Tongue River Railroad seeks quick action on smaller project

The Tongue River Railroad told the U.S. Surface Transportation Board (STB) in an April 19 filing that it will abandon, following an adverse appeals court decision, plans to build its rail line south of Ashland, Mont., and will instead focus on building the 80-mile segment of line that will run north from Ashland to a BNSF Railway interconnect at Miles City, Mont.

The Tongue River Railroad has been around as a proposal for over 20 years, with its routing fought out over the years at the STB and its predecessor agency, the now-defunct Interstate Commerce Commission. Environmental groups and local ranchers have put up stiff opposition to the plan.

Recently, the U.S. Ninth Circuit Court of Appeals, on a partial remand of issues back to the STB, essentially struck down board approvals of rail alignments in decisions called TRCC II and TRCC III. The railroad said it now wants to withdraw or amend its applications related to those decisions, which impact the south-of-Ashland line segment, and only proceed under a separate approval of the north-of-Ashland segment.

The need to push along construction of this north-of-Ashland segment became sharper over the past couple of years as Arch Coal (NYSE: ACI), now a co-owner of the Tongue River Railroad, secured state and private coal reserves in the Otter Creek area for a big new strip mine. Plans to develop this mine in a few years mean that north-of-Ashland rail construction needs to happen as soon as possible, the Tongue River Railroad told the board. It noted that the board will need to prepare a second supplemental environmental impact statement for this rail project now that the impacts of the planned Arch Coal mine need to be considered.

The railroad noted that other agencies – including the U.S. Army Corps of Engineers, the U.S. Bureau of Land Management and state agencies – will depend on the new environmental review done by the board during their own work on still-needed permits for the new rail segment.

In its full, original routing, the Tongue River Railroad would have started at the south end with an interconnect into a BNSF line near the existing Spring Creek and Decker coal mines, then would have run northeast along the Tongue River, through the Ashland/Otter Creek area, to Miles City. That would have been a win-win. It would not only have cut miles off existing BNSF coal movements over current lines to Upper Midwest utilities and a coal transloading terminal on Lake Superior, it would also have opened up access to the Otter Creek coal reserves in the middle. The new plan cuts out one of those wins, the part about shorter BNSF routing.

Said Arch Coal about its investment in the railroad in its Feb. 29 annual Form 10-K report: “In July 2011, the Company purchased a 33% membership interest in the Tongue River Holding Company, LLC (‘Tongue River’) joint venture. Tongue River will develop and construct a railway line near Miles City, Montana and the Company’s Otter Creek reserves. The Company has the right, upon the receipt of permits and approval for construction or under other prescribed circumstances, to require the other investors to purchase all of the Company’s units in the venture at an amount equal to the capital contributions made by the Company at that time, less any distributions received.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.