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Chapter 6: Coal jobs gone, perhaps for good

Published: June 16, 2013
By Bill Estep and John Cheves

A coal tipple and mine at Jones Fork in Knott County was once a busy site but sees little activity now.

HINDMAN – Kyle Thacker’s bloodline in the underground coal mines of Eastern Kentucky goes back decades.

His grandfather Willard Thacker raised 16 children on a miner’s pay, beginning in the days when the back-breaking job involved blasting down coal and loading it into carts with a shovel.

Thacker’s father, Curby, went to work in the mines in the 1970s. He was rarely out of work during his 35 years underground.

“You could quit one day at one mine … and you could get a job the next day at another one,” said Curby Thacker, 66, of Knott County.

All five of Curby’s sons followed him into the mines, but their experience has been different. All five were laid off in 2012; Kyle, 26, the youngest, lost his job in June and hasn’t been able to find work at another mine.

“I’ve looked about everywhere. You can’t pay them to let you work now,” Kyle Thacker said.

Thacker, who is married and has two young children, cashed out his 401(k) retirement account to pay off some bills. He had started remodeling his front porch but stopped when the money ran out, and he is going without health insurance because it would cost more each month than he receives in unemployment payments. He might have to let the bank take back the white 2011 Ford Taurus he bought when times were better.

Thacker and thousands of other miners are confronting the latest in a century of booms and busts in the Eastern Kentucky coal industry. This time, experts warn, the backslide looks permanent.

Driven down by competition from cheap natural gas and other factors, coal production fell 27.6 percent throughout Eastern Kentucky in 2012, to the lowest level since 1965. The slide in Knott County was worse: 45 percent.

The downturn wiped out more than 4,000 mining jobs in Eastern Kentucky; employment at coal mines in the state’s eastern coalfield dropped nearly 30 percent, from 13,608 in 2011 to 9,540 in 2012, according to the state Energy and Environment Cabinet.

Unemployed coal miner Kyle Thacker, left, son Taylon, 2, daughter Tapanga, 6 months, and his wife, Kelly, at their Hindman home.

In Knott County, 63 percent of coal jobs disappeared in 2012. The loss hurt worse than in most other places because coal had been the backbone of the local economy for decades, accounting for a larger share of local wages some years than in any other county in Kentucky.

The sharp decline is an echo of the early 1960s, when Harry Caudill, a lawyer from neighboring Letcher County, wrote his landmark book Night Comes to the Cumberlands: A Biography of a Depressed Area.

Coal production in the region was at the lowest point in decades at the time, and Caudill predicted that trend would not change. Within a few years, “tireless nuclear reactors” would replace much of coal’s share of electricity production, and coal “is unlikely ever again to be a prime industry,” he wrote.

Some of Caudill’s predictions were wrong — nuclear power didn’t become predominant, and coal had more than one comeback in the past 50 years — but his ultimate diagnosis of decay for Eastern Kentucky’s omnipotent industry now looks more likely than ever.

“I think we’re going to stop mining in Eastern Kentucky with coal still in the ground,” said Len Peters, secretary of the state Energy and Environment Cabinet.

Mining came late

Large-scale mining came later to Knott County than most of southeastern Kentucky.

In nearby counties, out-of-state corporations built entire towns from scratch in the 1910s and ’20s to house workers for the underground mines fueling America’s growth at the dawn of the century.

Coal production in Knott County, hindered by a lack of railroads, didn’t top 1 million tons until 1946, during the lingering boom from World War II demand. That was more than three decades after several other Eastern Kentucky counties first hit the million-ton mark.

Knott County, however, would soon be ensnared by the cyclical swings of coal production that already bedeviled many of its neighbors.

Demand for Eastern Kentucky coal dropped after the war, when railroad locomotives began guzzling diesel fuel instead of coal, and other energy sources gained popularity in factories and homes.

Coal production had reached 1.85 million tons in Knott County in 1950 but bottomed out at 722,198 tons in 1954, and it wouldn’t return to previous highs for more than a decade, according to state records.

In the Eastern Kentucky mines still running, machinery robbed jobs from men. A machine called a continuous miner, which grinds coal out of the seam, became available in 1948, and a national labor agreement in 1950 encouraged wider mechanization, forcing many smaller mines out of business, Appalachian historian Ron Eller wrote in his 2008 book Uneven Ground: Appalachia Since 1945.

The effect of the downturn was evident by 1960. Coal jobs in the region plummeted by more than half in the 1950s; 76 percent of Knott County residents lived in poverty, more than three times the national poverty rate.

“Hunger, lack of clothing, inadequate housing — these are all too prevalent,” a local committee said in a December 1960 report, now archived at Berea College.

Knott County lost nearly 15 percent of its residents between 1950 and 1960 as hundreds of thousands of people left Eastern Kentucky to look for jobs in the industrial Midwest.

Curby Thacker was a little boy in the 1950s, but he remembers lean times. His father put out a big garden and kept hogs, chickens and a milk cow to help feed the family, Thacker said.

“They just raked and scraped to get by,” he said.

Hillsides full of jobs

In the 1960s, industrial expansion and electricity-sucking suburban homes kick-started coal consumption. Knott County got a new rail line just in time to benefit.

A new railroad spur pierced the Caney Creek area in 1962, according to a book of local history. National Mines opened several operations along the spur, and those mines ultimately employed more than 2,000 people, according to the history book.

Coal companies in Knott County, as in the rest of Central Appalachia, also got a boost when Middle Eastern nations decided in the early 1970s to cut the flow of oil in retaliation for U.S. support of Israel.

Coal production nationwide shot up 14.4 percent between 1973 and 1976, according to the U.S. Energy Information Administration, and much of that coal was wrested from Central Appalachian mountains.

The boom lured Curby Thacker away from his job as a telephone lineman and into the mines, following in his father’s footsteps. Hollows around the county were pocked with portals to underground mines that honey-combed the hills, Thacker said.

On one warm day, as Thacker sat with his retired father on a roadside rock where he often whittled, three coal operators stopped by to offer Thacker a job, each promising $1 an hour more than the one before, he said, laughing as he recalled the story.

“There was jobs all over these hillsides,” Thacker said.

For much of his career, Thacker ran a machine that drove bolts into the roof of the mine to keep it from falling and crushing miners. His father thought the old way of shoring up the roof with pieces of wood was better, Thacker said.

“He said, ‘You’ll get killed, son, if you don’t set you some timbers,” Thacker said.

Coal exports from the region more than doubled by the end of the decade, boosting jobs and small-business growth and, for a time, reversing out-migration, Eller wrote. The poverty rate in Knott County dropped by more than half in the 1970s.

“It was obvious that the economy was better; there was more money,” said Robert Morgan, who was Knott County attorney in the 1970s before becoming a judge for more than 25 years.

Coal production has swung wildly in Eastern Kentucky for a century, thanks to changes in market conditions, technology and regulations. Coal operators have sometimes exacerbated the boom-bust cycle by opening too many mines during good times, leading to overproduction.

“If they’ve got a little boom, everybody in the world gets into it,” said Ray Slone, who has mined coal in Knott County since 1974, first as an employee and later as a contract mine operator.

The 1970s boom led to “long-lived excess productive capacity” in the coal industry, according to the U.S. Energy Information Administration.

With the flow of Mideast oil restored by the early 1980s, the number of surface and underground mines in Eastern Kentucky dropped from more than 1,700 in 1985 to 382 in 2000, and mining jobs dropped from more than 34,500 in 1980 to fewer than 13,000 in 2000, according to state and federal sources.

In the early 2000s, Knott County saw the pendulum swing again, recording job and production gains as red-hot growth in China, a U.S. economy and other factors supported demand for coal, according to state statistics.

The relative good times didn’t last long.

The county suffered an economic blow in summer 2009, when Consol Energy closed its underground mine on Jones Fork, laying off more than 150 people, but that was only the leading edge of a tsunami that wiped out local coal jobs in 2012.

There were only 330 people employed at coal mines by the end of the year, down from more than 1,300 a decade before, according to the Kentucky Energy and Environment Cabinet.

Kyle Thacker and two of his brothers were among the Knott County miners who lost jobs when Arch Coal closed several underground mines among the steep-sided mountains along Caney Fork. Two others lost their jobs at other mines.

One morning in late June, as Kyle Thacker and other miners arrived to don their work gear for the day shift, officials from Arch Coal headquarters in St. Louis told them that the company was mothballing the mine.

“When I showed up, they said don’t even worry about putting your clothes on,” Thacker said. “They just said they couldn’t sell the coal.”

Who to blame?

A sign in County Clerk Ken Gayheart’s office, and many others around Knott County, says “Stop the War on Coal” — an expression of the widespread local opinion that federal environmental regulations pushed by President Barack Obama are to blame for gutting production in Central Appalachia.

“That’s the way the people in our county feel — the regulations has gotten so tough,” said Gayheart, whose five employees include two who are married to miners. “We still have coal, but they’ve stopped us from mining it.”

The U.S. Environmental Protection Agency has held up permits for dozens of surface mines in the region because of concern over their potential to damage streams and water quality.

On another front, tougher federal clean-air rules — along with the potential for more — have helped to motivate utilities to close older, coal-fired power plants that produce relatively high amounts of pollution in favor of cleaner-burning natural gas plants.

Those developments dampened demand for Central Appalachian coal for production of electricity — called steam coal or thermal coal — and will continue to do so.

However, the chief force behind the coal industry’s precipitous slide in Eastern Kentucky was very cheap natural gas, which enticed utilities to switch from coal to gas, analysts said.

Developments in drilling technology have unlocked vast reserves of natural gas in recent years that were once inaccessible, driving down the price. Natural gas at the benchmark distribution hub in the U.S. averaged $4.12 per 1,000 cubic feet in 2011 but only $2.83 in 2012, according to the U.S. Energy Information Administration.

An abundant supply of cheap natural gas was “the dominant fact” fueling coal’s demise in Eastern Kentucky, said Peters, the Energy and Environment Cabinet secretary.

In April 2012, the share of electricity generated using natural gas reached 32 percent, matching coal for the first time since the federal government started keeping records in 1973.

Two months later, Arch Coal cited the “continuing decline in demand for steam coal” from Central Appalachia when it announced that it was closing mines in Knott and adjoining counties and laying off more than 400 people, including Kyle Thacker.

The price of natural gas has gone back up some in 2013, helping coal regain market share, but that hasn’t sparked a significant resurgence in Eastern Kentucky.

Knott County and the rest of the Central Appalachian coalfield face other challenges, including competition from other coal-producing regions and higher production costs.

In 1973, six Western states accounted for only 9 percent of all coal mined in the country, but that figure had jumped to more than 50 percent by 2010, according to EIA figures.

Most of that Western U.S. coal comes from thick, low-sulfur beds in Wyoming’s Powder River Basin, which are easier and less costly to mine than the coal in Central Appalachia’s mountains.

In mid-April, the spot-market price for Powder River Basin coal was $10.55 a ton, compared to $67.27 for Central Appalachian coal, according to the EIA. Eastern Kentucky coal burns hotter, but the price difference is a disadvantage.

One key reason it costs more to mine coal in Eastern Kentucky is that the region has been mined for a century. Coal companies went after the best, easiest-to-reach coal first, meaning higher costs and lower productivity when the remaining thinner seams are mined. Mining productivity dropped 45 percent in Central Appalachia between 2000 and 2010, the EIA said.

Analysts project that coal production in Eastern Kentucky and throughout Central Appalachia will continue a steep slide in the next few years regardless of the mix of environmental rules, said Sean O’Leary, an analyst with the West Virginia Center on Budget and Policy.

“It’s too expensive to mine, with or without the environmental regulations,” O’Leary said.

The EIA projected in April that coal production in Central Appalachia will plunge from 184.9 million tons in 2011 to no more than 104.3 million tons in 2021, with only a modest recovery after that.

A May report from Downstream Strategies, a West Virginia consulting group, pointed out a key reason for concern in Kentucky: 60 percent of all Central Appalachian coal that was shipped in 2011 to power plants slated for closure came from Eastern Kentucky.

The study said total coal-industry employment in Central Appalachia could go up over the next two decades because more miners might be needed to get harder-to-reach coal. The increase will be patchy, however; some counties are likely to see increases in jobs and coal-tax revenue, but most will probably lose out, the report said.

The study predicted that Knott, Pike and Letcher counties in Kentucky and Wise County, Va., are the most vulnerable, based on factors including where their coal goes.

“The expectation would be that those counties will experience economic losses,” said Rory McIlmoil, one of the report’s authors.

The bottom line is that structural changes in the economy have forever altered the Central Appalachian coal industry, Peters said.

There might be mini booms and busts in the region in coming years, and exports could prop up some production, but the overall trend will be down, he said. Higher natural gas prices could be a factor in slowing the decline, but they won’t reverse it, he said.

“We think it is clearly on a downhill slide,” Peters said of Eastern Kentucky coal production. “If it comes back, it’s going to be ephemeral.”

‘You can’t pay your bills’

The crash in coal production was evident by the time Greg Mullins, a retired state trooper, took over day-to-day oversight of Knott County’s government in early December after Judge-Executive Randy Thompson went to federal prison in a vote-buying case.

The county had come to depend heavily on a severance tax that coal companies pay based on the amount of mineral they pull from the ground. County officials used the money for employee salaries and benefits and a range of programs, including fire departments and community centers.

Severance-tax revenue had dropped so sharply and so quickly in 2012 that the county was on track to finish the fiscal year nearly $1 million in the red, officials with the state Department for Local Government told Mullins and members of the fiscal court at a meeting in late January.

“You can’t pay your bills at this point,” Andrew Hartley, staff attorney for the agency, told the fiscal court.

It was bitterly cold outside, but the meeting room in the Depression-era county courthouse was packed as Hartley explained the county’s options: enact an occupational tax or a tax on business profits; cut spending; or approve a combination of spending cuts and tax increases.

Hartley said the county would probably be left with a skeleton government if magistrates tried to balance the budget through cuts alone. When magistrates opened the floor for comments, however, retiree Roy Jent stood and said he opposed any tax increase. There weren’t enough wage-earners in the county to justify an occupational tax, he said.

“You pass an occupational license tax on everyone working in this county and you won’t raise enough money to make a payment on the Sportsplex,” Jent said, referring to a large county-owned recreation center built with coal-severance money. “We’re a poor county.”

Over the next three weeks, a budget committee and the fiscal court wrangled over how to deal with the budget shortfall. In one meeting, magistrates rejected both a tax increase and proposed cuts, leaving the budget in limbo.

On Feb. 6, the day the Department of Local Government had ordered magistrates to put a new budget plan in place or face court action, the fiscal court met again. They went through the budget line by line, discussing everything from potential cuts in computer service to vending-machine supplies and uniform rentals for county employees.

In the end, magistrates voted 3 to 1 for significant budget cuts, including layoffs or reduced hours for a quarter of the county work force; deep reductions in the contribution for employee health insurance; and a reduction in hours at the Sportsplex.

Magistrate Jamie Mosley, a former county dog warden, said afterward that he didn’t think it would be right to levy a tax on jobs, especially when so many were out of work. He also said the county payroll had grown bloated.

“We’ve got two, three people doing one job,” Mosley said.

One painful result of the budget cuts was fewer hot meals for older people who need help. The senior citizens center had to reduce home deliveries of meals from more than 50 a day to 19, director Eva Huff said.

The county receives federal money to provide some meals, but it had used its own money since 1999 to feed more people.

The nutritious meals weren’t the only benefit of the program, Huff said. Delivery people helped clients with chores, such as taking out the garbage, and they were the only people some residents saw all day.

Pearl Maggard, 70, was among those dropped from the meal program. Maggard said she has taken care of her husband since he suffered a stroke 17 years ago. She can fix a meal, but getting food delivered was a great help as she attended to him.

“It adds to each day’s burden,” she said of being dropped from the program.

Business is down

In some ways, the sharp downturn in 2012 leaves the county facing the same dilemma it did in December 1960, when a group of nearly 100 local leaders and residents gathered on a cold night to seek help from the administration of President-elect John F. Kennedy.

The group wanted it known that there had been progress in the 1950s, such as electricity installed in all but one school and telephone service that had grown from 80 phones in 1950 to 900.

But, the group’s report said, “Knott County desperately needs JOBS.”

When coal ultimately brought more jobs, the industry had an outsized impact on Knott County’s economy because there were few other opportunities for good-paying work. The county has no hospital, no motels and few restaurants, and with a population of about 800 in the one-stoplight county seat, the retail base is small. There is no Wal-Mart.

In 2011, mining accounted for 50 percent of the payroll in the county — the highest percentage in the state, according to the Kentucky Office of Employment and Training. When coal jobs disappeared, so did the local economy.

Many of the laid-off miners got severance packages, softening the initial blow of the layoffs, but they cut spending when smaller unemployment checks replaced their severance pay, said Russell Bentley, a former state representative who owns a small market at Topmost.

“I think everyone in the area … is seeing the impact right now,” he said. “I know my business is down. People are really cutting back.”

Bill Kitchen, who runs a jewelry story in Hindman’s small shopping center, said he couldn’t remember a worse economic time since he moved to the county in 1970.

One afternoon in early April, Kitchen was watching golf on television as he waited for a potential customer. One man had looked at a pair of earrings and talked of coming back to get them later for his girlfriend, but he hadn’t showed up by the time Kitchen closed.

It’s not unusual to go all day without a sale, he said.

“All these stores, I’m sure, have 0 days,” he said of surrounding shops. “If they’re paying their bills, they’re lucky right now.”

Sam Godsey, who owns a local trucking company, said he had only enough business in March for four tractor-trailers, down from 12 a year earlier. He parked his eight other trucks and didn’t re-license them, which will mean less tax money for local and state governments, in addition to the lost jobs.

“I’m a pretty optimistic person, but I don’t see it,” Godsey said of a comeback for the local coal industry.

No future

Kyle Thacker said that after high school, he thought about training to be a mechanic, but he decided instead to follow his father into the mines. That was in 2007, when there were plenty of mining jobs, and they paid far more than anything else available in the area without a college degree.

“I seen that money sign and I didn’t look to the future,” Thacker said.

He mined for five years, running a roof-bolting machine at times like his father. He went through some periodic layoffs, but they didn’t last long and he didn’t mind having a little extra time for hunting.

By mid-May, however, he was sick of the “vacation” that had lasted nearly a year.

Thacker, often dressed in his blue miner’s pants with reflective tape, has searched for mining jobs across the region. He received one offer at a mine in northern West Virginia, but he didn’t want to work that far from home.

An official at a coal company two counties away took his application in early May and wished him good luck, but nothing more. Not long after, Thacker thought he had a job lined up at a small mine, but then federal regulators shut it down after a surprise safety inspection.

Discouraged, and with the end of his unemployment looming, Thacker signed up in May for public assistance with his mortgage and began searching for jobs outside the mining industry.

“I’m open to anything that pays decent, that I can pay the bills on,” he said.

Thacker still thinks the coal industry in Eastern Kentucky will eventually rebound, but he doubts there will be a mining job waiting in Knott County when his 2-year-old son, Taylon, joins the workforce. Even if there is, Thacker said, he’ll try to talk his son out of relying on coal for his livelihood.

“Find something that’s steady,” he’ll tell him

New rules have coal industry on edge

In Montana, ranchers line up against coal
A proposed mine — and a railway extension to carry it out — would put their land at risk for an energy plan that mainly benefits Asia, ranchers say. But they’re in the minority.

Clint, left, and Wallace McRae run cattle on their 31,000-acre ranch in Montana, land their family has owned for 125 years. A proposed rail line to carry coal would run through their ranch. (Kim Murphy / Los Angeles Times / April 27, 2013)

COLSTRIP, Mont. — Out in these windy stretches of cottonwood and prairie grass, not far from where Lt. Col. George Armstrong Custer ran into problems at Little Bighorn, a new battle is unfolding over what future energy development in the West will look like.

Here, rancher Wallace McRae and his son, Clint, run cattle on 31,000 acres along Rosebud Creek, land their family has patrolled with horses and tamed with fences for 125 years.
They could probably go on undisturbed for 100 years more if the earth under the pastures weren’t laced with coal. A consortium led by BNSF Railway Co. wants to build a rail line to carry some of that coal to market. Nine miles of it would run through the McRae ranch.
The McRaes and some of their neighbors say the Tongue River Railroad, and a proposed coal mine at Otter Creek, puts southeast Montana and ranchers like them at risk for an energy plan that mainly benefits Asia.

“It’s going to cross our land, wreak havoc with our water, go through our towns,” Clint McRae said recently, sitting in the rustic wood house his father built, its hearth hewn from local stone.

The Montana ranchers are in the minority. For many others, coal has been one of the few good things to come out of a region so barren it sent many early homesteaders fleeing to greener lands farther west.

The Powder River Basin in Montana and Wyoming already is producing 42% of the nation’s coal, and with diminishing U.S. markets, producers are mounting a push to serve booming Asian industrial centers. Authorities are reviewing permits for four coal export terminals in Washington and Oregon that would ship up to 150 million tons of coal a year — including coal from Otter Creek — across the Pacific.

The issue has quickly become the hottest environmental debate in the Pacific Northwest. Nearly 9,000 people showed up at recent hearings on the export terminal proposed near Bellingham, Wash. More than 14,000 comments were collected, pitting those hoping for a new U.S. energy bonanza against citizens concerned about coal dust pollution and increased rail traffic.

Since the 1970s, coal has earned Montana $2.6 billion in tax revenues, and the Otter Creek Mine would bring more, along with 2,000 construction jobs and 350 mining jobs.
Those facts count to the McRaes’ non-ranching neighbors in Colstrip, where a 2,094-megawatt power plant burns coal from another nearby mine — and where the Tongue River Railroad would join the existing railroad line.

“Otter Creek is probably the biggest development opportunity our state will see in our lifetime,” said Jim Atchison, director of Southeastern Montana Development, an economic promotion group. “So even though people may be complaining about coal development and how dirty rotten bad it is, it pays a lot of bills in the state of Montana.”

The McRaes contend that the biggest costs are the ones you can’t see — the underwater aquifers that already have been polluted with coal ash.

“We have 16 springs on this ranch, and every single one of them comes out of a coal seam,” said the elder McRae, 78. “Now, they call us radical environmentalists because we want the laws enforced.”

The 42-mile-long Tongue River Railroad, they said, would bring its own problems. Seven trains a day would disrupt their cattle operations and impede efforts to fight rangeland fires

“They will cut off our cattle from water — it’s like a concrete wall,” said Clint McRae, 50. “And if we don’t fence it off, we’re going to have cattle just wiped out by trains.”

The McRaes these days tell neighbors in Colstrip it’s not just the future they need to think about; look what’s already happened to the past. A widely known cowboy poet, the elder McRae penned a verse about landmarks that disappeared when the coal men came in. “Nobody knows, or nobody cares, about things of intrinsic worth,” he wrote.

Colstrip Mayor Rose Hanser counters that coal helped make southeast Montana a habitable place.

“We probably have two or less people per square mile in this part of the country. So when you’re providing jobs for hundreds of people in a state that has less than a million residents, you are impacting the economy of an entire state,” she said.

There has been some pollution, she said, “but the trade-offs are incredible. You have a better education system, you have better infrastructure, better recreation and activities.”

Lately, the McRaes have found new allies as plans for the coal export terminals raise the prospect of a large number of coal trains running through places such as the Columbia River Gorge and the Seattle waterfront.

The city councils of Livingston, Helena and Missoula have passed resolutions asking for studies on how the region might be affected. Billings, which coal opponents say could see up to 64 trains a day, has not opposed the plan, but some of those who work downtown are becoming concerned.

“If you do the math, it’s somewhere in the magnitude of three or four times as much rail traffic as we’re experiencing now,” said Ed Gulick, a Billings architect who has worked with the Northern Plains Resource Council to block the coal shipments.

The federal Surface Transportation Board said it would study the full environmental impacts of delivering the coal at Otter Creek to market. Arch Coal, the developer at Otter Creek, has said it’s too early to say where any coal will be sold.

Clint McRae traveled to Seattle in December to testify at an Army Corps of Engineers hearing. Much of the crowd was adorned in the usual green get-ups: A man was dressed as a polar bear, and several people hoisted a giant inflated asthma inhaler. Then came a tall, somber man in boots and a Silverbelly cowboy hat.

“My name is Clint McRae. I have a ranch just south of Colstrip, Mont. My family’s lived on this ranch and ranched in that valley for 125 years,” he said, his long frame bending over to reach the microphone. “I want to make it absolutely clear: I am vehemently opposed for a private, for-profit corporation to use eminent domain to condemn my private land for a rail line to export coal to China.”

The hall erupted in cheers.

Wallace McRae said he had no intention of staying quiet if it meant losing part of his ranch. “The Corps of Engineers didn’t even have a hearing in Montana, though the only place they will condemn land for that railroad is right here,” he said. “Because they knew they were going to run through a buzz saw of people like me.”,0,1180899.story

They call it a “river of coal,” the seam that dwarfs the giant equipment excavating Montana’s Spring Creek surface mine.PHOTOS BY ALAN BERNER / THE SEATTLE TIMES

Originally published April 27, 2013 at 5:13 PM | Page modified April 27, 2013 at 9:37 PM

In the Northwest, rising coal exports to Asia stir huge fight
A push for more Montana coal exports to Asia — and a pushback over fears about air pollution and global warming — could turn into the Northwest’s biggest environmental battle in years.

By Hal Bernton

Seattle Times reporter

DECKER, Mont. —

At Spring Creek Mine, a broad black seam of coal, reaching depths of 80 feet, runs like a subterranean river through arid, sagebrush-covered hills.

This is a world-class seam formed from the remnants of ferns, grasses and other plants that flourished here more than 50 million years ago, when this part of Montana was a humid marsh.

Cloud Peak Energy, operators of this mine, and other companies have proposals that could eventually double the state’s coal production — part of the push for a big expansion of U.S. coal exports.

“There has been more activity in Montana in the last three years than there has been in a generation,” said Todd O’Hair, a senior manager at Cloud Peak.

Standing on the knoll where George Armstrong Custer made his last stand, you can watch the coal trains that already rumble north en route to British Columbia, where coal is now shipped to South Korea, Taiwan and Japan. To boost overseas sales, Cloud Peak also has secured rights to ship coal through Washington terminals proposed for Cherry Point near Bellingham and for Longview.

The industry’s export push has put Montana on the front lines of what is shaping up as one of the Northwest’s biggest environmental battles in a decade.

With coal-burning power plants a major contributor to global warming and ocean acidification, environmental groups and their allies have mounted a major campaign to try to restrict shipping coal overseas.

Last fall, thousands of people turned out at public hearings on the proposed export terminal at Cherry Point. More than 100,000 people sent comments — many citing concerns about the impacts of increased coal-train traffic — to the county, state and federal agencies that will conduct environmental reviews.

In Montana last summer, 23 people were arrested during a week of protests in the state capital over plans by Arch Coal, the nation’s second-largest coal company, to develop a new mine that could send coal to Asia.

“We ought to do all we can to control our own use of coal,” said Denis Hayes, chief executive of the Seattle-based Bullitt Foundation and the organizer of the first Earth Day. “But we don’t accomplish much if we export it to Asia. The atmosphere is indifferent.”

The industry’s pursuit of these exports reflects the potential for higher profits and expanding sales in Asia amid uncertainty over coal’s future in the United States. The vast majority of American coal is burned by U.S. utilities. But in the decades ahead, coal’s share of power generation in this country could drop substantially if regulators clamp down on carbon-dioxide emissions.

To support the exports, the coal industry has stitched together a coalition that reaches from the maritime unions in Washington to Montana’s Crow Tribe, which last year signed an agreement with Cloud Peak for the development of up to 1.4 billion tons of coal on reservation lands. Proponents say the region stands to gain jobs, a dynamic new Pacific Rim trade and multibillion-dollar investments in mines, railroads and export terminals.

No matter what we do, Asia is going to get their coal, and continue to grow,” said Darrin Old Coyote, chairman of the Crow Tribe. “We want to be part of that market … This (Cloud Peak coal) project would double our budget and help us to meet a lot of unmet needs for social services and health care.”

Coal leases at issue

So far, President Obama has largely sidestepped the coal-export debate.

During his first term in office, the Environmental Protect Agency imposed tougher pollution standards on U.S. coal-burning power plants, and developed new rules — yet to be finalized — that would regulate greenhouse emissions from new plants. These actions helped push utilities to use more cleaner-burning natural gas, which in recent years has been cheap and in abundant supply. The drop in coal use contributed to a nearly 7 percent reduction in U.S. emissions of the six main greenhouse gases between 2005 and 2011.

Yet during the same period, the Interior Department, the largest owner of Western coal reserves, continued business as usual.

It leased the rights to mine more than 2.1 billion tons of coal in the Powder River Basin, which stretches for more than 250 miles through Wyoming and southern Montana.

That tally roughly equaled the amount of coal leased in the basin during the first term of Obama’s Republican predecessor, President George W. Bush, according to federal leasing records.

The Interior Department is now led by Sally Jewell, the former REI chief executive lauded by Obama as an expert on energy and climate change.

As she takes over as secretary, the department’s Bureau of Land Management (BLM) is reviewing additional lease requests by mining companies for nearly 3 billion tons of coal in the Powder River Basin.

The leasing has come under attack from environmentalists. They question whether the government is receiving enough money in lease payments and royalties, and allege in federal lawsuits that the BLM failed to properly consider the impact that burning coal would have on climate change.

On April 15, Jewell’s first day on the job, she received a letter from 21 environmental, health and consumer groups urging the Obama administration to declare a moratorium on Powder River Basin lease sales.

“The amount of coal that we see on the table right now (for leasing) is unprecedented,” said Jeremy Nichols of WildEarth Guardians, the lead plaintiff in the lawsuits challenging the lease sales. “We have to plan a different future.”

Oregon Gov. John Kitzhaber and Washington Gov. Jay Inslee weighed in on the coal debate in a March 25 joint letter to the White House Council on Environmental Quality (CEQ). In the “strongest possible terms,” they urged a “thorough examination of the greenhouse gas effects and other air quality effects of continued coal leasing” before decisions are made to expand exports.

Meanwhile, three Republican senators, in a letter to the CEQ, asserted the law does not allow consideration of greenhouse-gas emissions produced by exports after they leave the U.S., and there should be no “climate change litmus test” for exports.

Coal-rich state

Montana has more coal resources than any state in America.

All over the hill country south of Billings, you can spot what geologists call “clinker,” rock outcroppings baked to a brilliant pink hue by ancient fires that burned through coal.

Some canyons reveal small, black seams that hint of larger deposits deeper underground, and one stretch of river runs over a coal bed.

Despite this abundance, Montana’s coal production is less than 10 percent of neighboring Wyoming. That’s partly because some of the biggest, easiest-to-mine deposits are in the southern part of the Powder River Basin, which also is closer to many major U.S. utility markets in the East, Midwest and South.

But politics also have played a role.

Montanans have been stung by the boom-and-bust cycles of hard-rock mining, which in some areas left a legacy of toxic pollution and torn-up lands.

In 1975, as large-scale strip mining took hold in the Powder River Basin, the Montana Legislature slapped a severance tax of up to 30 percent on coal production, then the highest tax in the nation. Though the severance tax eventually was reduced, it is still more than twice that of neighboring Wyoming.

“People in Montana got a little more cautious view of resource development because they got burned on the hard-rock side of this stuff in the past,” said Cloud Peak’s O’Hair.

Back in the 1970s, that caution spurred some Montana ranchers to join the battle to create a new federal law to improve reclamation of coal strip mines.

“I got to go to the Rose Garden and stand with Jimmy Carter as he signed the law,” recalls 69-year-old Art Hayes (no relation to Denis Hayes).

Hayes’ early activism was stirred by concern over the fate of his own family’s 9,000-acre ranch along the coal-rich Tongue River drainage.

Hayes’ great-grandfather, a Confederate veteran from Mississippi, staked a claim to those lands back in 1884, building a Southern-style house with porticos, which still stands today near an aging barn embedded with the skulls of bison.

Nine decades later, “land men” representing coal companies came knocking on the doors of valley homes, and their lucrative offers divided the ranchers into those eager to profit from mining and those opposed.

“This tore the community in shreds,” recalls Hayes. “Some people wanted to lease and some people didn’t, and people who were lifelong friends all of a sudden didn’t speak to each other.”

The rifts ran through Hayes’ own family as he fought unsuccessfully to keep his parents from selling the rights to mine their acreage along the Tongue River.

The Hayes family ranch was never mined, as the Western coal industry over the past quarter-century focused most development efforts in Wyoming.

The renewed interest in Montana is partly attributed to geography. When sending coal to Asia, the state’s major Powder River mine deposits are about 200 miles closer to tidewater than some of the large mines in Wyoming’s southern portion of the basin. That helps reduce the high cost of transporting coal to market.

But in Montana, coal development still can stir a fight.

The most contested plan is the Arch Coal mine proposed on state and private lands along a tributary of the Tongue River, a prime ranching area.

The deposit holds up to 1.5 billion tons of proven and probable reserves, and could be developed into the state’s largest mine. In a statement released to The Seattle Times, an Arch Coal spokeswoman called the Powder River seams “the most cost competitive fossil fuel in the United States,” and said the company would work with regulators to “ensure water quality and all other environmental standards are met consistently” at Otter Creek.

Hayes, president of the Tongue River Water Users Association, notes that the Arch mine site is in a wetter area than some of the other coal sites developed in Montana. Water draining from the mine spoils could flush out lots of naturally occurring salts, and Hayes fears that would increase the salinity content of a river that is key to irrigating thousands of downstream acres of pasture.

“This is a place where mining should never happen,” said Hayes, who predicts years of lawsuits that will delay or block development.

Divisions among tribes

The mine also has drawn opposition from Cheyenne Indian activists. They say the mine, though off their reservation, would be dug on traditional tribal lands where they hunt and gather medicinal herbs.

“I was raised along the Tongue River, and a lot of our sacred people are buried in the hills where they want to mine,” said Alaina Buffalo Spirit.

Buffalo Spirit and other Cheyenne activists have appeared at public hearings to denounce the Arch mine. In March, they hosted a meeting on their reservation with the Yakama Nation of Central Washington to help build broader tribal opposition to Arch Coal.

Their allies also include some Western Washington tribes. Last week, Lummi, Swinomish and Tulalip leaders appeared with Seattle Mayor Mike McGinn to announce their opposition to building new coal-export terminals in Washington.

“When it comes to coal … the negative potential of what it does to our Northwest — we stand with you to say no to coal. As a matter of fact, the Tulalip say ‘hell no’ to coal,” said Tulalip Tribes Chairman Melvin Sheldon.

But some tribal leaders see economic salvation in coal.

On the coal-rich Crow reservation in Montana, annual median earnings are less than $21,000 and more than 28 percent of the people live below the poverty line, according to a 2011 U.S. Census estimate.

One mine owned by Westmoreland Resources has operated on the reservation since 1974. It currently employs more than 75 members of the tribe at an average salary of more than $62,000. The company has paid more than $61 million in taxes and royalties over the past three years.

Crow leaders say they are eager for the development of a second mine, proposed by Cloud Peak, which they say could provide up to 200 jobs and tens of millions of dollars in additional annual tax and royalty payments.

“We’re too far from population centers, so gaming is not going to solve the problems,” said Old Coyote, the Crow tribal chairman. “We need to develop our resources.”

But the long-term fate of reservation lands remains a sensitive issue for the Crows, who want to see strip-mined acreage eventually restored for other use.

“The reclamation is one of the biggest keys to this,” Old Coyote said.

At the Cloud Peak mining operation at Spring Creek, restoration is an ongoing effort as huge quantities of rock rubble are piled into pits that have been stripped of coal. Topsoil, set aside during the initial excavations, is layered over the rock and eventually seeded with greasewood, sagebrush and other native plants prescribed by state regulators who enforce the federal Reclamation Act.

This reclamation is intended to create habitat for sage grouse and other wildlife. On a recent tour of the mine, nine deer could be spotted browsing in a restored tract that was planted last year.

Throughout Montana coal country, more than 12,400 coal-mine acres have been filled, resculpted and replanted while more than 39,000 acres are still considered disturbed, according to state officials.

Bruce Jones, Spring Creek’s general manager, said that even when the costs of the restoration are tallied into the mining operation, coal can be mined here for about $6 a ton. That makes Spring Creek, with 260 employees, one of the lowest-cost mines in the nation and helps coal exports compete in Asia despite what company officials say is $70 per ton in transportation costs to reach those markets.

The mining is a carefully choreographed operation that involves blasting up to 240 feet of rock and removing the rubble with the aid of a drag line that weighs nearly 8 million pounds and works day and night. The coal is then blasted, crushed and — on a warm spring day — loaded in less than three hours’ time into more than 120 freight cars.

By early afternoon, the coal train departed on the first leg of a land-and-sea journey that would end at an Asian power plant.

“To satisfy their needs, they’re … turning to coal,” Jones said. “You’re not going to deny them.”

Natural gas challenges coal as king of the energy hill in Ohio
Entire villages in the eastern part of the state are leasing their land for gas drilling. What’s a cash boon to some has others worrying about the future.

A coal-burning power plant in Beverly, Ohio, eventually might have to close if it can’t meet clean-air standards. More companies are turning to cleaner and increasingly cheaper natural gas instead of coal. (Michael Williamson, Washington Post / November 10, 2011)

By Neela Banerjee, Washington Bureau

March 2, 2013, 10:00 p.m.

BELLAIRE, Ohio — The four miners who gathered one blustery morning at the United Mine Workers of America hall know that, so far, they are lucky.

Their coal mines along the West Virginia state line are still working, having survived a painful 30-year decline in the industry. But a new threat has pushed into Ohio, imperiling the primacy of coal here and all over the country.

“I feel worried about the future, that natural gas is a threat to us,” said Tim Merryman, 54. “Some of those coal plants will convert [to natural gas], and that’s a threat to coal guys.”

For more than 200 years, coal has been king in Ohio, occupying a privileged position in state politics and as the fuel of choice for local power plants. Now its supremacy is being challenged. A natural gas rush that has hurtled through the country over the last five years has pushed its way into the coal fields of Pennsylvania, West Virginia and Ohio. Entire villages in eastern Ohio are leasing their land for gas drilling, and huge energy companies that relied on coal to generate electricity are turning to natural gas.

Stoked by technological advances, the gas boom is transforming the United States and creating winners and losers on a national level and in far-flung small towns. From Texas to North Dakota to Pennsylvania, natural gas production has brought jobs and revenue. It has also driven up rents in small towns, torn up roads and led to lawsuits about control over energy development. And it has raised environmental and public health concerns.

The energy boom is also transforming the American economic landscape. The United States now imports less crude oil than it has since 1987, thanks in large part to an oil rush in North Dakota and a rise in vehicle fuel economy. More electricity now comes from renewable sources as the prices of wind and solar fall and states put in place clean energy mandates. Among the biggest shifts, however, has been the rise of natural gas, and with it the increasingly fragile position of coal.

As gas has risen, coal has dived. Long the primary fuel for the country’s power plants, coal has been squeezed by cheap natural gas and tightening environmental regulations. With the arrival of gas companies in Ohio, the coal industry and the towns and people tied to it find themselves grappling with the complex risks and rewards unlocked by the national energy shift.

“Is the coal industry suffering? You bet,” said Thomas Stewart, executive vice president of the Ohio Oil and Gas Assn. “Not too long ago, coal was king and natural gas was the ugly stepchild. You see companies switching the fuel they use. Coal is a very efficient fuel, but they’re the ugly stepchild now.”

Coal still is the most widely used fuel in power generation, but with each year, its share of the domestic market has shrunk. Industry lobbies and their political allies assert that the Environmental Protection Agency has declared “a war on coal” in the form of tighter pollution rules. But independent analysts say cheap gas has played as crucial a role as regulation in eroding coal’s supremacy.

In 1993, coal generated 53% of the nation’s electricity. By the end of 2012, it was just 37%. Natural gas, meanwhile, has risen from 13% of the fuel mix 20 years ago to 31%. Advances in horizontal drilling and high-volume hydraulic fracturing, a controversial production method also known as fracking, have allowed companies to produce gas in geological formations that were too technologically and financially daunting a generation ago.

Ohio has a long history of oil and gas production, but this latest wave of natural gas development is still in its early stages, unlike in Pennsylvania, where thousands of wells are already producing. Only 249 wells have been drilled in Ohio, in great part because the pipeline network has yet to catch up with the drilling interest. The gas here is so-called wet gas, more valuable than the “dry gas” prevalent in Pennsylvania because it is extracted with certain liquids like ethane and butane that can also be sold on commodity markets.

The advance team for the gas boom has begun to course through eastern Ohio. Hotels are being built along the interstates to house experienced oil and gas hands from Louisiana, Oklahoma, Texas and elsewhere. In St. Clairsville recently, the county deed recorder’s office was choked with about 45 mostly young men and a few women checking on who owns the mineral rights to parcels of land. Two years ago, five visitors to the office would have made for a busy day.

Coal production in Ohio has held steady in recent years, but only because more of it is exported. In Ohio, 82% of electricity still comes from coal, but the number is dropping. The country’s second-largest power company and a huge coal consumer, AEP, based in Columbus, has been burning more natural gas than in previous years because increased availability has driven the price down.

Still, coal will continue to be a substantial part of the country’s fuel mix, says Mark McCullough, AEP’s vice president of generation. As part of a legal settlement announced Monday with the EPA and other parties, AEP agreed to stop burning coal at power plants in Kentucky, Indiana and Ohio by 2015.

But as gas elbows its way into coal country, disputes have started to emerge. Here in some parts of Belmont County, drillers have to bore through shallower coal seams first to get to the gas thousands of feet below ground. Coal companies can derail the drilling if they assert that it impinges on a mine, even one that hasn’t been established yet. The Smith-Goshen Landowners Group has leased 35,000 acres for gas drilling, and nearly all of it sits above seams belonging to Murray Energy, the country’s largest privately owned coal company.

Gas and coal advocates use the arguments of environmentalists, whose assessments they normally dismiss, to raise questions about the other side. Landowners leasing land to gas companies point to the damage done by coal mining to Ohio.

A member of the Smith-Goshen group, dairy farmer Larry Cain, drives past the entrance to one of Murray’s coal mines to give a visitor a view of an impoundment pond, a man-made lake of mining sludge as far as the eye can see. The miners meeting in Bellaire, for their part, echo environmentalists’ worries that hydraulic fracturing might contaminate water sources.

Many Ohioans, include some in coal mining, have had a hard time resisting the pocketbook allure of gas. People are being offered $5,000 to $7,000 an acre to sign leases, and royalty payments of 20% of revenues once gas is produced.

For years, Richard Clay worked as a coal miner in eastern Ohio. Now retired, Clay, 66, and his wife, Kaye, 54, have leased their 140-acre cattle and sheep farm in Piedmont to Gulfport Energy. Just signing the deal gave them enough money to pay off their mortgage. The company drilled a well and set up storage tanks under a stand of trees where the Clays’ son got married. After seeing what coal mining can do to the land, the Clays said, they were pleased by how little disruption the gas drilling created.

“It felt wonderful to be able to pay off the mortgage,” Kaye Clay said. “At the same time, we want this farm to be a heritage to our children, so we didn’t want it torn up.”

For many miners, the only solace during the gas rush may be that there is so much coal in the country, it will have to be used somehow. To men like those at the United Mine Workers hall in Bellaire, natural gas may be needed, but it is a flash in the pan, while the deposits here are good for perhaps 30 years, they contend. Coal, they say, can be used for maybe hundreds of years.

Says miner Rick Altman, “When they turn off the tap, the pocketbooks will dry up too.”,0,3564344.story

European industry flocks to U.S. to take advantage of cheaper gas

Lori Waselchuk/For The Washington Post – Contract workers begin construction of a formic acid plant at the BASF Geismar chemical plant in Geismar, La.

Posted on Tuesday, June 18, 2013
Corps of Engineers won’t review climate change impacts of Northwest coal exports

A coal train is heading north through the old Georgia-Pacific site in Bellingham, Washington. | Philip A. Dwyer/Bellingham Herald/MCT

By Curtis Tate | McClatchy Washington Bureau

WASHINGTON — The U.S Army Corps of Engineers will not review the broader climate-change impacts of proposed coal export terminals in the Pacific Northwest, an agency official told Congress on Tuesday.

The much-anticipated decision was a significant victory for the supporters of three terminals in Washington and Oregon and a setback for environmentalists and state and local officials who oppose exporting coal to China.

“The corps will limit its focus on emissions to those associated with construction of the facilities,” Jennifer Moyer, acting regulatory chief for the corps told lawmakers. “The effects of burning of coal in Asia or wherever it may be is too far to affect our action.”

Moyer added that the corps also would not consider the impact of coal trains on waterways and air quality. The governors of Washington and Oregon, environmental groups and Indian tribes had demanded that the corps account for the transportation of coal from the mines to the ports in its analysis, which was required before the projects could forward.

There has been little study of how increased locomotive exhaust and coal dust would affect communities through which the rail shipments travel, a key driver of opposition.

Moyer noted in her testimony that coal had been shipped by rail from U.S. mines for export for many decades, and it was beyond the realm of the agency’s expertise to judge what increased coal shipments would mean for the region.

“We don’t control shipping by rail,” she said.

Rep. Henry Waxman, D-Calif., the ranking member on the House of Representatives Energy and Commerce Committee and a leading environmental advocate in Congress, urged her to reconsider the decision.

“I think the corps is making a big mistake,” he said.

The hearing in the Subcommittee on Energy and Power was dominated by lawmakers from coal-producing states.

None from the states affected by the proposed ports, including Washington and Oregon, were present.

The subcommittee’s Republican chairman, Rep. Ed Whitfield, represents Kentucky, one of the nation’s leading coal producers. The state’s coal industry has been reeling from a decline in domestic coal consumption, fueled by an abundance of cheaper natural gas and stricter environmental laws.

Noting that the U.S. exported a record 126 million tons of coal in 2012, Whitfield said that overseas markets presented a “tremendous opportunity.”

“It will help decrease our trade deficit,” he said. “It will help increase the number of jobs in America.”

Rep. John Shimkus, R-Ill., who represents another coal-producing region, said the proposed terminals would be a welcome role reversal for the United States, which long relied on imported energy to meet its needs.

“Now we can say people are buying our energy,” he said. “They will send their money to us.”

But lawmakers from coastal states threatened by rising sea levels brought the discussion back to climate change.

“Coal is the single largest contributor to global warming,” said Rep. Kathy Castor, D-Fla. “With everything climate science is telling us about climate change, we should not be exporting coal.”

Others oppose the terminals because of potential community impacts. The proposed Cherry Point terminal near Bellingham, Wash., would bring 50 million tons of coal a year by rail through the state’s major population centers.

Seattle Mayor Mike McGinn said such movements would increase congestion and pollution in his city.

“We have better ways to create jobs,” he told the panel.

The corps’ decision boosted supporters of the coal terminals who have watched the number of proposed projects shrink from six to three – two in Washington and one in Oregon. It also was favorable to rail companies. Earlier this month, the Sierra Club and other environmental groups sued Burlington Northern Santa Fe, one of the nation’s largest railroads, accusing the company of polluting rivers along its coal shipment routes in the Northwest.

Lauri Hennesey, a spokeswoman for the Alliance for Northwest Jobs & Exports, a coalition of supporters, welcomed the Corps’ announcement.

“These terminals can be done right, creating thousands of good jobs,” she said in a statement.

Environmental groups said they would continue their push for a broader review. KC Golden, policy director for Climate Solutions, testified that it would be “irresponsible” not to consider the full implications of exporting coal.

“Let’s not be afraid to ask and answer the big questions,” he told the committee. “These choices deserve full transparency and accountability.”

About Jerry Frey

Born 1953. Vietnam Veteran. Graduated Ohio State 1980. Have 5 published books. In the Woods Before Dawn; Grandpa's Gone; Longstreet's Assault; Pioneer of Salvation; Three Quarter Cadillac
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