Utah port authority memos reveal coal industry ties to California rail controversy

The Utah Inland Port Authority briefly worked behind the scenes to advance a secretive proposal to rehabilitate an unused California railroad for coal.

Francisco Kjolseth | The Salt Lake Tribune Coal is piled up at the Levan transfer facility along Interstate 15--south of Nephi. Utah Community Impact Board awarding a $50 million loan to four coal-producing counties to build a deep-water port in Oakland, Calif. that would be a shipping point for Utah coal. We want to illustrate Utah's current coal industry chain and points that might have between 1 and 3 million tons of coal moving through them in the future.

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The Utah Inland Port Authority worked behind the scenes exploring a secretive proposal to rehabilitate an unused California railroad that would be used to ship Western-mined coal overseas through an out-of-the-way port on the Northern California coast, according to internal documents obtained by The Salt Lake Tribune.

In March, six months before the rail project came to public attention, a Utah port authority staffer named Christopher Mitton participated in a conference call with two coal industry representatives, an administrator from a Northern California tribe and a man named Justin Wight, identified as the “project consultant.” The call’s purpose was to discuss taking over the North Coast Railroad and develop an export terminal at Humboldt Bay. The project would have complete, or at least majority, tribal ownership.

According to a memo Mitton wrote summarizing the March 16 call, Wight was seeking up to $1 billion in loans from the U.S. Department of Transportation to rehabilitate the rail line, which winds through Northern California’s Eel River Canyon.

“This program is not a grant program but a loan program that would need to be repaid,” the memo said. “The loan is likely contingent on securing long-term contracts as a source of repayment.”

The memo doesn’t specify which federal loan program, but a probable option is the Railroad Rehabilitation and Improvement Financing program, overseen by the Transportation Department’s Build America Bureau. The North Coast Railroad, however, does not appear on the program’s list of active projects.

The industry representatives on the call were Conrad “CJ” Stewart, energy director for the Crow Nation, and Utah Mining Association president Brian Somers. The Crow of southeast Montana holds extensive coal reserves in the Powder River Basin. Joining them on the call was Michelle Vassel, tribal administrator for the Wiyot, a federally recognized tribe that is indigenous to Humboldt Bay.

The Wiyot Nation is “fully committed to this project” and the Crow Nation is “looking for any new export channel or new use for their mineral resources,” according to the memo that Mitton sent to Jill Flygare, the port authority’s chief operating officer.

Vassel did not respond to a request for comment left at the Wiyot tribal offices in California. Stewart did not respond to a voicemail left on his cellphone. Somers could not be reached and contact information for Wight was not available.

A co-founder of the National Tribal Energy Association and former member of his tribe’s Legislature, Stewart is a leading advocate of coal exports and has spoken out against Pacific coast states’ efforts to block proposed coal-loading port projects, such as the stalled Millennium Bulk Terminals in Longview, Wash., and the Oakland Bulk and Oversize Terminal on the San Francisco Bay.

“Imagine having a trillion dollars in mineral wealth under your feet and yet your people are starving and destitute before you,” he told a Senate committee in 2018. “It’s a cruel nightmare that could be avoided if not for the Clean Water Act being weaponized against the Crow Tribal resource economy and the Crow people and culture.”

The rail proposal came to light three weeks ago after a shadowy company notified the federal Surface Transportation Board of its intentions to take over the century-old North Coast Railroad, a defunct and dilapidated line running 320 miles through northern California’s coastal mountains from the Bay Area to the Port of Humboldt Bay. The company’s filing said it has a “thoroughly developed” plan to rehab the line for “high-volume traffic” and has secured $1.2 billion in financing for a project that aims to export unspecified bulk minerals.

Who exactly is behind the newly formed North Coast Railroad Co. remains a mystery, but available evidence points squarely to the Western coal industry, which has long hoped to expand its seagoing export capacity. Hammered by the nation’s flagging appetite for a fossil fuel closely associated with climate change, Utah coal producers hope to increase exports to Japan and economically growing Asian countries that burn coal to generate power. These ambitions have repeatedly been thwarted by local and state political leaders on the West Coast aiming to block coal shipments through their communities and discourage the use of coal elsewhere.

The mystery company’s recent filing, known as an “offer of financial assistance,” was ostensibly made to block a popular plan to convert the rail right of way into the Great Redwood Trail, which has upset many northern Californians, few more than state Sen. Mike McGuire, a champion of the rails-to-trails project.

This month, he introduced a bill in the California Legislature aimed at blocking the rail rehabilitation.

“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,” McGuire said in a statement posted Tuesday. “This dangerous proposal must be stopped.”

But the coal industry’s involvement has been a matter of conjecture thanks to the North Coast Railroad Co.’s complete lack of transparency in its public filings. The Inland Port documents help clarify the roles of Utah, the tribes and the coal industry, although many unanswered questions remain concerning the company: Who is Justin Wight working for? What is the source of the $1.2 billion in funding the company claims? Do the Crow and Wiyot tribes control the company? Does it have contracts in place with coal producers?

Another memo Mitton provided his boss in March contained contact information for various officials with the Humboldt Bay Harbor District, whom Mitton apparently reached out to around that time.

The district’s deputy director, Adam Wagschal, told The Tribune that Mitton contacted him asking about the port’s suitability for shipping bulk minerals. In an interview this week, Wagschal said he could not recall whether Mitton mentioned coal or any specific commodity.

The port authority declined to make an official available for an interview.

Speaking through a spokesperson, Flygare said the participation of Mitton, who worked only a few months at the port authority as its “strategic projects manager,” was limited to asking some questions about the Humboldt Bay project.

The port authority was invited to the March meeting to hear about the proposal, according to Flygare. After conducting due diligence, the agency determined it was not a viable port project and it hasn’t been involved since.

“In response to a Tribune reporter who is writing a story that falsely implies the Utah Inland Port Authority is pushing or has ever supported a project to ship coal from Utah to Asia — UIPA has no current or future plans to export coal from Humboldt Bay,” said executive director Jack Hedge in an emailed statement. “We looked into it and did not find it to be a project the Port Authority could be involved with.”

Few people believe the North Coast Railroad has any chance of ever being restored and put back into service, given the need to rebuild it completely and the difficulty of maintaining the stretch through the slide-prone Eel River Canyon.

Additionally, the Port of Humboldt Bay would require costly upgrades before it could handle the level of freight traffic described by the proponents of the rail project. The harbor entrance itself is prone to regular closures because of river sediments forming sandbars that complicate navigation.

The Army Corps of Engineers dredges the channels every spring to remove the sediments that wash down the Eel River in winter, according to Jennifer Kalt, a local environmentalist who heads the Humboldt Baykeeper.

“There would have to be a massive increase in dredging to create the kinds of depths at the shipping channels and then also to open the entrance year-round,” Kalt said. Meanwhile, the facilities on the site, all associated with Humboldt’s faded timber industry, are in no shape for handling mass volumes of coal or other bulk mineral commodities.

“There isn’t really something anyone calls a port here necessarily. What there is is a lot of dilapidated former mill sites that have docks. Two of them were pulp mills. Some of them were lumber mills, and they’re just completely dilapidated and falling apart.”

But one remains in fairly good condition and occupies the harbor’s deepest water, she said. It’s a privately owned facility called the Fairhaven Terminal, where the water is 38 feet deep and there are five acres of paved storage. A message left for that terminal’s owner, Eureka businessman Rob Arkley, was not returned.

The Inland Port memo indicates the bay has existing federal shipping channels that would work for exporting minerals. Wight identified terminals on the north side of Humboldt Bay that could be used for loading ships and are not close to environmentally sensitive areas.

“Both Justin [Wight] and Michelle [Vassel] stated there is strong local support for revitalizing the harbor and port operations,” the memo said. “Michelle mentioned she would expect some, but not overwhelming opposition to the project.”

Vassel could have hardly been more wrong in this assessment.

“No way, no how are we going to let this happen,” said Sen. McGuire in unveiling key additions to his SB307 on Tuesday.

The legislation would ban any state funding from being used to improve the northern half of the rail line for coal shipments north and from being used to build a coal handling terminal at Humboldt Bay.