HELENA, Montana — Plans to build a $400 million railroad to haul coal from a proposed mine on the Montana-Wyoming border were put on indefinite hold Wednesday because of delays in obtaining a mining permit and a weakening coal market, officials said.
The Tongue River Railroad Co. requested that the Surface Transportation Board suspend the permitting process for the 42-mile line that would run from the proposed Otter Creek Mine in Powder River Basin to Colstrip. From there, coal trains would connect with existing railways to U.S. markets and West Coast ports for export, according to the company's preferred route.
The Tongue River Railroad Co. is jointly owned by BNSF Railway, Otter Creek mine owner Arch Coal Inc. and a limited liability company called TRRC Financing. A statement announcing the move said the railroad company believed production at the Otter Creek mine might start by January 2017, but "with mine permitting delays and near-term market weakness, that timeline now appears unachievable."
BNSF Railway spokesman Matt Jones said the company plans to renew the application once the Montana Department of Environmental Quality has issued a mine permit for Otter Creek, and after any subsequent lawsuits are resolved.
"We have not withdrawn the application," Jones said. "The TRRC has simply submitted a request to suspend the permitting process due largely to the ongoing delays to the mine permitting process."
The proposed railroad has faced years of opposition from southeastern Montana landowners and tribal members who say the project would harm cultural sites and resources.
Jeanie Alderson, a Tongue River rancher and the vice chairwoman of the Northern Plains Resource Council, said Wednesday's announcement reflects the instability of the proposed railroad, the mine and the coal market.
Alderson was optimistic the suspension of the plan may result in abandoning the proposed rail line, but noted the idea has been around for decades.
"I would like to think this means maybe it's done, and there are all kinds of indications that maybe it should be, but it does have a way of hanging on," she said.
The Surface Transportation Board has had some version of the Tongue River Railroad project before it since 1979. The Tongue River Railroad Co. filed its revised application in 2012, the same year the Otter Creek mine application was submitted.
The reserves at Otter Creek near Ashland hold an estimated 1.4 million tons of coal. The Montana Land Board sold the public mineral leases involved in the mine proposal to Arch Coal five years ago for $86 million.
The state DEQ in March said it would not move forward on Arch Coal's mine permit until the company addressed hundreds of deficiencies in its application.
Arch Coal expects to resubmit its application in early December, company spokeswoman Logan Bonacorsi said in a statement.
"At that time, we believe the application will be deemed complete and the permitting process will continue toward issuance of the mine permit," she said.
DEQ spokeswoman Kristi Ponozzo did not immediately return a call for comment Wednesday.
Shares of Arch Coal closed slightly higher Wednesday at $1.09 per share.