Railroad industry officials throughout the Western United States this week expressed renewed optimism concerning their futures based on this week's 246-161 House defeat of the coal slurry pipeline bill.
More than $8 billion of expenditures for new equipment and track designed to serve the growing community of coal mines in states like Wyoming, Colorado, Texas and Montana will be made by Western railroads within the next seven or eight years, according to the Association of American Railroads. Much of that investment would have been curtailed or eliminated entirely had coal slurry pipelines become reality.
Despite the troubled financial condition of many railroads, large Western-based roads like the Union Pacific and Burlington Northern are profitable, and expect huge increases in coal business due to the growing energy demands of a nation attempting to reduce its dependence on oil.
In the past 10 years, for example, the highly profitable Union Pacific has seen its coal business go from practically nothing to 22 percent of all tonnage carried by the road in 1977. Burlington Northern saw coal go from virtually zero to 18 percent of its business in only five years.
Although eastern railroads still carry some 80 percent of the coal mined in the U.S., the portion that will be carried by western roads has been increasing dramatically, mostly because of the grrowing demand for the low-sulphur coal which is practically unavailable in the east. And because of the longer distances between cities in the west, half of the mileage devoted to coal transportation is in the west.
The coal slurry pipeline bill would have given eminent domain authority to a pipeline that would link many western coal mines directly to power plants, eliminating the need for existing and future rail connections between the two.
The pipeline would have carried a mixture of crushed coal and water from mines in places like Wyoming and Colorado to plants in the Northwest, Texas and Arkansas.
But the railroads claimed that they could handle all of the coal business efficiently, and that the new coal business was vital to the rail industry's attempt to get back on its feet financially.
In addition, environmentalists joined forces with the railroads in an unusual alliance, pointing out that water levels in several of the states involved were already dangerously low, and would be threatened by further demands on the water supply.
Agriculture and economic development could be effected adversely if the water levels drop further, and avoidance of that problem could not be adequately provided by legislation, opponents of the bill contended.
In an interview at UP corporate headquarters here Thursday, UP president John Kenefick said he was "pleased" at the outcome of the House vote, which defeated the bill by a surprisingly large 246-161 margin.
"It was a case of the old cream-skimming problem," Kenefick said. "If we lost our coal business, we would lose many of our bulk movements (large trains moving at high speeds between two points - the most efficient form of rail shipping) and be left with smaller, 20-car trains."
Kenefick said he was interested to see "why as many of the congressmen voted the way they did." The issue was not expected to have anything near the support it did in congress. Proponents of the bill claimed it would keep the railroads competitive, and prevent a virtual rail monopoly in the transportation of coal.
Norman Lorentszen, President of the Burlington Northern Railroad, said in a telephone interview from his office in St. Paul, Minn., that BN was "delighted that the House voted the way they did.
"I think the concern over the water problem and the fact that railroads had already invested many millions in coal transportation had an effect," Lorentszen said. "A vote the other way would have reduced the value of an investment made by railroads to nothing. This is a major step forward for us."
The BN and the Chicago & Northwestern Railroads are planning a joint $200 million venture that would bring a rail link to several coal mines in the Powder River, Wyoming basin.
That venture, which would involved upgrading of mainline track, laying new feeder lines, and purchasing equipment, was still in limbo because of the possibility of the coal slurry pipeline, which would have served those mines also. Now, it is likely to go on.
According to Lorentszen, BN projects that it will carry about 70 million tons of coal this year, compared to an estimated 55 million tons in 1977.
Coal is now the leading commodity carried by all railroads nationally, according to Dick Briggs of the AAR, accounting for 29 percent of all tonnage and 21 percent of all carloads and 14 percent of all revenues.
Coal business on trains has grown at the rate of about 2 percent a year for many years, Briggs said, but this year it is expected to leap 10 percent.