs.

The company also said that the permitting process was taking longer than first thought.

Steven Friederich, a Daily World writer, can be reached at 537-3927, or by email at sfriederich@thedailyworld.com