Coal Tattoo investigates: Is there a MTR permit crisis?

November 4, 2009 by Ken Ward Jr.


To hear folks from the coal industry — and their politician friends — talk, you’d think that the Obama administration’s move to more closely review mountaintop removal permits has brought coal production across Appalachia to a halt — or at least driven mine operators to the brink of thousands of layoffs and economic ruin.

Take state Senate Majority Leader Truman Chafin, D-Mingo, who told a statewide radio audience in West Virginia yesterday:

We’re going to see layoffs like you’ve never seen before real soon.

Or state Senate President Earl Ray Tomblin, D-Logan,  who warned the U.S. EPA in a letter last month:

It is of the utmost importance that this situation be resolved not in a matter of weeks, but days.

Such statements make local political leaders sound pretty tough — slapping around some bureaucrats in Washington, D.C., is always an easy thing for these guys to do.

These comments also fuel fear among hard-working coal miners and their families. They put pressure on regulatory agencies to back down, or make much quicker — and perhaps less thoughtful — decisions than a calmer, more reasoned debate might produce. They’ve helped the coal industry get out huge numbers of people at public meetings, and generated an atmosphere that is hardly healthy for a real discussion of mountaintop removal’s future.

But are these statements true? Is there a mountaintop removal permit crisis? Not if you believe what executives from the region’s largest publicly traded coal producers are telling industry analysts and corporate shareholders.

Over the last two weeks, coal company officials have repeatedly told stock analysts and their shareholders that they’re in pretty good shape for another year, maybe two … seems like plenty of time for everyone to sit down and come up with a workable solution without scaring workers and threatening environmental activists.

blankenshipap.jpgTake Massey Energy President Don Blankenship, for instance. During a conference call last week with coal industry stock analysts, Blankenship was asked about the impact of U.S. EPA’s permit reviews on Massey Energy operations:

They are very safe in detail in ’10. In ’11 if we had a issue with permitting on a surface mine, we would go to more deep mines …  We will be and keep ourselves in a position to make those volumes or more irregardless of which way the permitting issue evolves.

But certainly if we get a lot of pressure from the permitting side that continues on into ’11 we will begin to get restricted to some extent and we’ll probably see a little bit higher cost on surface mining because of the placement of the material and perhaps move a little bit more to deep mining.


That’s not to say there aren’t issues … but are they as serious as the National Mining Association and state-based coal lobby groups are trying to make it sound?

Mike Carey, president of the Ohio Coal Association, had this to say about EPA’s permit reviews:

EPA is playing with fire. More importantly, the agency is playing with people’s livelihoods. The implications of their delaying tactics will be felt throughout this state’s economy.

Bill Caylor of the Kentucky Coal Association said:

EPA’s hit list was compiled by people in Washington who are entirely insulated from the consequences of their actions and far removed from the families and communities affected by them.

And my buddy Bill Raney, president of the West Virginia Coal Association, said:

People all over West Virginia can’t believe this is happening. They don’t understand why Washington is willing to kill-off good paying jobs when our economy is still on the ropes and the unemployment rate is still unacceptably high.

Are things really as bad as Carey, Caylor and Raney make them sound?

One permit that’s gotten a lot of attention is the Spruce No. 1 Mine. Arch Coal subsidiary Mingo Logan Coal Co. has warned that at the Spruce Mine — the subject of a pending permit veto effort by EPA — it “must soon develop more fill capacity or cease operations.”  But that mine currently lists just 26 workers. And its permit dispute with EPA didn’t even merit a mention in Arch Coal’s recent quarterly financial report or earnings conference call.

Or consider Patriot Coal subsidiary Hobet Mining’s Hobet 21 expansion project — called Hobet 45 — down along the Boone-Lincoln County line in Southern West Virginia. It’s one of the last large surface mines working under a United Mine Workers contract.  It employs 325 people.

We’ve discussed this permit before, and reported on Patriot’s concerns that without the new permit its dragline would have to be shut down. But the company said it didn’t expect to lose much production until the second half of 2010, and that it was exploring options that could keep that mine working. More recently, state regulators reported that Patriot and EPA had reached a deal on this permit, averting layoffs at the Hobet operation.

board_whiting.jpgDuring a conference call with industry analysts last week,  Patriot CEO Rick Whiting said the permit hasn’t gotten final approval yet, but expressed some optimism about the situation:

We do not have it in hand. We continue to provide answers to questions and have meetings with the regulators and in fact I think we are going to make a new submittal, I guess, I’ll call it a partial submittal or an adjustment to previous submittal by the end of this week, and we continue to keep the dialogue open and respond to their request, and I believe we are making progress, but we do not have a permit at this point.

Of course, in an opening statement, Whiting gave the standard coal industry line about the EPA permit reviews:

Currently surface mining provides almost two-thirds of Central Appalachian thermal coal. So, we look with great concern on the EPA decision to further review all 79 surface mining permits pending with the Corps of Engineers.

If future permits are not granted and important source of low cost fuel for electricity will be eliminated that will mean higher utility cost for many Americans. Unfortunately the EPA’s decision adds further uncertainty for coal producers, our employees, our customers, and our investors.

But, one analyst asked, is Patriot facing serious problems with any specific permits other than Hobet 21? Whiting responded:

I think that anything else that we have in our lineup it becomes more of an issue [when] you get to mid 2011.

In fact, Whiting went on to say that Patriot already has some permit approvals in the area where it previously shut down its huge Samples Mine, and might seek more permits in that area, but not until probably 2012:

Obviously at some point in time we have other opportunities, what was Paint Creek, which is the area, where Samples previously operated, we have some other reserves already permitted out there and we have another large block that we would be seeking a permit for sometime in the future probably all those we get done in by 2012 up there we would be a good shape for that fits in to our strategic plan and when we think we would like to bring those terms online.

So, as we get in to 11 and 12 no permit scenario, we can’t run and hide from that any more than in the rest of the industry can. I think we are probably a typical profile that if our production drops down over the next three or four years, if we don’t get any permits, but I think anything that’s going to affect ’10 is pretty well the Hobet 45 that has gotten so much fame of light.

1058-roger-nicholson.jpgThe only layoffs that I’m aware of that have so far that have been attributed to EPA’s permit reviews were announced last month by International Coal Group Vice President and General Counsel Roger Nicholson during that crazy Army Corps of Engineers mountaintop removal public hearing here in Charleston.Nicholson said the Obama administration has enacted a “de facto moratorium” on new permits that is “strangling the Appalachian coal industry.” Nicholson said that at one ICG opreation, permit delays caused a sequencing problem, closure of certain equipment and loss of jobs.

After the hearing, I asked Roger for some more details on what happened. Here’s what he said:

… Delay or non-issuance of permits has directly contributed to layoffs at both our ICG Eastern operations (38 workers laid off) and ICG East Kentucky operations (10 workers laid off).

By way of explaining what permit delays mean to mine operators, he added:

The practical effect of delay in issuance of permits is that a mine is often forced to change its mining sequence when permits for logical extensions of an operation are delayed.  This raises costs and can render an operation uneconomical, and, of course, permitted coal reserves can be exhausted, which can lead to closures and layoffs without the issuance of new permits for additional areas.

Over the last few weeks, I’ve repeatedly asked ICG for more details. I wanted to know exactly what happened at these operation, to understand specifically how EPA’s permit review contributed to the layoffs. Finally, I got this response from Roger yesterday:

We are not going to comment in detail about specific permits.  Mining is a very complicated, engineering-intensive business.  Permits are the lifeblood of any mining company’s business, and companies plan specific operations, as well as subsequent mining areas for those crews to “go-to” when existing operational areas are exhausted, well in advance.  The delays in mining permit issuance is a contributing factor to those operational changes that I mentioned in my initial statement As we have stated publicly, the mining permit delays have not yet caused a material negative effect on ICG’s financial performance overall.

bhatfield12.jpgIn a conference call last week, ICG President Ben Hatfield  repeated this idea that there’s a “de facto permit moratorium” instituted by the Obama administration:

It is inevitable however, that all Appalachia and coal producers will face more significant operational difficulties unless the administration de facto moratorium on coal permit issuance is listed and permits for both surface and deep mining operations are issued without undue delay.

Hatfield also made what appears to be a perfectly reasonable point: That the coal industry wants clear direction from EPA about what is wrong with the permits is is reviewing and what needs to be done to fix them:

Our strategy would be easier to find, if could find some method to the madness part. Frankly, when they won’t even give us a good excuse of what they are looking for or what their problems are, we don’t, quite know how to react.

I’m hoping to discuss this particular issue in more detail in a future post. For now, though, it is important to look at what Hatfield said when asked about specific operational problems the EPA permit reviews were (or weren’t) causing his company:

Well, the short answer would be essentially our higher costs impact certainly. We do not see in the permits that are teed up for scrutiny at this point anything that’s likely to cause us to have to literally shutter production in that two year time horizon. But certainly there is a cost impact that even there as we speak in the current period, because when you don’t get permits for new valley fills that means you have to haul the material further.

We are fortunate to have locations, particularly at Hazard in ICG, Eastern locations, where we can haul the material little further and maintain our more or less our current production output. But there is a cost connected to that. So in the near term I would say more pressure on higher costs because we don’t have the permits approved and certainly over the more extended period I would say beyond the two year horizon, substantial risk of production shutting and quite literally as existing mines are depleted and the successor permits are simply not approved at that stage.

In addition, consider this:

But our overall plan as you know probably from following our… for a period of time, most of our growth is on the underground side. Beckley with a big piece of our growth, Center with a big piece of our growth and continuingly we expect to develop the Tygart project beginning in 2011. That’s another major step up on underground production.

Roger Nicholson would want me to point out here this quote from him regarding that Tygart Mine, an underground operation proposed for Taylor County, W.Va.:

Of course, as you are also aware, anti-mining extremists have been contesting the state permit for ICG Tygart Valley’s deep mine–one which will create hundreds of new jobs in Taylor County–for a couple of years now.

But overall, here’s what Hatfield said about the future:

So I think you would generally see our company particularly in the industry, in many cases favoring, bidding on both on the underground side as of somewhat safer haven so to speak because of the uncertainty as to how long it takes or even whether you can get a surface mine permit approved.

So I think that the short answer is moving more of our focus on expanding underground operations and looking particularly at our subs operations or locations where we can continue producing without new adequate, not letting not putting material back on existing bench or reusing an older field. So there are some strategies that help us bridge that period of time, but the industry overall is going to see a negative impact to production output and particular to surface mining in Appalachia.

j_harvey.jpgConsider what the folks from CONSOL Energy had to say in a conference call with industry analysts two weeks ago. CONSOL President Brett Harvey explained  that his company has some exposure to mountaintop removal mining permit issues because of its purchase two years ago or Amvest Corp. But, Harvey didn’t indicate any crisis there, even though at least one Amvest permit is among those being examined by EPA:

That permit right now, we are running the biggest mines that we have in Amvest , and they are running on year to year permits. We had five other permits in the queue, and those permits were more expansive type, and we’ll continue to push for those permits, but it’s not in our 2010 plan at this point in time.

Harvey called the mountaintop removal issue in the Central Appalachian coalfields “a very poignant issue” and said it is “critical to get permits there.”  But he also said:

We have low exposure to Central App, but we think it will affect Central App in a big way that could translate back into an advantage for Northern App because we have very big mines that are well capitalized and have 20 to 25 year lives … We would rather see everybody get permits and be competitive, but if there is a positive for us, it does push value back to Northern App if Central App continues to struggle based on permitting.

And, even Don Blankenship seemed to be saying that EPA was doing his company a favor by taking a closer look at some of the pending mountaintop removal permits held by his company’s competitors:

We believe we have a 100 million tons of thermal coal or surface mining coal permitted and that we have lots of opportunities to get permits in manners or in ways that comply with these laws, but we always worry about what EPA and others will do next, as far as frustrating that process.

But relative to other companies we feel very good and we think that at least in the short  term that we would benefit from the permitting process being frustrated but we’re certainly not in favor.

Blankenship added:

I mean one of the reasons that we bought in prompt delivery coal in the third quarter and let our fixed coal volumes suffer was is that it allowed us to add a couple of mines that are fully permitted that were sort of left in storage in case the permit issue worsens and the prices improve.

59 Responses to “Coal Tattoo investigates: Is there a MTR permit crisis?”

  1. FactsFirst says:


    You are correct, EPA does have authority to veto the permit and I did not intend to imply otherwise. Indeed, my point was only that there is a process laid out for EPA’s engagement, and that has been changed. But it would be incorrect to say that EPA’s authority prevents the Corps from issuing the permit–the veto can only be issued once the Corps has issued the permit over EPA’s objections. What you correctly suggest is that perhaps EPA did not want to face the prospect of issuing many vetoes and preferred to set up a process that avoids such a scenario since that would obviously demonstrate tension between the two agencies. Clearly, EPA did not want to be confronted with dozens of situations like it confronts now with the Arch permit it is threatening to veto. So my point is not that EPA does not have a role–and a powerful one at that through the veto authority. But it seems obvious that EPA thinks that role at the end of the process does not match up well with what it would like to accomplish here. No doubt the view has changed on what constitutes unacceptable impacts–and I would suggest it is not a change from simply the last administration–but a change from all prior administrations since these types of mines have been permitted under the laws for decades. So in the end, the MOU is, as you suggest, an “alternative” process to avoid the confrontation at the end of the process through a veto. The only point is that it is a new process–to some a good one ,to others not so good, to many, apparently from the commentary on your blog and elsewhere, one they don’t understand.
    Thanks for passing on the court decision. I agree with your assessment that the decision suggests that EPA has wide latitude when it exercises its veto authority.

  2. Ken Ward Jr. says:

    Facts First,

    You’re really making me earn my pay today … Thanks for a very detailed discussion …

    You wrote:

    But it would be incorrect to say that EPA’s authority prevents the Corps from issuing the permit–the veto can only be issued once the Corps has issued the permit over EPA’s objections.

    I don’t think that’s correct … my reading of 40 CFR 231.3(2) is that once the formal notice that EPA is invoking the 404(c) authority — as has happened with the Spruce Mine — the Corps may not issue the permit in question … here’s that language:

    Where the Regional Administrator has notified the District
    Engineer under paragraph (a)(1) of this section that he is considering
    exercising section 404(c) authority with respect to a particular
    disposal site for which a permit application is pending but for which no
    permit has been issued, the District Engineer, in accordance with 33 CFR
    325.8, shall not issue the permit until final action is taken under this


  3. Ken Ward Jr. says:


    One last thing from me this evening … you’re absolutely right — this is a process that clearly folks here in the coalfields don’t understand.

    I’d say the media, local politicians, the coal industry, and environmental groups all share the blame for that.

    My to-do list for next week now has a new entry: Write something that makes some sense of the process here … process being important..


  4. FactsFirst says:


    You are correct and thank you for pointing out the EPA 404(c) rules. I was thrown by the decision you posted earlier that begins with the statment that the Corps “granted” a permit under 404(b) and EPA “vetoed” the permit under 404(c). I didn’t see in the Corps rules I pulled off the web any specific mention of a veto in advance of issuance, but going back to them now it appears that the EPA rule you cite would fall under the Corp provison that says the District Engineer will refer the application to the Chief Engineer if the District Engineer is precluded by law or procedures from taking final action on the application. 325.8(c)(4).
    Look forward to your future posts on the process. I would only add one other entity to your list of those who have fallen short on explaining the process –the federal agencies. Thanks again.

  5. Jason Robinson says:

    The science demonstrating the cumulative impacts (that are “unacceptable” under the CWA) has only in the last 3 or 4 years become readily available. The idea that all of a sudden the Obama administration has changed their view of what is unacceptable is risible. On the other hand, we’ve known for over 10 years that the valley fill process is a violation of the original intent of the SMCRA. The scientific information necessary to demonstrate that those impacts violate the CWA is the issue has only recently come to light. Ironic that calls for a flexible regulatory process are really calls for overlooking flagrant violations of the spirit and intent of environmental protection laws. Adaptive management requires collecting and utilizing information as it becomes available.

  6. Casey says:

    Jason, I’m no expert but is your statement “the valley fill process is a violation of the original intent of the SMCRA” accurate? A quick search found a statement from the Corps “Congress enacted the Surface Mining Control and Reclamation Act (SMCRA) with the intent of balancing the energy needs of the nation with environmental protection. SMCRA allows for surface coal mining and mountaintop mining/valley fills (MTM/VF) was identified as an acceptable type of mining.” This is more in line with my understanding.

  7. Jason Robinson says:

    Hi Casey this is of course what all the fuss is about. But the Environmental Impact Statement implementing section 501(b) of the SMCRA said “the program should directly protect the quantity and quality of the waters within and downstream of the areas mined and habitat characteristics, including streambeds and velocities, on which aquatic species are dependent”. Clearly valley fills do not protect these attributes of streams. The loophole in the regulations, to my understanding, lies in a section 1265 of SMCRA, which discusses the necessary drains for fills with wetland seeps or springs. I am not a lawyer and I would love for a lawyer to weigh in here as there is a longer history regarding this particular phrase of this section, and it’s my understanding that this particular phrase is the keystone of the legal decisions allowing valley fills of streams and wetlands. This is important because this particular phrase is at odds with 1) the rest of the language in the SMCRA 2) the streamside buffer zone rule as originally formulated before rewrites redefined it out of existence 3) the Clean Water Act as it defines “fill” and “waste” under sections 402 and 404 and 4) the Environmental Impact Statement implementing SMCRA.

    Valleyfills are a biological holocaust. Attempts to justify their use for surface coal mining by appealing to “balancing environmental protection” or “state sovereignty” are inhuman.

    If we had full knowledge of what was being destroyed by valley fills in terms of the biodiversity that relies on upland seeps springs bogs and wet rock faces then no doubt the Endangered Species Act would preclude this type of surface coal mining. Unfortunately we know next to nothing regarding the systematics and taxonomy of aquatic insects that utilize these habitats, and hundreds of square miles of these habitats have already been destroyed. In my personal research I can point to several dozen species that are known from only a single collection or collections at a single site or watershed. These areas are hotspots for biological diversity and they are being reduced to elk pastures that aren’t even decent habitat for white footed mice much less orchids, plethodontid salamanders, ethnobotanicals etc etc.

  8. […] held a bizarre seance with faltering West Virginia politicians last week and whipped them into an unfounded frenzy about job losses from environmental […]

  9. […] “ in several months if the permits don’t come through” — this despite his comments to industry analysts that Massey is in good shape for Clean Water Act permits through at least 2010 and maybe on into […]

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