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STB OKs final segment of Tongue River Railroad

(The Associated Press circulated the following story by Matthew Brown on October 10.)

WASHINGTON, D.C. Federal officials on Tuesday announced approval of the final stretch of a long-delayed $341 million rail line that could open southeastern Montana's vast but largely untapped coal fields to more intensive development.

The Tongue River Railroad, first proposed in 1983, would run 130 miles from Miles City to Decker - into the heart of the coal-rich Powder River Basin along the Montana-Wyoming border. Area landowners have fiercely fought the proposed line, fearing it could industrialize a rural area now dominated by agriculture.

Permits from state and federal agencies are still needed, and rights of way through private and public property must be secured before the line can be built. Also, an unresolved 1998 federal lawsuit hangs over the project, meaning the line could get tied up in court before construction begins.

But a railroad attorney said Tuesday's federal go-ahead was crucial and will allow the Tongue River Railroad Co. to start lining up a customer base that can deliver a steady supply of coal. That could include the state of Montana, which has a roughly 40 percent stake in a 1.4 billion-ton coal tract located off the proposed line in the Otter Creek area.

"This is the biggest piece of the puzzle that had to fall into place," company attorney David Coburn said of the Surface Transportation Board announcement.

The transportation board's Tuesday announcement involved a 17-mile stretch of the line near Decker that had not been included in prior approvals. Other sections had been approved in 1986 and 1996.

Environmental hurdles, litigation and financing difficulties had delayed further progress on the project.

About 40 percent of the nation's coal is mined from the Powder River Basin, but most of that comes out of Wyoming. Montana last year produced about 40 million tons of coal - less than 4 percent of the nation's total.

Exploitation of Montana's sizable reserves has been hobbled by a lack of rail access and opposition from ranchers and other landowners, concerned the large amounts of water used in the mining process would quickly deplete underground aquifers.

The plaintiffs in the pending federal lawsuit, the Northern Plains Resource Council and the Northern Cheyenne Tribe, argued that the rail line's potential environmental damage was not fully addressed in prior studies of the project.

"We've been fighting the Tongue River Railroad for probably 30 years," said Northern Plains Chairman Mark Fix, whose ranch along the Tongue River would be bisected by the line. "It's a bad idea. It goes through our ranches and it cuts our pastures off from the river so the cows can't get to the river for water."

Fix said 50 to 60 landowners would be affected by the project. Under Montana law, private land could be involuntarily condemned to make way for the new line.

Victoria Rutson, chief of the Surface Transportation Board's environmental analysis section, said a task force of state and federal agencies would be set up to monitor construction of the line and minimize environmental damage.

State officials looking to develop the Otter Creek coal tracts near Ashland have closely tracked the rail line's progress. Mary Sexton, director of the Department of Natural Resources and Conservation said leasing the state's tracts for development was contingent on the railroad's success.

She said her agency has a "fiduciary responsibility" to maximize state revenue from its coal reserves.

Great Northern Properties also owns a large share of the Otter Creek tracts.

The new rail line could boost Montana coal production by about 12 million tons annually over the next decade, according to testimony presented by Tongue River Railroad to the Surface Transportation Board. The coal would be destined for Midwestern power plants.

To make the project economically viable, the railroad also projects hauling 12 million to 16 million tons of Wyoming coal annually. The new line would offer a shortcut for coal cars coming out of Wyoming along the Burlington Northern Santa Fe railroad, trimming 320 miles off the circuitous route now used by BNSF.

That could give pause to state policymakers if the more accessible Wyoming coal undercuts Montana's market, said Evan Barrett, an economic development aide to Montana Gov. Brian Schweitzer.

"If the facts were to show the movement of Wyoming coal would be harmful to Montana's interests, both in terms of coal production and state revenues, obviously that would be a serious concern," Barrett said.

A BNSF spokesman, Pat Hiatte, said Tuesday that the railroad offered "an opportunity to develop portions of Montana's extensive coal reserves that today are not accessible to the marketplace."

Hiatte declined to comment on how much Wyoming coal the company might ship along the Tongue River line.

Wednesday, October 10, 2007

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