Is coal industry behind secretive plan to preserve a defunct California railroad?

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An out-of-nowhere proposal from a shadowy company to take over a defunct railway through Northern California’s coastal mountains has raised suspicions that Western coal companies are engineering a backdoor pathway for exporting coal to Asia.

California has been seeking permission from federal rail regulators to decommission much of the 320-mile rail network, connecting the San Francisco Bay with the port at Humboldt Bay, and repurpose it as the Great Redwood Trail.

That plan is now in jeopardy after lawyers for the mystery company filed papers on Aug. 16 with the federal Surface Transportation Board, objecting to California’s plans to transform the North Coast Railroad to a trail. State Sen. Mike McGuire, a champion for the trail project, now alleges Western coal operators, including Utah producers, are behind the move.

McGuire based his suspicions on the presence of Utah state Sen. David Hinkins, a coal industry ally, at a recent meeting with Humboldt County officials where the rehabilitation of the railroad was discussed.

In a news release posted Friday, McGuire said the plan to transport coal is “one of the largest environmental threats in decades” to his district which stretches from Marin County north to the Oregon border, and vowed to shut it down.

“This toxic coal train would run through the heart of so many thriving communities and along the Russian and Eel Rivers, which are the main source of drinking water for nearly 1 million residents‚” said McGuire, a Democrat from Sonoma County and the California Senate’s assistant majority leader. “These mighty waterways are also home to some of the most sensitive ecosystems on Earth, which include numerous endangered species.”

The controversy was first reported Sept. 2 in a story posted by the Lost Coast Outpost.

With the U.S. appetite for coal in steep decline, Western producers see their industry’s salvation in Asia, where there is a growing demand for coal, especially in Japan. The 2011 Fukushima meltdown soured the island nation on nuclear power and it has turned to coal to fill the gap.

But liberal politics and climate activism have effectively blocked proposed coal export terminals on the West Coast, most notably at Oakland, Calif., and Longview, Wash. The city of Richmond, Calif., last year banned coal handling and ordered a phaseout of exports from a terminal that has been shipping Utah coal for the past several years.

The first indication that the coal industry might be interested in Humboldt Bay, a port 260 miles north of Richmond, was made public on Aug. 16 when the Chicago-based lawyers for a newly formed LLC called North Coast Railroad Co. filed papers with the Surface Transportation Board, challenging the state’s move to convert the railway to a trail. The filing claimed the company has a fully developed proposal to restore the defunct line and has funding to the tune of $1.2 billion.

The filing claimed that the North Coast Railroad Co. (NCRCo) is making an “offer of financial assistance,” or OFA, to acquire the line and restore it to operating condition. The company, incorporated as an LLC Aug. 6 in Cheyenne, Wyo., made no reference to what commodities it was hoping to transport.

“NCRCo is a well-funded, interested party with thoroughly developed plans to restore the Line and deploy it in the transportation of high-volume shipments by rail over the Line,” wrote attorney Robert Wimbish. “It must be allowed to participate in this proceeding and present its case in support of an OFA, despite the [North Coast Railroad] Authority’s attempt to foreclose all efforts to see the Line restored to service before relevant evidence of transportation need and access to adequate funding have even been formally presented and assessed.”

Translation: This newcomer has the financing and blueprint for moving freight on the old railroad, which gives its proposal precedence over any rails-to-trails plan.

This came as a complete surprise to Charles Montagne, a lawyer representing the North Coast Railroad Authority, who dismissed the filing as a “hoax” because of the billions it would require to make the century-old railway suitable for hauling heavy freight. The state agency had been searching in vain for such a proposal, but had never heard of the vague proposal laid out by Chicago lawyers prior to the Aug. 16 filing, Montagne said.

The northern half of the line follows the sinuous bends of the Eel River as it flows north through a narrow canyon before emptying into Humboldt Bay. Washouts and tunnel collapses were common occurrences that pushed the last operator, Eureka Southern, into bankruptcy.

“This thing has been embargoed since 1998. There has been no use on it. It’s geologically unstable. It should never have been a railroad,” Montagne said. “They jeopardized lives by putting it on unstable terrain next to a river like the Eel. If you do rehab it, it falls apart right away because of earth movement, mudslides and storm events. It’s the most expensive line in the country to maintain.”

Montagne said it would cost at least $2.4 billion to restore the 176 miles to track from Willets to Eureka, plus billions more to prepare an interstate rail connection, upgrade Humboldt Bay’s port and build an export terminal.

While the northern half of the line presents countless technical hurdles, the southern half passes through Napa and Sonoma wine country and Marin County, communities that would doubtlessly object to unit trains hauling coal passing through.

“If coal anticipates using this line, they are deluding themselves, D-E-L-U-D-I-N-G, deluding themselves,” Montagne said. “We see it literally as an impossibility.”

Wimbish did not return a phone message, nor has his office responded to Montagne’s requests for information.

Montagne is baffled that the company won’t reveal its real identity or how it came to “thoroughly” develop a restoration plan without ever contacting the rail authority.

“They don’t identify an officer, they don’t identify an agent, they don’t identify anything,” Montagne said. “We thought it could be a ruse by some locals, some rail nuts.”

Then he learned of Utah’s Sen. Hinkins’ involvement, which pointed to coal-industry involvement. Reporting by the Outpost said the Orangeville Republican visited Humboldt Bay earlier this year to discuss plans for exporting coal with local elected leaders.

Reached Tuesday, Hinkins, whose district covers much of central Utah coal country, confirmed he had gone to Eureka to scope out the out-of-the-way port that once shipped timber back when logging was a mainstay activity in Northern California’s redwood forests. He said he went there at the behest of American Indian tribes — the Crow and the Navajo — that have extensive coal holdings in Montana.

“They asked if Utah would be interested and I said Utah would be interested in anything that would help us ship coal,” Hinkins said. “The port would work perfectly, but the rail service would be terrible.”

After observing the rugged terrain the railroad moves through, he added, he lost interest in the prospect of moving Utah coal through Humboldt. He said trona from Wyoming and iron ore from Utah could also get shipped.

The railroad was built prior to World War I to move Humboldt County lumber to the rapidly growing San Francisco Bay. But over the decades it has lost its relevance with the declining timber harvests and the regular washouts that disrupted service.

Working with the conservation group Friends of the Eel River, Sen. McGuire secured legislation and appropriations to harness the old rail line for one of the nation’s longest rails-to-trails projects.

“It will provide both an opportunity to mitigate the mess left by the railroad and also ecologically appropriate ways for locals and visitors to fall in love with this spectacular and remote region,” said the group’s executive director Alicia Hamann in an email. “Rebuilding the [railroad] line would destroy progress that we and many others have made in protecting salmon, steelhead, and other aquatic life in the Eel River, and running 100 carloads of coal through the canyon to Humboldt Bay would poison our region.”

McGuire’s release said he intends to introduce legislation to keep coal off the line.

“I’m here to promise that, no matter how many billions of dollars these coal barons throw at this project, we’re going to stop this dangerous proposal and put a nail in the coffin of coal, " he said, “and we will continue to move the Great Redwood Trail forward.”