More Carbon than Keystone

Peabody Energy and Warren Buffett ship coal to China


Bellingham, Washington


At dusk on a warm Wednesday afternoon in September, a Lummi couple in their sixties had just finished picking kelp out of a gill net they had stretched out into Bellingham Bay. The wind was calm and the water so clear that every stone on the bottom was visible. The incoming tide was flowing north along the peninsula that makes up most of the Lummi Nation, in the direction of the Nooksack River, the net straining against six long branches that anchored it to the bottom.

A dozen silver salmon were spread out on a pile of kelp. The man pulled a small shark out of the boat and dropped it on the bank. The woman climbed onto a log and yelled at another fisherman who was tossing kelp into the current. She spotted a harbor seal swimming toward the shore.

“Look at that,” she said. “If they’re not eating the salmon, they’re playing in your nets.”

But for the weathered, ’80s-vintage fiberglass boat powered by a small outboard, I might have been looking at a sepia-toned photograph of Coast Salish Indians fishing as they fished for a thousand years before 1885, when their chiefs accepted the inevitability of white settlement, signed the Point Elliot Treaty, and the tribes retreated to reservations.

The couple were subsistence fishers—filling their freezer with salmon and selling part of their catch out of an ice chest. But many of the Lummi earn their living fishing. The professionals were gill-netting in the river or working reef nets in the bay.

No one would describe these waters as pristine. A few miles north of the spot where the gill netters were fishing, BP and Phillips 66 operate refineries and tanker terminals, and Alcoa produces 260,000 metric tons of aluminum a year.

But a coal-export terminal that will connect the strip mines of Wyoming’s Powder River Basin to coal-fired electricity plants in China is a greater threat to these fisheries and the regional environment than two refineries and a smelter. The terminal is a threat that extends beyond the Pacific Northwest and beyond China. The Powder River Basin is a carbon reserve with the potential to heat the planet past the point that our civilizations can withstand.

On the drawing boards, and in the permitting process, the Gateway Pacific Terminal at Cherry Point will be more than twice the size of the largest coal port in North America.

The interests advancing the project are betting on a complex permitting process and against two governors—Washington’s Jay Inslee and Oregon’s John Kitzhaber—who are fiercely committed to environmental protection.

The corporate architecture behind the deal is elaborate.

Peabody Energy, the largest coal producer in the world, operates the strip mines in the Powder River Basin. Warren Buffett’s Berkshire Hathaway holding company owns the Burlington Northern Santa Fe Railroad (BNSF), which will move the coal from Wyoming to ports in the Pacific Northwest. Goldman Sachs owns 49 percent of Carrix Inc., which owns SSA Marine, which in turn owns Pacific International Terminals, the subsidiary that will operate the coal port. Buffett wins, or loses, on both ends of the deal. As investment banks were collapsing in 2008, Berkshire Hathaway bought $5 billion in preferred Goldman Sachs shares.

The Powder River Basin is a carbon reserve with the potential to heat the planet past the point that our civilizations can withstand.

The low price of natural gas, and tighter environmental restrictions, have made coal a hard sell in the U.S. But China is bringing one new coal-fired electricity plant on line each week, has minimal environmental standards, and is described by Peabody CEO Gregory Boyce as a “coal-fired miracle.” Without a Pacific outlet, Peabody’s coal is landlocked in a country that, for the most part, has little use for it. Gateway Pacific is one, and the largest, of three coal-export terminals looking for homes in Washington and Oregon.

To get some idea of what’s in store for Cherry Point, I drove an hour north from Bellingham to what is currently the largest coal port in North America. On Google Maps, the Westshore Terminals in southwest British Columbia appear as a black mountain covering a third of a man-made island near the mouth of the Fraser River.

A million and a half tons of coal can be piled in three parallel stacks that at times reach eight stories. The stacks are divided by three parallel tracks for three cranes, each fitted with a 30-foot-tall rotary wheel equipped with 12 buckets that shovel coal onto conveyor belts.

According to Oregon Public Radio, Westshore spent $7 million upgrading water guns and misting systems to control coal dust. Yet dust remains a problem as far away as Point Roberts, a landlocked American town on the south end of a peninsula two miles from the coal terminal, where house painters advertise special deals on coal-dust removal.

On the last Sunday in September, the rain had let up, a 35-mile-an-hour wind was blowing hard out of the south, most of the machinery at the terminal was idle, and black dust swirled in vertices above the coal stacks. Seven million dollars has to have made some difference, but coal can’t be moved, or stacked, without creating dust.

Westshore ships 21 million metric tons to China each year. Gateway Pacific, when fully built out, will export 48 million metric tons each year.

And while Westshore sits at the end of a two-mile causeway, Gateway Pacific will be built on the mainland, adjacent to the Lummi Reservation and 10 miles west of downtown Bellingham.

The proposed Gateway Pacific Terminal will occupy 1,092 acres. When it begins shipping, its coal pile and machinery will be contained to 105 acres, which over time will expand to 350 acres.

As many as three ships will tie up at a 2,980-foot wharf, taking on coal from a 1,250-foot trestle that connects the stockpiles to the wharf. (Westshore had no major environmental catastrophes since it opened in 1970—until December, when a tanker veered off course, toppled a trestle, and dumped 30 tons of coal into the water.)


Mile-long trains and capesize ships

The terminal is the stationary piece of the project.

“We’re in the position of having the terminal here,” Crina Hoyer told me. “But coal trains are a mile-and-a-half long and really dirty. They are a concern all along the rail route.”

Hoyer is the executive director of RE Sources for Sustainable Communities, a Bellingham environmental non-profit that is coordinating more than 100 advocacy groups in a campaign to stop Gateway Pacific. Two coal trains move through the city of 81,000 every day, on their way to British Columbia then back to the Powder River Basin.

Gateway Pacific will add nine more trains (18 transits) to tracks that run along the Bellingham waterfront. (If a second coal terminal under consideration is approved, at Longview near the Oregon state line, 34 coal trains per day will travel through communities that lie between strip mines in the West and coal terminals in the Pacific Northwest.)

In July the Sierra Club, the Natural Resources Defense Council, and six regional environmental groups sued the BNSF railroad under a provision in the Clean Water Act. The groups claim that:

“According to BNSF testimony at hearings before the Surface Transportation Board, each rail car loses an average of 500-3,500 lbs. of coal dust. Coal trains are composed of approximately 120 rail cars, resulting in an average of 60,000-420,000 lbs. of coal per train each trip.” Plaintiffs allege that BNSF is violating the Clean Water Act because dust ends up in waterways along the rail bed: the Columbia River, Puget Sound, the Spokane River and 90 other bodies of water.

“The point sources are the rolling stock,” Charlie Tebbutt told me. Tebbutt is a Eugene, Oregon, attorney who filed the suit. “The Clean Water Act requires them to have permits if they are discharging pollutants. And they don’t.”

The suit asks a federal judge to impose civil penalties of $35,000 a day for each violation of the Clean Water Act and to enjoin the railroad from shipping coal without taking measures to contain the dust.

A BNSF spokesperson told Bloomberg News that the lawsuit is “a publicity stunt meant to stop the permitting of multi-commodity export terminals in the Pacific Northwest.”

The other moving pieces of the Gateway Pacific project are bulk cargo ships.

“They are adding 457 transits a year to these waterways,” said Matt Petryni, who is coordinating RE Sources’s “Power Past Coal” campaign. “And the coal will be shipped on capesize and Panamax coal carriers.”

A Panamax bulk carrier—294 yards long and 45 yards wide—is the largest ship that can transit the Panama Canal. Capesize vessels are so large—317 yards long and 50 yards wide—that they sail around the southern continental capes, because the Panama and Suez Canals cannot accommodate them.

Bulk carriers burn bunker oil, cheap low-grade, high-sulfur fuel made from “resid” that remains after gas, kerosene, and diesel are refined. Ships leaving the Gateway Pacific Terminal will be topped off with fuel for Pacific passage. And they will be navigating the already congested waterways of the San Juan Islands, Petryni said, where one navigational error can result in an ecological disaster.

The San Juans are an archipelago of 800 islands, reefs, and narrow waterways, where cleaning up after an oil spill would be a challenge. Rosario Strait, which connects Bellingham to the San Juan de Fuca Strait, is a half-mile wide. Haro Strait, which straddles the Canada-U.S. border, requires pilots to make a sharp turn in a channel less than two miles wide.

The capesize Selendang Ayu en route to Xiamen, China, from Seattle in November 2004, was carrying 1,000 tons of bunker oil when it lost power and broke in half in Unimak Pass in the Aleutians.

Hoyer said the project will also threaten fragile habitat that is protected by state law. Gateway Pacific will be located in the 296-acre Cherry Point Aquatic Reserve, where Pacific herring reproduce and five species of salmon lay over to adapt to salt water before returning to the sea.


Dwarfs Keystone XL pipeline

Perhaps because much of the infrastructure is in place—two rail lines that connect Wyoming to the Pacific Northwest—the coal ports have not engendered a national movement like the Keystone XL pipeline has. But the stakes are even higher.

“Powder River Basin dwarfs Keystone in terms of climate impact,” Denis Hayes told me. Hayes, who coordinated the national staff that organized the first Earth Day in 1970, directs the Bullitt Foundation, a Seattle-based environmental organization with a national reach. Hayes said there is less interest in coal because coal has traditionally been burned for fuel, while bitumen—or tar-sands oil—is a new fuel source. And because Keystone is the focal point of Bill McKibben’s 350.org campaign.

Eric de Place, at the Seattle-based Sightline Institute, used State Department and EPA figures to calculate that burning oil cooked out of Alberta’s tar sands will release 144 million tons of CO2 per year. Burning coal that Peabody intends to ship to Asia will produce 199 million tons of CO2 per year.

Coal shipped from the Gateway Pacific alone will add 86.7 million tons of CO2 to the atmosphere each year.

No one handicapping a green campaign against Peabody Coal and Warren Buffett would describe it as an even match. Yet it is a fight that a coalition of local, regional and national environmental organizations, and the Lummi Nation, stand a fair chance of winning because the fight isn’t fixed.

Looking out over Puget Sound from his office in Seattle, Hayes described the political geography of the Coastal Western United States. “There are three governors—Jay Inslee, John Kitzhaber and Jerry Brown—who have the opportunity to make the West Coast a different sort of place regarding environmental issues,” Hayes said. “And on this issue, with these governors, it’s going to be difficult to turn the West Coast into … the great carbon exporting axis of the world.”

In March, Washington Governor Inslee and Oregon Governor Kitzhaber collaborated in a remarkable letter to the President’s Council on Economic Quality. The Democratic governors warned of a threat far greater than the Pacific export terminals:

No one handicapping a green campaign against Peabody Coal and Warren Buffett would describe it as an even match.

“We believe the decisions to continue and expand coal leasing from federal lands and authorize the export of that coal are likely to lead to long-term investments in coal generation in Asia, with air quality and climate impacts that dwarf almost any other action the federal government could take in the foreseeable future.”

The Army Corps of Engineers is pursuing what Hoyer described as “a very myopic” approach to its environmental assessment, considering only the local effects of the terminal.

But the Corps of Engineers cannot, on its own, make the project happen.

The Washington State Department of Ecology and the Whatcom County Council are conducting an assessment that complies with the Washington Environment Policy Act, studying the “impacts on earth, air, water, plants and animals, energy and natural resources, environmental health, land and shoreline use, transportation, and public services and utilities.”

Both the County Council and the Department of Ecology have to issue permits before the project can move forward. The state agency, Hayes said, reflects Governor Inslee’s values and is not likely to bend to outside political pressure.

The County Council is an elected body, and four of its seven incumbents face challengers this month. It is also non-partisan and quasi-judicial, so no candidate has taken a public position on the Gateway Pacific Terminal. But a $20,000 contribution from Burlington Northern to the state Republican Party, followed by $5,000 contributions to four candidates, defines the positions of four candidates.

Lisa McShane, a Bellingham political activist who tracks political money, told me that some corporate contributors were holding back to avoid the appearance that a local race is being bought by outside interests. Washington votes by mail and ballots were not available until October 10.

“The big money will be spent late,” McShane said. “Most of the campaign will be evident in people’s mailboxes in October.”

After the November 5 election, seven members of a county council a continent removed from the corridors of power in Washington, D.C. and the markets in Lower Manhattan will shape the environmental policy in the United States and the People’s Republic of China.


Seven generations

Then there is the Lummi Nation.

Its elected governing body, the Lummi Business Council, has opposed the terminal since 2010.

A lawsuit filed by RE Sources in 2012 appears to have stiffened its resolve. The Lummi knew that in 2011 Pacific International Terminals bulldozed roads and drilled test wells in an archeological site where pre-Columbian artifacts, and the remains of Lummi ancestors, were buried 3,500 years ago.

RE Sources’s Clean Water Act lawsuit revealed that the company knew that its site-assessment team was working in a designated archeological site.

“We think the evidence proves that the violations were intentional and motivated by profit,” said Knoll Lowney, the Seattle attorney who filed the suit. “They jumped the gun on the permitting process. The evidence proves that they lied to multiple government agencies.”

To settle the suit, Pacific International Terminals paid $1.6 million to RE Sources, which turned the money over to a group that restores wetlands. But the willful desecration of a sacred site has become central to the narrative of Lummi leaders working to stop the coal-port permit.

“They took a bulldozer over a known site where human remains are known to lie,” Jay Julius said at a tribal meeting in February. “They knew and understood well before July 2011 the nature, extent, and resources [contained in the site].”

Julius, a professional fisherman and secretary of the Lummi Business Council, is leading the tribe’s opposition to the terminal. (Julius was returning from a regional Indian Nations meeting where the export terminal was discussed when I was reporting on the story and was unavailable for an interview.)

At the February meeting, Julius described the coal port as a threat to 60,000 commercial fishermen and the state’s $3 billion fishing industry. He said the bulk carriers will “come right through our ancestral waterways,” and moor “at Vendovi Island, where we fish.”

“They want to take 5.3 million gallons of water per day out of the Nooksack River to water down their coal piles,” Julius said. “How does that affect our ability to fish the Nooksack?”

In July, the Business Council wrote to the Corps of Engineers, declaring the “Lummi Nation’s unconditional and unequivocal opposition to the Gateway Pacific Terminal.”

The letter said coal port is an “impairment of the Lummi treaty fishing right.” The Corps usually defers to treaty rights, even if their response to the letter suggests they believe negotiations are still on.

The irony is exquisite.

A Native-American tribe of 5,000 telling the U.S. government that, “We must manage our resources for the seventh generation of our people.” Then stopping the advance of a railroad baron moving his trains across the American West.

Lou Dubose is the editor of The Washington Spectator.

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