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In the Northwest, rising coal exports to Asia stir huge fight

The Columbian
Published: May 5, 2013, 5:00pm

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.

9 Photos
At more than 22-feet high, dump trucks at the Spring Creek Mine in Montana have a ramp that drivers can use to get in and out of the cab.
Northwest coal fight Photo Gallery

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.”

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

During his first term in office, the Environmental Protection 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.

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.

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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.

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 month, 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.”