Federal board axes Tongue River Railroad proceeding, without prejudice

The U.S. Surface Transportation Board in an April 22 decision issued in written form on April 26 denied a petition filed by the Tongue River Railroad Co. (TRRC) to hold a proceeding over a planned rail line in Montana in abeyance and dismissed the proceeding without prejudice to the TRRC coming back later with a new application.

In October 2012, TRRC filed an application for a board license allowing it to construct and for TRRC partial owner BNSF Railway to operate a rail line in southeast Montana. The line would originate at the planned Otter Creek surface mine of Arch Coal (another TRRC co-owner), and also at another undeveloped coal tract nearby, and would then interconnect with the BNSF at Colstrip, Montana.

On November 2015, TRRC filed a petition to hold the proceeding in abeyance. According to TRRC, the proposed line’s major shipper, Otter Creek Coal LLC, a subsidiary of Arch Coal, does not expect a final determination regarding the mine permit application it filed with the Montana Department of Environmental Quality (MDEQ) for another year or more. TRRC explained that until that application before the MDEQ is approved and the mine is developed, there will be no coal to transport on the proposed rail line and therefore no reason to construct it.

TRRC asserted that holding this proceeding in abeyance would avoid any further expenditure and potential waste of resources in the event the mine permit is further delayed or denied.

In December 2015, the Northern Plains Resource Council and Rocker Six Cattle Co. (collectively referred to as NPRC) replied in opposition to TRRC’s abeyance petition and filed a motion to deny and dismiss with prejudice TRRC’s rail construction application. NPRC asserted that TRRC failed to disclose that Arch is having severe financial difficulties. NPRC claims that Arch’s weak financial condition demonstrates that the demand for coal (and thus need for the proposed rail line) has greatly diminished and that TRRC may not have the financial ability to construct the line.

NPRC further argued that the purpose of TRRC’s abeyance petition is to delay the project because of weak coal market conditions and to avoid the disclosure of allegedly damaging documents as part of discovery. 

NPRC asserted that, if the rail construction project is allowed to remain dormant indefinitely rather than dismissed with prejudice, there would be harm to the landowners NPRC represents, in that they would not be able to make improvements on their properties, due to the uncertainty of the project’s status. 

In December 2015, TRRC replied in opposition to NPRC’s motion. Among other things, TRRC noted that: Arch is only one of three TRRC owners that could fund construction of the rail line; both the rail project and mine project will continue despite Arch’s current financial condition; and the demand for coal will be sufficient in several years to warrant the opening of the Otter Creek Coal mine and, by extension, the rail line.

On March 15, NPRC argued that Otter Creek Coal’s decision to suspend action on its mine permit application illustrates why the proceeding seeking authority to construct and operate the rail line should be dismissed. On April 5, TRRC responded that dismissal with prejudice is not appropriate here. TRRC stated that Arch still possesses a lease from the State of Montana for the Otter Creek coal tracts and that energy markets can change quickly. NPRC responded on April 15, stating that over half the coal tracts are leased from Great Northern Properties Limited Partnership, and that that entity terminated the lease months ago.

Said the STB decision: “We will deny TRRC’s request to hold this proceeding in abeyance and instead dismiss the proceeding without prejudice. At this time, there appears to be little prospect that Otter Creek Coal’s mine permit will be secured in the foreseeable future. Otter Creek Coal and its parent, Arch, have both filed for bankruptcy, and Otter Creek Coal has suspended its application for an MDEQ mining permit indefinitely. While it is possible that Otter Creek Coal or another party could restart the mining permit application process in the future, it is unclear whether and when this might occur. Therefore, to keep this docket open would serve no purpose. In addition, NPRC requests that the Board dismiss with prejudice. We will deny this request. … [A] party cannot be permanently precluded from reapplying for Board authority. Therefore, we will dismiss this long-running proceeding, but without prejudice to the refiling of a request for Board authority in the future.”

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.