Coal Ports, Rail Facilities Essential to Economic Growth, Says New Report – Trade-Dependent State Shouldn’t Take International Commerce for Granted

A BNSF freight barrels past a signal on the main line near Lacey.

A BNSF freight barrels past a switch on the main line near Lacey.

OLYMPIA, Aug. 18.—As state policymakers search far and wide for reasons to say no to coal, a new report from a business-oriented think tank says coal export terminals in this state could provide a crucial competitive edge for the Washington economy. While world trade booms and new port and rail facilities are developed in California, Canada and the Gulf Coast, Washington is in danger of losing its leadership position as a major exporter, says Washington Research Council President Richard Davis.

And he says Gov. Jay Inslee’s eagerness to make an environmental statement about global warming ought to make business gulp.

The Research Council, in a series of reports being released this month, makes the argument that the state can’t afford to thumb its nose at coal ports proposed for Longview and the Bellingham area. The two projects will drive private investment in improved shipping and rail facilities that will improve the economy as a whole, the council argues. Davis, noting that 40 percent of the jobs in this state are related in some way to international trade, says the debate over coal ports has bigger economic implications than many people realize. “The decisions we will make on these two port projects, on trains and rail investment, could very well determine whether we maintain our advantaged transportation position,” he said. “We have always assumed that our geographic location and our deep-water ports are going to guarantee us success. But competition is becoming more intense, and as is so often the case with Washington public policy, we can’t take success for granted because we were blessed in the past.”

The council is essentially laying out the business case for the two port projects. Its first report, on Washington’s dependence on rail, was released last week at a meeting of Greater Spokane, Inc., the Lilac City’s regional chamber of commerce and economic development organization. Future installments will examine the importance of exports to the Washington economy, the need for further investment in rail facilities, and the opportunities for industrial growth, agriculture and job creation if the ports are developed.

The argument is being presented at a critical time, as matters of green politics are being injected into what ordinarily would be a dry consideration of environmental issues specifically related to the two port projects. Though the administration of Democratic Gov. Jay Inslee pledged to make job creation its top priority during last year’s campaign, it appears the “greenest governor’s” advocacy of environmental causes may be more important. The state Department of Ecology announced last month that in its environmental review of the Cherry Point project near Bellingham, it will consider an unprecedented range of issues that appear designed to give the state a reason to say no. They include the impact of coal-burning on the other side of the world and the impact of trains carrying coal from Montana and Wyoming to the port. Scope of another environmental review for Longview is being determined, though the same treatment may be expected there.

Bizarre Approach to Job Creation

Richard Davis, president of the Washington Research Council.

Richard Davis, president of the Washington Research Council.

The new attitude from Olympia ought to give any major business pause as it contemplates major new industrial development in Washington state, Davis says. That has particular implications for Boeing as it contemplates building a plant for its next-generation 777 airliner, Davis says — but it isn’t limited to that.  “What does this say about any major expansion of a facility?” he wonders. “Are we going to be worrying about the emissions from the next generation of aircraft? Or a new truck out at Paccar? And how do you begin to create a consistent, predictable standard for environmental review?

“We’ve got a good system in place. I know of no one who believes that Washington underregulates in the environmental world. Our standards are high and for the most part they have been transparent and well-understood. This begins to introduce a whole new degree of unpredictability, and in time I think any manufacturer or producer considering an expansion in the state will have to wonder what standards are going to be applied to them as they begin to go into production or contemplate increased production.

“And then there’s the bizarre notion that somehow we even have the ability from here to assess what the impact of coal being burned in China will do to the environment. Are we going to send the Department of Ecology regulators off to the provinces and have the Chinese communists grant them admission to their facilities? At what point do we get bounded by some realpolitik on this? I don’t know whether we have fully realized the implications of the expanded review, or of the possibilities or being able to successfully complete the mission. It is a rather strange innovation.”

Rail, Shipping Essential to Washington Economy

Already, by dint of the state’s position on the coast, Washington is highly dependent on international trade – 35,000 direct jobs are created, Davis says. And the existence of a well-developed transportation network has helped create a state economy dependent on international trade. The estimate that 40 percent of jobs in this state are trade-related comes from a report last year from the Washington Council on International Trade. The remarkable thing about it, that report observed, is that it happened all by itself, without any sort of comprehensive, coordinated public strategy. Its point was that Washington ought to develop one.

But Davis sees other implications. What Washington needs to understand is that the rail transportation network is an almost-entirely-private affair; while modest public investment has occurred, that has come primarily for passenger rail. Meanwhile the big prospects for continued growth in trade are prompting rail companies like the Burlington Northern Santa Fe and the Union Pacific to invest heavily in improving their networks and rail lines. BNSF last year spent $106 million in Washington state; UP spent $15.8 million.

Certainly existing infrastructure remains in place. But the Research Council report notes that prospects for international trade are so bullish through 2030 that rail is in a rebuilding phase akin to the rail boom of the gilded age,  to make existing lines more efficient and able to carry more types of freight. The big question is where that investment will occur.  One takeaway from the report is that the existing rail network in Washington can probably handle natural expansion of freight rail through 2020, but new investment will be needed after that point for additional traffic. Davis’ argument is that development of the port facilities will provide the rationale. “We have an opportunity right now for significant new investment to support this increased activity,” Davis says. “We will still have the traffic we have but we have the opportunity now to really trigger a great new investment to support these expansions.”

The argument over the coal ports really ought to be seen as an argument over whether Washington will continue as a leader in international trade, the report concludes. “Our state’s ability to maintain its nation-leading position as a hub for domestic and international trade depends on speedy, safe and reliable transportation connections,” it says.