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King Coal's Last Stand

If built, the Gateway Pacific Terminal in Washington State would double US exports of coal, a boon for the flagging domestic industry and energy-hungry China. But it would also send nine mile-and-a-half long coal-filled trains barreling through Seattle...


Coal opposition in Bellingham, Washington. Photo courtesy of Portland Rising Tide

Somewhere outside Ferndale, Washington—after following a series of backcountry roads through rolling pastures and fertile farmland dotted with goats and llamas—I reached a sign warning: “No Trespassing, Violators Will Be Prosecuted,” that marks the presumed far outer edge of the proposed Gateway Pacific Terminal.

If approved and built, the massive, $600 million facility will ship at least 59.5 million tons of coal per year to Asia, doubling US exports of the world's dirtiest fossil fuel. To effectively feed the beast, nine trains per day, each one and a half miles long, would travel from the Powder River Basin in Montana and Wyoming, over the Continental Divide, to this small stretch of coastline just 17 miles south of the Canadian border. Then those same trains would turn around and head back to the mines, to fill up once again—all part of an never-ending loop cutting through small towns, remote wilderness, and even big cities like Tacoma, Spokane, and Seattle, spreading coal dust all along their route. Up to 3 percent of each load escapes from the open-air cars on each westbound leg of the journey.

That's the plan, anyway.
           
What lies beyond the "No Trespassing" sign at this particular moment, however, really depends on who you ask. Before venturing to Ferndale, I started my inquiries earlier in the week with a visit to the northwest regional office of the Washington State Department of Ecology in Bellevue. The DOE is currently tasked (along with the small County of Whatcom  and the US Army Corps of Engineers) with producing an Environmental Impact Statement (EIS) on the Gateway Pacific proposal. Plans for the terminal were first submitted in 2011 by SSA Marine, which owns the land upon which the export terminal would sit, and the DOE have been racing to produce their study.

“If you go there,” Regional Director Josh Baldi told me, “it will look like a pretty stretch of Puget Sound shoreline.”

Baldi and his colleagues at Washington Ecology further described the site as a large area of forested and unforested wetlands, noting that even without addressing the thorny issues surrounding coal, they'd still be asked to assess the environmental consequences of a 140-plus acre wetland impact, the largest in state history (by a factor of ten) since wetland protection laws were enacted in the 1970s. The shoreline in question, known as Cherry Point, is also a major nursery for a specific type of herring that's a key link in the food chain for juvenile salmon, whose stocks have been in serious decline for decades, possibly due to previous industrial projects in the area.

“This proposal has major potential implications for water quality, hydrology and habitat,” according to Baldi. But it's undoubtedly coal that's made Gateway Pacific a flashpoint in the biggest environmental battle in the Pacific Northwest since the “timber wars” of the 1990s pitted defenders of old growth forests against the logging companies.

During an unusually intensive scoping process designed to determine exactly which impacts will (and will not) be studied as part of the EIS, thousands of citizens voiced their fears that Gateway Pacific, the trains that service it, and the coal they carry will congest rail lines, tying up local traffic along the route, while dangerously overburdening shipping lanes in Puget Sound and releasing roughly 100 million tons of carbon dioxide into the atmosphere annually—more than all other activity in the rest of Washington State combined. Concerned citizens submitted over 125,000 comments as part of the review process, and a series of seven public meetings drew record crowds in the thousands, organized by groups like Power Past Coal and the Washington Environmental Council.

“We've never experienced anything like that,” Baldi acknowledged, noting that the  outcry helped convince his department to announce plans to pursue a report that not only assesses impacts at the proposed Gateway site, but also along the entirety of the rail route, plus cargo-ship safety within and beyond Washington waters, affects on human health in the state, and  climate change impacts.            

“The breadth of this does look different than other EIS's that we have overseen,” Baldi affirmed, “but that's because the facts associated with this are different. It's a unique proposal, and that compelled us to establish a scope that's appropriate to the project.”
             
No aspect of Baldi's forthcoming report—which should take two years to complete—will be more controversial than projections of the effect of greenhouse gas emissions once all that coal reaches power plants in Asia, an inclusion vehemently opposed by the various industries hoping for swift approval. Originally Washington Ecology reached an agreement with the US Corps of Engineers to work together on a joint county/state/federal EIS that would feature these far reaching impacts, but just days after our discussion, the Corps announced that they will in fact produce their own statement, focused only on local impacts.


A coal train travels along Puget Sound. Photo by Paul K. Anderson

Meanwhile, to hear what the proposal's proponents had to say for themselves, I contacted SSA Marine. I received no reply, though I was able to arrange a phone interview with Lauri Hennessey, spokesperson for the Alliance for Northwest Jobs & Exports. A former EPA official under Presidents Clinton and Bush, Hennessey—presumably with a straight face—described the Alliance as “a grassroots effort,” despite  being created and funded largely by the coal industry and its allies. She then acknowledged that her “real life job” is serving as Vice President of Corporate and Public Affairs at Edelman, the world’s largest public relations firm, with 67 offices and more than 4,800 employees worldwide.

Edelman's best known for their decades of work for Big Tobacco, including designing and implementing coordinated campaigns to downplay the dangers of smoking and discredit those who sought to more vigorously regulate their clients' deadly and addictive cigarettes. Only difference is that now Edelman's moved from promoting cancer sticks to defending smokestacks.
           
“Countries that are looking for more sources of energy, like for example China, do use coal and they will be using coal for the next several years,” Hennessey informed me. “In the future they will use other sources, but at least for the next several years they'll be using coal. And so the question is: Where is that coal going to come from? And this particular coal that we're talking about exporting has lower sulphur and lower ash so it's a better quality than what those countries would otherwise import.”

Hennessey called herself an environmentalist, though not without a nervous titter. She then disputed the idea that doubling US coal exports will drive global warming, before repeatedly asserting that “at the end of the day, the key argument is always going to be about creating jobs.”

Industry estimates predict that Gateway Pacific's two-year construction period will create up to 4,400 new temporary jobs and $92 million in state and local tax revenues, with up to 430 permanent direct jobs left once the facility is operational. More independent analysis has shown less clear benefits, but really, any way you slice it, that's just not a lot of employment compared to the massive financial investment involved in mining, moving, shipping, and selling all that product. Backers of the project are quick to tout local union support, but something tells me that if the $600 million in construction costs for the Gateway facility alone were instead to be equally divided among the 430 people who stand to land a new permanent job, such support would quickly evaporate.

So could it be that the coal companies are actually primarily interested in their own profits, a subject conspicuously absent from the Alliance's ubiquitous cheerleading for the project? I asked Hennessey a few pointed questions regarding how her corporate masters balance their apparently altruistic drive to create a better life for workers with their insatiable desire to make money, and got a series of nonanswers in reply.

Then, suddenly, our time ran out. But before I let Ms. Hennessey get back to her real-life job, I asked  what I'd see at the proposed Gateway Pacific site, if I visited in person.

“Cherry Point is basically in an industrial area,” she replied, citing a nearby oil refinery and aluminum smelter. “So [the coal terminal] is a perfect use for that kind of area.”

Not surprisingly, Jewell James of the Lummi Nation, a Native American tribe from the Puget Sound area, strongly disagrees.

He’s a master carpenter who creates special totem poles to provide spiritual healing at disaster sites, including three poles installed near the locations where America suffered attacks on 9/11. Now he's making a 1,200 mile journey with his latest offering, following the proposed route of the coal trains from the Powder River Basin mines in Montana all the way to Cherry Point, with stops along the way to educate the public, and drum up support for the Lummis' efforts to stop Gateway Pacific.

Reached by telephone following the “We Draw the Line!” tour's first stop at the Cheyenne Indian Reservation in Southeastern Montana, Jewell described Cherry Point as a 3,500-year-old site that's covered in the graves of his ancestors, while remaining alive and vital in the Lummi Nation's oral history. A place he and his contemporaries have worked for 30 years to rebuild the herring population and salmon fisheries—and a majestic cliff overlooking the San Juan Islands.

“At sunset,” he told me, “it's just beautiful.”

According to a letter sent to the US Army Corps of Engineers by Lummi Indian Business Council Chair Tim Ballew that expressed “unconditional and unequivocal opposition to the proposed Gateway Pacific Terminal," Cherry Point is also a place the tribe's fishers have sought sustenance for 175 generations. Rights guaranteed to this day by the Point Elliott Treaty of 1855, which also pushed the Lummi onto the reservation they still occupy.


Totem pole en route to the proposed Gateway Terminal site. Photo by Paul K. Anderson

“The Lummi Nation cannot see how the proposed projects could be developed in a manner that does not amount to significant impairment of the treaty fishing right and a negative effect on the Lummi way of life,” Ballew's July 30 letter concluded. “Please recognize this clear statement of opposition to these projects from the Lummi Nation."

Hundreds of tribal members also gathered on a beach near the proposed terminal site last year to ceremonially burn a symbolic million-dollar check, hoping to demonstrate that no amount of money can convince them to sign off on the coal facility. All of which would seem to make their opposition more than crystal clear.

Except to Muffy Walker, the Army Corps of Engineers' regulatory branch chief in Seattle, who just last week told the local Bellingham Herald that the Lummi haven't yet objected strongly enough to suspend action on the Gateway Pacific permitting process, as commonly happens when Native Americans with treaty fishing rights invoke them. According to Walker, the tribe must send the Corps a letter saying, “There are no more discussions, we can't come to any agreement” before she will decide how to proceed.

Fortunately, not every government official with a stake in this fight shares the federal agency's foot-dragging inclinations. Seattle Mayor Mike McGinn, for example, has been an outspoken opponent of Gateway Pacific and the 18 trains per day that would slug through his city—going to and fro—since he first learned of the plan back in 2011.

Invited to talk coal with the mayor at his office, I arrived early, expecting to jump through all sorts of bureaucratic hoops before earning an audience with His Honor. Instead I encountered a ping-pong table on the lower level of City Hall, and a friendly receptionist waiting to check me in once I reached the seventh floor. After about ten minutes of admiring the contemporary glass art in the lobby, and an outdoor patio complete with a vegetable garden (basil, chard, kale) and a commanding view of the city, the elevator doors opened and a slightly disheveled gray-haired man in a worn, yellow raincoat with one pant leg pulled up over his sock emerged holding a bicycle helmet. He chatted with a colleague about the city's renowned Bumbershoot festival, saying something I didn't quite catch about MGMT.

Meet Mike McGinn, environmental activist, pot-legalization advocate, and coolest big-city mayor this side of Portlandia. And don't worry, by my appointed meeting time, he'd showered and changed into clean pants and a crisp, white, button-down shirt.

“I think the public in Seattle wants their mayor to lead on environmental issues,” He told me, practically by way of introduction. “At least I'm betting on that.”

Locally, McGinn described the disruptive effects of the coal trains on Seattle, citing a

city-commissioned Community Attributes study that predicted congestion at rail crossings could cost up to $455,000 annually in lost revenue, plus another $475 million in diminished real estate values for commercial, residential, and industrial properties located within 600 feet of the tracks. Not to mention increased noise, pollution, and traffic delays for the city's residents, commuters and tourists.


Mike McGinn, Seattle's mayor. Photo via

But it's the global effects that truly stoke the ire of the former Sierra Club state chair.

Asked if he'd protest the trains as vehemently if they were to carry Idaho potatoes instead of Powder River Basin coal, McGinn said he'd still have strong objections, but not nearly the same level of concern. He then roundly rejected the idea that a Washington State mayor has no place worrying over coal that will be burned halfway around the world.

“I was actually in China about a year ago. We have a sister city in Chongqing, and to get there the flight goes through Beijing, so I spent some time there. The air quality was just horrible, like walking around in a toxic soup. And I think the government needs to respond to that. Even dictatorships have to hold themselves accountable to the public, and I don't know how much longer you can run a country, and remain in charge, when the air's not fit to breathe. So I have to imagine that there's going to be a tremendous amount of pressure in China to clean up their energy sources. We actually met with representatives from the Chinese utilities, who are simultaneously building the most advanced solar and smart-grid projects in the world, while also constructing additional coal plants.”

McGinn, who famously says we should leave America's estimated 259 billion tons of recoverable coal “in the ground, where it belongs,” obviously hopes China chooses conservation and renewables. And to push them in the right direction, he's pushing his own home state to export its knowledge and innovation, rather than Wyoming's fossil fuel.

“We have made the decision in Washington to get off of coal. We now rely on hydro, wind power, and conservation. We're actually long on wind power, to the extent there are some days we have to turn off the turbines because there's no place for the electrons to go.”

Ultimately, McGinn believes a mix of economic and political pressure will incentivize the Chinese to follow that lead. Even as our own federal government continues to falter when it comes to adequately addressing climate change. Including a president who speaks against global warming when it suits him, while proposals like Gateway Pacific fail to make his radar, and the equally offensive Keystone XL Pipeline remains in play pending a final decision from the State Department.

“Are we going to deal with these an issue at a time, or start to look at them as part of our national energy policy?” McGinn wondered. “Are we really going to approve taking all of this carbon from beneath the Earth and putting it into the atmosphere with potentially devastating effects on populations around the globe?”

Not if Mayor Mike has anything to say about it.

Of course, he might not be mayor for much longer if his current poll numbers don't rebound in time for what looks to be a tough November election against fellow Seattle Democrat Ed Murray, who also publicly opposes the Gateway Pacific Terminal.

“Everybody says they're against it,” the incumbent acknowledged, before turning on his front-running challenger. “But this is an issue I've led on because of my passion for the environment and for this city. And I have a suspicion that my opponent in this race wouldn't have that same passion. One of his major fundraisers is doing public relations work for the coal companies. And he's accepted donations from BNSF, the railroad company. So I would be very surprised if he would push this issue as hard as I will.”

On my way out, McGinn's spokesperson suggested paying a visit to a local Seattle sustainability think tank called the

Sightline Institute to learn more about the dirty dealings beneath the surface of the great coal debate. So I made an appointment to visit their offices,  in a LEED-certified green building just blocks from Seattle's famous Pike Place Market. But first, I took a quick detour—just ten miles outside the city—for some scenic hiking and a lesson in historical context along the appropriately named Coal Creek Trail that starts in the tiny town of Newcastle, population 10,380.

Host to a productive coal mine from its founding in the 1870s, and later linked by the first rail line in the county directly to Seattle, this land produced 13 million tons of fossil fuel before operations shut down in 1963. Today, on trails lined with red cedars, cottonwoods, devils club, nettles, Indian plum, sword ferns, and salmonberry, you can follow one of the old rail grades for miles, encountering a few filled-in mine shafts and related artifacts along the way, including a clearing where the coal workers built a baseball diamond sometime around the turn of the century. Informational signage explains how their efforts played a central role in the economic development of the entire region, fueling local industry and creating an export market via train to energy-hungry California.

For nearly a century, the entire Pacific Northwest prospered in part because of these mines, despite the abusive antilabor practices and harsh working conditions of the era, most famously chronicled by Upton Sinclair in his 1917 novel King Coal. So is it hypocritical to turn around now, and say China shouldn't take advantage of this same cheap, plentiful natural resource? Possibly, but at various times slavery and child labor also powered the American economy, and who would make the same defense in favor of those practices?

Photo by David Bienenstock

Certainly not the Sightline Institute's Program Director Clark Williams-Derry, who quickly made it clear that the fight against Gateway Pacific just might be the pivotal issue in what's looking (at least to me) like an increasingly long-shot attempt to stave off the worst effects of global warming before they drown us all. For with each new killer storm, record-breaking drought, raging wildfire and massive tsunami, it becomes increasingly clear that no amount of evidence will convince those with a vested interest in the status quo to admit the obvious and change course. And so, given the lack of any real national conversation on climate change, Gateway Pacific and a similar coal export proposal west of Longview, Washington, have brought together the kind of broad coalition required if we ever hope to turn the tide from the bottom up.

In describing this dynamic, Williams-Derry depicts Washington state as Denmark in the west grafted onto Oklahoma in the east, with the Cascade Mountains dividing the progressive environmentalists along the coast from the small-town conservatives living on the other side. Only now he sees them banding together, as many rural residents balk at suffering the drawbacks of the coal trains that will whoosh past their homes and farms without reaping any of the benefits. These strange bedfellows might also be getting some unexpected assistance from an unlikely source: the plummeting price of coal.

“This is basically a Hail Mary pass for the coal companies,” Williams-Derry continued. “They can barely make money at today's market prices, so they're just marching forward hoping that by the time these coal-export proposals pass the regulatory process, including getting through all of this public opposition, followed by spending billions actually getting this coal out of the country, that finally the bubble will reinflate sufficiently to justify all of those investments.”

The story of the coal bubble begins back in the good old days of the George W. Bush administration, when a whole new raft of coal-burning power plants were in the planning stages and set for easy approval. But then a perfect storm of new environmental standards, subsequent US coal-plant closures, rising mining costs, the 2008 Great Recession, and cheap natural gas prices (largely due to fracking) combined to push down demand precipitously. Things began to rebound in 2009, however—a resurrection largely fueled by China's unprecedented double-digit economic growth and related supply bottlenecks. Accounting for more than 50 percent of worldwide demand, China actually moved at that time from a net coal exporter to a voracious importer.

By 2011, international prices neared their pre-recession highs, prompting US coal companies—facing declining domestic demand—to propose at least six new West Coast export facilities, including Gateway Pacific. But according to Williams-Derry, their plans were all “two-to-four years behind the times.” Because although these new facilities arrived at or near peak international prices, those markets have since plummeted—by 30 percent in the last year alone. Crashing long before any of those export terminals could be approved, never mind built and made operational.

Existing exporters in the Pacific Rim like Australia and Indonesia meanwhile moved quickly to meet the excess demand, while China worked to make its economy more efficient and shift energy production to natural gas, nuclear power, and renewables. Just this month, the Chinese government announced a total ban on all new power-plant construction near Beijing, Shanghai, and Guangzhou to help control air pollution, all of which pushed prices back down to where they were following the financial crisis.

In August, when the federal government put a Powder River Basin coal tract in Cheyenne up for auction, their buried treasure received no bids, including from a mining company already operating an adjacent tract—the first time that's ever happened in Wyoming history. The Bureau of Land Management's next auction saw only one bid, and it was so low they rejected the offer.

“The signals right now are very clear that Asian demand is not nearly what was hoped for two years ago,” Williams-Derry explained. “You see that when a coal company doesn't show up to essentially bid on its own product. You also see it from a number of Wall Street blue-chip firms that say the rise in price we saw was in fact a bubble.”

Most notably, a Goldman Sachs research report released over the summer declared that “the window for profitable investment in thermal coal is gradually closing,” suggesting that if you haven't already gotten product into the pipeline, you're too late to make money. Meanwhile, Goldman Sachs Infrastructure Partners owns a 49 percent stake in the parent company pursuing Gateway Pacific.

“So you have two tentacles of the great vampire squid hedging on two sides of the same bet,” according to Williams-Derry. “The difference is that the infrastructure side has already been largely sold off to pension funds, teachers unions, and so forth as a 'safe investment.' So the risk has been passed on to someone else.”

So why even bother moving forward with these massive export proposals, particularly in the face of such fierce and growing opposition?

Most obviously, the coal companies simply don't have a better option than to do what they do best, cross their fingers, and hope for a reversal of fortunes. A closer look, however, reveals an important secondary benefit, one you'll never hear escape the lips of a well-paid flack from Edelman.

“The goal, fundamentally, is not just to make money on coal exports, but also to give the coal companies, who are basically at the mercy of declining US coal prices, the opportunity to say, 'OK, if you don't want our coal, that's fine, we'll ship it to Asia,'” according to Williams-Derry. “Because that would give them a point of leverage to raise prices domestically. And that's an even bigger benefit for US coal than tapping the Asian markets. So it's not just about selling to China, it's also a way of using those exports to make Americans pay more for their own coal.”

And it really is our coal—a natural resource owned by the public, at least until the federal government leases it off to private industry at rock bottom prices. Furthermore, according to Sightline's analysis, if the coal companies ever had to pay the true costs of all the pollution, deaths from asthma, and climate change caused by their industry, they'd never survive in the marketplace.

Which leaves only the last, best argument I've heard in favor of Gateway Pacific, the idea that at least when it comes to global warming, the international coal market is really just a zero sum game. Eliminate additional supply from US exports and China will still burn the same amount of coal—and perhaps lower quality coal. But even here, independent research reveals this seemingly common sense argument as a smokescreen.

A 2013 report from Power Consulting, for example, found that every 140 million tons of additional Powder River Basin coal exported from the US will cause a net rise of 98 million tons burned in Asia.

“If Chinese markets have access to a broad number of suppliers, that creates a race to the bottom to produce large amounts at minimal cost.” Williams-Derry explained. “That's going to keep prices stable and low, which are the ideal conditions to incentivize increased coal consumption. So the more entities that get into that market, the more coal that's out there, the more likely that China will continue to make long term investments in coal.”

Which brings me back to Cherry Point.

Naturally, I'd never admit to engaging in something as harshly punished as criminal trespassing. But if I did venture past that sign and into the sun-dappled wilderness beyond, all the way down to a stunning sheer cliff with a sweeping view of Puget Sound and the rocky shore below, I have no doubt I'd see something a lot closer to the Lummi Nation's vision of the land as a place of peace and sacred spiritual beauty than Lauri Hennessey's ideal industrial zone.

The only question is what will I find there should I return just two years from now.


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