Monday roundup, Sept. 23, 2013

September 23, 2013 by Ken Ward Jr.


A C.S.X. train loaded with coal winds its way into the mountains in this Nov. 21, 2004 file photo taken near the New River at Cotton Hill in Fayette County, W.Va.  (AP Photo/Jeff Gentner)

While I was out last week, the big, big news was obviously the announcement — as expected — by the Obama administration and the U.S. Environmental Protection Agency of its rule to limit global warming pollution from coal-fired power plants. I’ll write more about that later, but here are a few quick links that I flipped through as I was catching up on things this morning:

— The New York Times summarized the matter in a story that previewed the announcement, and The Associated Press had this initial story on the EPA rule.

— Interestingly, The Hill reports this morning on some comments from EPA Administrator Gina McCarthy about the next step in the Obama administration’s plan for combating climate change:

An upcoming regulation on existing coal power plants will not require a contentious and potentially expensive technology to trap and store greenhouse gas emissions, avoiding a key line of criticism about the Obama administration’s climate agenda.

The Environmental Protection Agency (EPA) will not call for existing coal plants to use carbon capture and sequestration (CCS) technology in a rule to be proposed next year, the head of the agency confirmed on Monday.

By ruling out the requirement, the EPA is averting one of the most controversial possible measures for the upcoming rule to reduce carbon emissions.

“CCS is really effective as a tool to reduce emissions when it’s designed with the facility itself,” EPA Administrator Gina McCarthy said at a breakfast sponsored by the Christian Science Monitor on Monday. “It is not seen, at least at this stage, as an add-on that could be used to put on an existing conventional coal facility. In those applications it doesn’t seem that it’s appropriate at this stage.”

— The Washington Post’s Wonkblog has two interesting posts, one headlined Everything you need to know about the EPA’s carbon limits for new power plants and the other called Will coal survive the EPA’s new carbon rules?

And for those who haven’t watched McCarthy’s announcement yet, you can still check out her National Press Club appearance online here:

Also while I was out last week, the U.S. Mine Safety and Health Administration announced it had reached a deal with the engineering firm Agapito Associates Inc. in the August 2007 Crandall Canyon Mine Disaster. Mike Gorrell at the Salt Lake Tribune explained:

Robert MurrayA Colorado engineering company will pay a $100,000 fine for a “high-negligence violation” of mine-safety laws leading up to the 2007 Crandall Canyon mine disaster.

The federal Mine Safety and Health Administration (MSHA) announced Wednesday it had settled its case against Agapito Associates Inc. of Grand Junction.

If approved by a judge, the settlement will end the federal government’s legal proceedings involving the disaster, which began Aug. 6, 2007 when the walls of the Emery County coal mine blew in over a half-mile area of underground tunnels, burying a six-man crew.

Ten days later, another implosion blasted a crew of rescuers burrowing their way through rubble-filled tunnels toward the missing men. Two miners and an MSHA inspector died. Six others were injured.

MSHA’s formal disaster investigation pinned most of the blame on the mine’s operator and co-owner, a subsidiary of Ohio-based Murray Energy Corp., which agreed in September 2012 to pay $950,000 in civil penalties.

Genwal Resources, the Murray Energy subsidiary, also pleaded guilty in U.S. District Court for Utah to two criminal misdemeanors for willful violation of federal health and safety standards. That fine was $500,000.

Agapito was initially charged in MSHA’s investigation with a flagrant violation, which had a maximum penalty of $220,000.

Agency investigators determined Agapito’s flawed engineering analysis of the mining area deep beneath East Mountain led to an unsafe mine design, with roof-supporting coal pillars that were too small to hold up the mountain overhead as miners engaged in retreat mining, also known as pulling pillars.

Mike’s story continued:

“With this settlement, Agapito takes responsibility for its role in the tragic mine collapse at Crandall Canyon,” said MSHA leader Joe Main. “… When you look at the size of the penalty for a contractor, and the fact they have agreed to a high negligence finding, that’s a sizable end result for the closure of this case.”

Agapito Associates President Mike Hardy released a statement later Wednesday, saying that while his company “disputes MSHA’s allegation of flawed engineering analysis, the firm recognizes MSHA’s enforcement mandate and agreed to cooperate with MSHA in accepting a reduced, nominal citation as a step toward closure of the case.”

A Murray Energy spokesman declined comment.

While catching up on things, I also noticed this interesting SNL Financial piece about coal-leasing in the western U.S.:

The U.S. Bureau of Land Management late Sept. 18 rejected a bid by Kiewit Mining Properties Inc. for the Hay Creek II coal tract in Wyoming, marking the second time in the past month a federal coal lease auction concluded without a sale.

The BLM said Kiewit’s bid of just more than $35 million for 167 million tons of minable coal, or 21 cents/ton, did not meet the agency’s undisclosed fair market value. Kiewit submitted the lone bid. It was the lowest bid per ton for a coal tract since 1998.

At the same time, the group Taxpayers for Common Sense released a report calling for reforms in the federal coal-leasing program:

“Federal Coal Leasing: Fair Market Value and a Fair Return for the American Taxpayer,” examines the reasons for the federal government’s loss of an estimated $29 billion over the past three decades due to the undervaluing of federal coal. The report recommends a number of actions for Congress and the Bureau of Land Management (BLM), the agency within the Department of Interior responsible for the federal coal leasing program, as Congress awaits the results of two recent inquiries about the program.

“It is outrageous that taxpayers are giving away vast resources at a time when the country faces a protracted budgetary crisis,” said TCS President Ryan Alexander. “BLM has failed to create a system that fosters competition for a valuable public resource by allowing the coal industry to largely control the process of leasing and bidding for this land.”

The report comes on the heels of a lease auction in the Powder River Basin that failed to attract a single bidder, including the company that proposed the tract. Another lease sale is scheduled for today, and is expected to attract below-market-value bids, if any. 

“The current down market provides a good opportunity to take a ’time out’ so that the reports of poor management and recommendations for reform can then be gathered, assessed and implemented,” said Alexander. “Each of these recent sales represents another lost opportunity for the Federal government and its state and local partners.”

Despite repeated Congressional directives to ensure a fair return for mining publicly owned coal, the current system is inadequate and shrouded in secrecy, says the study. While the use of coal for energy is on the decline in the United States, it is growing abroad, especially in Asia. It concludes that coal companies, banking on growth markets abroad, are taking advantage of a poorly administered government coal program to underpay royalties as well.

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