Friday roundup, May 10, 2013

May 10, 2013 by Ken Ward Jr.

The S.S. Badger Capt Jeff Curtis is all smiles before boarding the carferry for its first trip of the year trip across Lake Michigan from Ludington, Mich., to Manitowac, Wisc., Monday, May 6, 2013. As the Badger begins its 60th season, a judge is considering whether to approve a deal with the U.S. Environmental Protection Agency that would allow the vessel to continue discharging coal ash into the lake for another two years while developing a plan to store the ash onboard. (AP Photo/Ludington Daily News, Jeff Kiessel)

 Dustin Bleizeffer of WyoFile made an interesting connection this week between two important milestones:

Wyoming Gov. Matt Mead issued a press release last week celebrating the 10-billionth ton of coal mined in the state, which is supposed to happen sometime in the month of May.

Another milestone expected in May: Scientists at the Scripps Institution of Oceanography at UC San Diego say that carbon dioxide (CO2) in the earth’s atmosphere will likely reach 400 parts per million (ppm) — a level last seen 2.5 million to 5 million years ago.

The piece continued:

There’s no denying the significant financial wealth Wyoming has gained from decades of mining coal. Gov. Mead and the industry point to this massive revenue base as evidence that mining coal at current rates is essential to Wyoming’s economic health far into the future, but they do so without disclosing the obvious economic danger; Wyoming is overly-reliant on a commodities industry that bends to the whim of markets and policies that are driven from outside Wyoming’s pro-coal borders.

And then, you just knew this was coming:

So just where does Gov. Mead stand on climate change? Does he attempt to square his stance on federal coal exports with his policies and efforts to get federal aid for drought and wildfires in Wyoming?

To answer the first question, Gov. Mead was recently quoted in the Gillette News-Record; “The fact is, as I see it anyway, the issue of climate change, global warming is still under debate, is still developing.”

Meanwhile, in a related matter, David Roberts at Grist reminds us that EPA is actually required to do something about carbon dioxide emissions from coal-fired power plants:

Again, this series of executive actions is prescribed by statute. EPA is not “bypassing” Congress, or going around it, or in any way exceeding its authority. It is not even acting on Obama’s discretion, not really. It is simply carrying out the will of Congress, as embodied in the Clean Air Act.

Yes, EPA can slow-walk this, maybe even enough to punt rules for existing CO2 sources to the next administration (though I don’t think it will). Or it could conceivably issue toothless rules (this I’m 50/50 on). Or it could issue good rules and see them struck down by a reactionary D.C. Circuit Court, a disturbingly plausible outcome.

But what it can’t do is just decide not to issue existing-source rules. The agency is under statutory obligation to do so and would be subject to lawsuit if it didn’t. Neither Obama nor EPA has the authority to decline to issues these rules.

But as Bloomberg reported:

Methane emissions from coal mines escaped being curbed by the Environmental Protection Agency, which said mandatory U.S. budget cuts didn’t leave it with the resources to determine if the pollution is a significant risk.

The EPA rejected a petition from environmental groups, which three years ago asked the agency to limit the greenhouse gases released from the mines.

“The agency must prioritize its regulatory actions. This is especially the case in light of limited resources and ongoing budget uncertainties,” acting EPA Administrator Bob Perciasepe wrote in a letter to Edward Zukoski, a lawyer for the environmental group Earthjustice. “In the future, the EPA may initiate the process for such a determination, but the agency has decided that it will not do so now.”

Also this week, the Courier-Journal in Louisville reported:

Nearly a year after it was fined more than $800,000 for safety violations, K and D Mining Inc. — run by two operators of the Kentucky Darby Mine where five miners died in 2006 — has essentially disappeared and none of the fines have been paid, federal records show.

It’s the latest example of how the federal Mine Safety and Health Administration’s penalty process is too slow and cumbersome to stop operators from putting miners in danger and fails to deter companies that ignore fines, mine safety advocates say.

“The process of collecting fines from scofflaw operators — rogue operators — is still broken,” said Wes Addington, deputy director of the Appalachian Citizens’ Law Center, a nonprofit firm in Whitesburg, Ky., that represents miners and their families on mine safety and environmental issues. “It really is disappointing.”

And the Cleveland Plain Dealer reported this:

In eastern Ohio’s coal country last Aug. 13, a federal inspector went down into Powhatan Mine No. 6, one of the state’s two largest mines. Both are owned by Murray Energy Corp. and controlled by Robert Murray, the Pepper Pike-based businessman and Republican donor.

It was a routine inspection, yet it ended with a claim of safety violations for what the government said was a failure to spread enough rock dust, which guards against the risk of explosion when coal dust mixes with methane, a naturally occurring gas. Federal regulators fined the company nearly $90,000, an amount that was the second largest for an Ohio coal mine in at least the last six years, according to regulatory records

But Murray Energy, which says it produces 62 percent of the coal mined in Ohio, may never have to pay that much. In an industry where safety and health citations sometimes involve a cat-and-mouse chase, mine owners — and not just Murray — are fighting significant fines as a matter of course and getting them reduced, if not dropped, a Plain Dealer examination of coal mine records has found.

Large fines announced elsewhere in high-profile mine safety cases, even disasters, get reduced, too.

Critics say that in fighting back, mine owners are clogging up the appeals process and wearing down a system that lacks resources to match the challenge. Like a game of Chutes and Ladders, the process plays out year after year: federal inspectors cite a mine, the agency proposes fines, the mine owner appeals and gets many of the fines reduced — and the process repeats itself anew. It raises questions about how sensible and effective the mine-safety system is.

But the federal Mine Safety and Health Administration, or MSHA, defends the system, saying inspections and citations, regardless of how the fines are resolved, create safer mines. MSHA is a division of the Department of Labor.

For their part, mine owners and representatives say they just are exercising their legal rights.

“MSHA inspectors are given great latitude in their evaluation of alleged hazardous conditions, and many times there are mitigating circumstances that they do not take into account during their inspection,” said Gary Broadbent, Murray Energy’s assistant general counsel. “We document these circumstances, and other facts, and present them later in administrative courts, which in our experience have overturned MSHA 47 percent of the time.”

In one story about Murray Energy, SNL Financial reported:

Murray Energy Corp. has filed a lawsuit against subscription-based news service Debtwire Inc. over the disclosure of confidential financial information in a news article that Murray said is significantly injuring its business and its ability to secure future contracts and financing.

Murray alleges Debtwire “willfully misappropriated certain trade secrets, characterized as ‘financial information,’ by disclosing that information in an April 3, 2013, article published by Debtwire news service to its subscribers,” according to Murray’s complaint filed May 7 in U.S. District Court for the Southern District of Ohio.

And in another piece, SNL Financial said:

Moody’s affirmed Murray Energy Corp.’s B3 corporate family rating and maintained a stable outlook on the company after the coal producer announced refinancing plans, the rating agency said May 8.

Moody’s assigned a Ba3 rating to a proposed $300 million senior secured term loan and a Caa1 rating to proposed $400 million senior secured notes. Moody’s said Murray, a privately owned coal company based in Ohio, generated approximately $1.3 billion in revenue in 2012.

“Murray’s demonstrated ability to control costs across all basins and long-term contracts covering anticipated production in Northern Appalachia impart some predictability to future cash flow,” Moody’s said in the ratings release. “Free cash flow has been negative due to heavy capital spending since the initial rating assignment in late 2009, but with the program tapering off, Moody’s expects free cash flow will turn positive in 2013 and could strengthen further in the intermediate term.”

In International news:

A coal and gas outburst killed 21 miners at a colliery in Guizhou Province, Xinhua reported, adding that 58 more had managed to get to the surface safely. Four others were missing after the March 12 incident at the Machang coal mine, which is part of Guizhou Water & Mining Group.

In 2012, 1,384 people were killed in coal mine accidents, down from 1,973 in 2011, Xinhua said. Most of the accidents occurred in smaller coal mines, many illegal or unlicensed.

Although the official number of coal mine deaths has declined dramatically from nearly 7,000 per year a decade ago, deadly accidents remain common, especially in the less-well regulated regions of southwest China.

A new study in the Harvard Business Review of 276 Chinese enterprises operating in dangerous industries such as mining found a startling correlation between worker fatality rates and the political ‘connections’ of enterprise managers. The study revealed that ‘connected’ companies had five times as many worker deaths on average as unconnected companies.

And:

Every morning at the crack of dawn, 13-year-old Sagar Kujur joins many others of his age and even younger to trudge towards the coal pits of Ramgarh in Jharkhand, a state in eastern India.

Armed with shovels and cane baskets, they tip-toe over the jagged surface, settle down in a corner and start digging a hole through rocks of solid coal. A few back-breaking hours later, their baskets fill up with pieces of coal that had been chipped away, and they hurry to the nearest market to sell their day’s treasure.

Children like Kujur, blackened with coal dust, serve as daily reminders to the dark secrets of the 15,000-odd coal mines in the state.

Jharkhand is mineral-rich, but a majority of its people is dirt poor. As in the rest of India where, according to UNICEF, some 28 million children work to supplement their families’ meagre income, 400,000 children aged between five and 14 work in Jharkhand. Given the proximity to mines, many children work in them.

It is dangerous to work in the mines, particularly those that are underground where fatal cave-ins are frequently reported. But their penury leaves the children with few choices. “I know there is danger in this work, but at the end of the day, it is the money that matters,” Kujur said.

In the western U.S.:

The New Elk Coal Co., has agreed to pay an electrician working at the New Elk Mine in Trinidad $115,000 after his employment was terminated shortly after he filed a hazard complaint, the U.S. Department of Labor said Wednesday.

The company also agreed to pay the DOL’s Mine Safety and Health Administration a civil penalty of $10,000 .

In April 2012, the electrician contacted MSHA about hazardous conditions along a beltline that he claimed were not being properly addressed by his supervisors.

The day after he filed the complaint, MSHA issued several citations to the mine.

And in an interesting piece from Oklahoma:

Coal mining plays a key role in the history of eastern Oklahoma. Without immigrant miners flooding into the area in the late 19th and early 20th centuries, some towns might not even exist.

When Oklahoma coal mining began to die off, so did many of the towns founded around it.

Oklahoma’s coal is too high in sulfur to be of much use in the United States, and burning it in large quantities is against federal clean air regulations.

Not all countries have those kinds of restrictions, however, and growing economies in Asia could drive the renewal of Oklahoma’s coal mining industry.

Here’s the news from Virginia that has the Sierra Club happy:

The Virginia Department of Mines, Minerals and Energy has denied a permit that would allow A & G Coal Company to operate a surface mine on Ison Rock Ridge, near Appalachia, Va.

But over in Kentucky:

Some people on Dave Hollow Road in Elkhorn City say yesterday boulders fell from the sky when a large mountaintop removal blast went off nearby.

“Kind of like bombs,” said 15 year old Shelly Cavins, describing the sound of the boulders crashing.

At around 4:30 p.m. on Monday, the Cavins family says it felt like they were in a war zone.

“They blasted and it was just like we were all in Afghanistan…Rockets going down through there but it was big rocks,” said Charles Cavins, who lives in Elkhorn City.

Some folks in Elkhorn City say the blast is from Mountaintop removal and damaged at least one home and injured one person.

One man says he was just sitting on his couch when all of a sudden large rocks hit his home. He says the force was so big that it knocked him off his couch injuring his neck and his arm. His niece says what happened to him is not fair.

“It was my uncle’s house. I think he can stay in his own house without rocks coming in and flying on him,” Shelly Cavins said.

Finally, in her continuing coverage of the FirstEnergy “asset transfer” case at the West Virginia Public Service Commission, the State Journal’s Pam Kasey wrote this week:

Comparison shopping may be instructive in Mon Power’s petition to buy the Harrison coal-fired power station from sister FirstEnergy subsidiary Allegheny Energy Supply.

The utility, which serves its own and Potomac Edison ratepayers in northern and eastern parts of West Virginia, proposed to the Public Service Commission of West Virginia in November to buy the 80 percent it does not own of Harrison in a transaction that amounts to $1.2 billion.

Full ownership of the Harrison facility is the best of all possible options for meeting future customer demand, and the proposed price is fair, the utility asserts. It provided a consultant’s analysis that some argue is incomplete and skewed.

The proposed price is based on the value of the plant on AE Supply’s books.

But three recent sales of supercritical coal-fired plants give another view. The sales were referenced near the end of direct testimony filed in the case by engineer and industry consultant David Schlissel on behalf of intervenors the West Virginia Citizen Action Group and the Sierra Club.

And here’s the conclusion from WVU law professor Jamie VanNostrand about this FirstEnergy proposal:

From this author’s analysis of the application to the PSC, the proposed deal is a bad one for Mon Power ratepayers (and the author is one such ratepayer), and should be rejected by the PSC. Perhaps the terms of the deal can be rehabilitated through conditions that the PSC could attach to its approval. As currently proposed, however, the application is sorely deficient, and fails to meet the “public interest” standard necessary for its approval.

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