RailAmerica drops pursuit of coal terminal for Grays Harbor

RailAmerica has abandoned any current plans to construct a coal storage and export facility at the Port of Grays Harbor’s Terminal 3 in Hoquiam.

Port Commissioners on Tuesday were told the company has completed an evaluation of the site and that it would no longer be exercising an agreement giving it access to study the potential for a coal terminal, although the rail company still plans to partner with the Port on future projects.

“We believe that the biggest and best potential for continued growth here at Grays Harbor is the development of Terminal 3,” said Gary Lewis, RailAmerica’s senior vice president. “It’s a prime piece of property (with) deep water access, of course served by a terrific railroad.”

Another company spokesman, Paul Queary, said RailAmerica was “shelving the Terminal 3 coal export project” because there is a “third party that has an interest in shipping something else from the terminal and thinks that would come to fruition more swiftly than the coal terminal.”

The railroad first entered into an access agreement with the Port on Jan. 11, 2011, and received three extensions to the original agreement continuing without any lapses until April 9, when the contract expired.

“Over the past year, we have been performing due diligence on that property to evaluate its fit for an export bulk terminal,” Lewis told the commissioners at their regular monthly meeting. “We spent a lot of money. We spent a lot of time, and unfortunately at this point we believe that there are other uses and other opportunities for that terminal that are much more likely to generate jobs, economic development, tax revenues, (and provide a) general increase in business for the Port and, of course, for RailAmerica and for Puget Sound and Pacific Railroad.”

RailAmerica had said it was interested in possibly shipping 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 a Daily World public records request showed that RailAmerica first approached the Port about a coal terminal in the spring of 2010. The proposal wasn’t made public until July 2011.

An anti-coal group called Citizens for a Clean Harbor has opposed any use of the terminal for coal shipments and questioned the possible health impacts.

One of the group’s co-founders, Arnie Martin of Hoquiam, said he believed economics was more of a factor than public opposition to RailAmerica’s decision to back off the coal terminal proposal at the Port. Martin noted that coal prices have dropped in China, and he speculated the company realized the possibility of “having multi-year delays” in the process to site a coal terminal in the Harbor because of potential lawsuits.

Martin, however, was suspicious that the coal proposal was only “taken off the table” and might come back at some point.

“So we’re not stopping yet,” Martin said, noting the group plans to remain active in opposing any coal export terminals in the Northwest, including ones proposed in Bellingham, Longview and in Coos Bay, Ore.

“There’s still plenty to worry about,” he said.

In addressing the Port Commission, Lewis acknowledged the railroad had allowed the access agreement to lapse but indicated there are no plans to revive the proposal.

“We don’t have any immediate intention to renew that,” he said.

Port Commissioner Stan Pinnick summed up the developments by asking if “the coal project is basically on the back burner and on the shelf?”

Lewis replied with a one-word reply: “Yes.”

The company believes the information gathered in the process will benefit the Port “to pursue other opportunities and other suitors for that property for development,” Lewis said.

But the company doesn’t plan to spend any more money on studying the terminal for coal.

“My hope was that spending the money would yield something more immediate,” Lewis said. “But as we said from the start, we needed to do due diligence. We have done that and this is where it’s led us.”

Port Executive Director Gary Nelson said the Port and RailAmerica still remain partners in finding new employment opportunities for the county. And Lewis told commissioners the railroad has received several other inquiries about the terminal while studying the site.

“We’re happy to work with any parties the Port feels is appropriate on a new project,” Lewis said.

He noted that RailAmerica currently is in the process of being acquired by another rail company. Genesee & Wyoming, another short-line holding company, has a pending $1.39 billion offer for RailAmerica.

RailAmerica currently operates 45 railroads, while Genesee & Wyoming has 63 in North America as well as operations in Australia and Europe, Lewis said. The combined company would have railroads in 33 states, with a combined 13,000 miles of rail and 1.6 million carloads of freight in North America.

The transaction still needs regulatory approval, which could take months or up to a year.

Despite the changes, Lewis said the company plans to continue to work with the Port as partners.

“Working on Terminal 3 has been an interesting project for a lot of reasons,” Lewis said. “But again, I think it has brought our companies closer together and I look forward to pursuing other projects jointly with you.”