This Chapter Addresses the Following Issues Pertaining to Coal As an Energy Source

Chapter 3

Coal

The conversion of coal into energy involves four steps: mining, processing, transportation, and combustion. The coal industry is one of the most heavily regulated industries in the United States, primarily because of concerns about the dangers—to health and the environment—that coal mining presents. Coal is extracted in two ways: underground mining and surface mining (aka strip mining). Each presents their own unique challenges and externalities. Historically underground mining has been the primary method used to extract coal, but today over half of the coal mined in the United States is obtained by surface mining. One form of surface mining, known as mountaintop removal mining, has been particularly controversial.

This chapter addresses the following issues pertaining to coal as an energy source:

What are the environmental and health dangers associated with underground mining?

As surface mining has become more prevalent than underground mining, what are the issues that have arisen in the regulation of surface mining? [insert brief answer]

What is mountaintop removal mining and why is it so controversial?

What unique issues are presented by in the areas of mineral rights and transportation, with respect to coal? [insert brief answer]

What are the legal and environmental concerns relating to the combustion of coal? [insert brief answer]

What is “clean coal” and how will environmental, safety, and fuel shortage concerns shape the future of coal? [insert brief answer]

3.1Coal in America: Past to Present

Coal has played an important role in American history. During the Industrial Revolution, coal provided a concentrated form of energy that made conversion of that energy into movement possible, through the steam engine. Over time, shifts have occurred in the location of the coal reserves that the United States is accessing, the methods used to extract coal, and in the markets in which the coal is ultimately used. These changes are examined in more detail below.

3.1.1Sources

Historically, coal was found mostly in the Appalachian Mountains, especially Pennsylvania and West Virginia. As the nation developed, coal mines were opened in the Midwestern and Rocky Mountain areas of the United States. Presently, there are around 500 billion tons of readily extractable coal in the United States, approximately half of which is in the Rocky Mountain area.

Coal in the eastern U.S. has high heat content, and high sulfur content (which means it releases high volumes of sulfur dioxide during combustion). On the other hand, coal in the west has lower heat and sulfur content, which means it does not release as much sulfur dioxide when burned, but more must be burned to produce the same amount of energy.

Coal production is on the rise—from 890 million tons in 1986 to 1111 million tons in 2004—but the number of mines has decreased. Many small mines in the east have closed and large surface mines in the west are now the leading coal producers.

3.1.2Extraction Methods

Accompanying this shift from eastern to western coal, is a shift from underground mining to surface (aka strip) mining. (this section should be expanded)

Underground mining.

Mountain top removal.

Surface mining. Powder River Basin

•Roughly half of the nation’s coal is mined in Wyoming.

•Most of that is mined in the Powder River Basin.

•The electricity used by one out of every five homes and businesses in the US is produced from coalmined in Wyoming.

3.1.3Markets

Historically, coal, in the form of coke, was primarily consumed by the iron and steel industries. Today, coal supplies the majority of the fuel that produces electricity in the United States, and electric utilities consume approximately 92% of the coal mined in the United States. Although coal production has shifted to the west, the eastern-central part of the country (from Pennsylvania to Missouri) is the area of heaviest coal use.

Formerly, coal was exported in significant levels from the United States to other countries, but export levels have declined in recent years. In 2009, about 59 million tons of coal were exported. Since coal is available in many other countries, demand for coal exports is limited to high quality coal.

3.2Underground Mining: Environmental and Health Concerns

Historically most coal was mined using underground methods. In underground mining shafts and tunnels are dug underground from a minehead. While underground mining does not impact the surface of land in the same way surface mining does, it presents its own unique risks and problems. These include risks of the health and safety of mine workers in underground mines, subsidence of the ground above underground mines, and acid drainage from underground mine refuse.

3.2.1Health and Safety Risks

The risks involved in underground mining include the presence of methane gas in many mines. Methane gas is potentially explosive and can cause asphyxiation. Many deadly mine explosions have been caused by improper ventilation of methane gas in underground mines. The most deadly recent example of such explosions occurred at the Upper Big Branch mine in West Virginia in April, 2010. Twenty-nine miners died and two were injured in the blast. See and

Another safety risk to miners is the danger of mine shaft collapses, which could crush miners working inside underground mines. [more info and examples here].

Finally, Black Lung Disease, caused by the large amounts of coal dust, has also plagued miners who have worked in underground mines. [more info and examples here].

3.2.2Subsidence

In simplified terms, underground mining is accomplished by drilling a mine shaft down to the coal seam then tunnels are excavated through the seam. Subsidence is “the lowering of strata overlying a coal mine, including the land surface, caused by extraction of underground coal.” Subsidence can cause damage to foundations and structural components of houses and buildings. It can also cause sinkholes and troughs, which may make land difficult or impossible to develop or farm. Subsidence may also cause loss of groundwater or surface ponds.

In the 1922 case Pennsylvania Coal Co. v. Mahon, the Supreme Court struck down a Pennsylvania statute that prevented coal companies from mining in a way that caused subsidence, known as the Kohler Act. For the first time in American history, the Court held that a regulation could be tantamount to a taking. Justice Holmes wrote the majority opinion and justified the holding by balancing the public interest, which is his view was limited and largely private, with the extent of the taking, which was great because it made commercial mining virtually impossible. However, in Keystone Bituminous Coal Ass’n v. DeBenedictis, decided in 1987, the Supreme Court upheld a similar Pennsylvania statute. The Court distinguished the upheld statute from the statute it struck down in Pennsylvania Coal because the upheld statute was limited to preventing subsidence to roads, schools, and other public facilities. Therefore, the public interest was public safety, and the extent of the taking was limited and did not make it “impossible for [coal companies] to profitably engage in their business.”

In 1992, Congress added § 720 to the Mining Act which requires underground mines operating after October 24, 1992 to: (1) “[p]romptly repair, or compensate for, material damage resulting from subsidence caused to any occupied residential dwelling and structures related thereto, or non-commercial building due to underground coal mining operations;” and (2) “[p]romptly replace any drinking, domestic, or residential water supply from a well or spring in existence prior to the application for a surface coal mining and reclamation permit, which has been affected by contamination, diminution, or interruption resulting from underground coal mining operations.” Regulations promulgated under this Act were challenged by the National Mining Association (“NMA”) in National Mining Ass’n v. Babbitt. The NMA alleged that the regulations were unreasonable because the regulations nullified prior agreements between the owners of eligible structures and mine operators. NMA argued that this would result in double compensation of the owners of the structures. The D.C. Circuit court rejected this argument because the cost of the waiver would be subtracted from the damage amount. The NMA further argued that because the regulations interfered with contract rights it was a per se taking. The court rejected this argument as well, and upheld the regulations.

3.2.3Acid Mine Drainage

Under the Clean Water Act (“CWA”) the discharge of any pollutant into navigable waters by any person is unlawful, except when done in compliance with designated sections of the statute. The CWA defines a pollutant was anything other than sewage from vessels or fluids used to facilitate production from oil or gas wells, which are covered under other statutes. “Discharge of a pollutant” is defined as the addition of a pollutant to navigable waters (which are the waters of the United States, including the territorial seas) from a point source (which is defined broadly and includes pipes, tunnels, and animal feed lots).

In United States v. Law, the Fourth Circuit upheld the conviction of Law and Mine Management, Inc. (“MMI”) for violated the CWA. Law, the sole owner and stockholder of MMI, purchased 241 acres from New River Co., which included “gob piles” (masses of coal refuse) and a water treatment system, which was designed to reduce the acidity and metal content of the drainage from the gob pile. This water treatment system was subject to a National Pollution Discharge Elimination System (“NDPES”) permit when MMI purchased the property. However, despite notice of the need to apply, Law and MMI did not apply for or receive an NDPES permit for the water treatment system. On at least 16 occasions between March 1987 and November 1991, acid mine drainage discharged into two creeks. Law and MMI were convicted by a jury of violating the CWA. On appeal, they argued that the pollutants were preexisting in the waters of the United States and they merely diverted the flow of the water. The Fourth Circuit rejected this argument and stated that the runoff and leachate collected in the water treatment system were not part of the “waters of the United States” and that the treatment system was a “point source,” as defined by the CWA.

3.3Surface Mining Externalities

Black Letter Law Points

-Surface mine companies must restore their land after they finish mining.

-Mine operators must post a bond calculated to secure their restoration commitments.

-Jurisdiction over mine operators terminates upon release of the performance bond.

3.3.1The Economic and Social Costs of Surface Mining

In contrast to the safety and health concerns associated with underground mining, debates over surface mining tend to revolve around the potential ecological damage created by the excavation activity. The surface mining regulatory regime targets reclamation as its overarching goal. Under the Federal Surface Mining Control and Reclamation Act (SMCRA, 30 U.S.C. § 1201 et seq.), mining companies are required to perform a variety of tasks: restore the soil, re-contour the surface, revegetate the site, etc… The amount of restoration a company is obligated to perform varies according to the original condition of the land. For instance, land suitable for farming prior to the mining would need to be returned to like condition afterwards.

The Office of Surface Mining (OSM) administers SMCRA in conjunction with State governments. Once a State obtains permission to enforce SMCRA compliance, the OSM takes on an overseer role with limited authority. Modification of State SMCRA programs requires federal approval.

To enforce SMCRA, the government requires mine operators to post a bond calculated to meet the reclamation obligations. The bond secures funding for reclamation and ensures that the regulation’s environmental goals will be met even in the event that the mining company goes insolvent. Once the company completes the reclamation work and the government inspects it, the government releases the bond and the company is no longer subject to SMCRA jurisdiction. Termination of jurisdiction is a controversial topic that came to the attention of the courts in National Wildlife Federation v. Lujan, 950 F.2d 765 (D.C. Cir. 1991).

3.3.2Case Study: National Wildlife Federation v. Lujan

In Lujan, the NWF brought suit against the Secretary of the Interior in response to rules promulgated by the Office of Surface Mining Reclamation and Enforcement (OSMRE) regarding the reclamation bond. Under the existing framework, mine operators must wait a certain number of years before their bond is returned to ensure that the reclamation efforts have taken hold. The number varies between 5 years for eastern lands to 10 years for arid, western lands. Once the time passes, and assuming the land is restored, the government releases the bond, and it may terminate regulatory jurisdiction over the mine operators. The practical effect of this regulation means that once the government returns the performance bond, the operator is no longer required to comply with SMRCA, whether or not the operator’s land has actually been restored to its previous useable condition as required by SMRCA.

The NWF challenged the termination and argued that OSMRE did not have the authority to terminate jurisdiction over operators. It argued that the agency had a continuing duty to ensure that SMRCA requirements were being met.

The court disagreed with NWF and sided with the Secretary. Engaging in a bit of creative construction, it argued that the statute only requires the government to enforce SMRCA “during mining and reclamation operations.” Once reclamation is completed, the Act no longer applies, even if the reclamation efforts are not, in fact, complete. The court also reasoned that the purpose of the Act was to promote two conflicting policies: “protect the environment and…ensure an adequate supply of coal to meet the nation’s energy requirements.” If mine operators were forever liable for surface reclamation, then the second purpose of the Act would be thwarted.

Questions

-Does SMCRA exceed Congress’s power to regulate interstate commerce, in light of the fact that mining is a localized activity, unlike downstream pollution under the Clean Water Act?

-Should the release of a SMCRA bond terminate regulatory jurisdiction?

-What, if anything, should the government do in cases where the environmental effects of the mining are not apparent until well after the bond is returned?

3.3.3Mountaintop Removal Mining

Mountaintop removal mining is a form of surface mining and is one of the most controversial subjects in the coal industry today. Mountaintop removal mining is prevalent in Southern Appalachia. To accomplish this form of surface mining, the soil and rock (“overburden”) on top of a mountain are blasted away to expose the coal deposits below. The overburden is hauled into adjacent valleys. This deposit of overburden is regulated by the Surface Mining Control and Reclamation Act of 1977 (“SMCRA”).

The Army Corps of Engineers exercises permitting jurisdiction over the deposit of fill into wetlands and has traditionally granted approval for these activities under Nationwide Permit 21 (“NWP 21”). This practice has been challenged as inconsistent with the CWA, but all challenges have failed. However, on July 15, 2009, the Army Corp of Engineers proposed changes to NWP 21 to prohibit its use to authorize its use to authorize discharges of fill material into waters of the United States for surface mining in six states in the Appalachian Region. On June 17, 2010, the U.S. Army Corps of Engineers suspended the use of NWP 21 for mountaintop removal mining operations in the southern Appalachian region. This suspension will remain in effect until the Corps takes further action on NWP 21, or until the permit expires on March 18, 2012.

The Environmental Protection Agency (“EPA”) has veto power over permits issued by the Corps under the Clean Water Act. On January 13, 2011, the EPA used this power to revoke a water permit to the Spruce No. 1 Mine in Logan County, West Virginia. This mine would have been nearly 2,300-acres and would have buried nearly seven miles of streams. The EPA’s decision was based on “several major environmental, water quality, and wildlife concerns.”

[this section can be significantly expanded in the future]

3.4Mineral Rights

Traditionally, the owner of the surface of the land also had the rights to all minerals underneath it. However, mineral rights may be separated from the land, and, indeed, often they are - either as a lease or an outright purchase. Coal mining companies typically only obtain rights to the minerals, and not the overlying surface, because (a) the coal mining company does not have to assume responsibility for the uses on the surface, and (b) they could obtain the rights at a lower price than if they purchased/leased the property as a whole.