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COAL: Swelling exports shine spotlight on port pollution

BALTIMORE -- Bulldozers and water sprayers are constantly shaping and wetting the 150,000-ton mountains of coal here at CONSOL Energy Inc.'s shipping facility. A street sweeper cleans the roads at least three times a week, and a truck sprays water on roads, all in an effort to keep coal dust pollution at bay.

"It's almost a battle plan," Christopher Marsh, vice president for CONSOL's CNX Marine Terminal, said during a recent interview. "Imagine talcum powder and try to keep it from moving."

A sharp rise in U.S. coal exports and plans to dramatically boost the country's capacity to ship coal to hungry overseas markets have boosted activity at ports like CONSOL's, but they've also brought more scrutiny from environmental groups and other watchdogs.

And chief among the environmentalists' concerns is coal dust, which is one of the toughest pollutants for facilities like this one to keep in check.

CONSOL's 200-acre coal-export terminal sits off Interstate 95 within Baltimore's city limits and just beyond the Inner Harbor, a showpiece of the city's renaissance and a magnet for local entertainment and tourism. The terminal is sandwiched among the city's other industrial and shipping facilities and is home to machines that can scoop coal straight from rail cars, depositing it on ships.

But much of the coal moving through the terminal spends time in one of the massive piles with the potential to stir up dust or foul water that could run off into the harbor. CNX has the capacity to ship about 15 million tons of coal per year and hold more than 1 million tons on site at any given time.

"Due to the composition of coal and the close proximity of the coal piles to the Baltimore Harbor, I have real concerns about toxic pollutants ending up in our waterways from these facilities," said Tina Meyers, an environmental attorney and the head of Blue Water Baltimore's Baltimore Harbor Waterkeeper.

The CNX terminal must comply with various state and federal standards dealing with air and water discharges. Permits prohibit visible emissions and require the company to limit particle releases, odors and coal dust, said Samantha Kappalman, a spokeswoman for the Maryland Department of the Environment.

The company must also report excess emissions, analyze any toxic air pollutants and keep records of the material it handles, Kappalman said. So far, CONSOL is in compliance.

When it comes to water discharges, the terminal must comply with a Clean Water Act permit. The confluence of coal and water at the facility creates a polluted mix that the company must keep from reaching the harbor.

Marsh said the company collects polluted water using three ponds sitting amid the coal piles. Treatment facilities clean the water of impurities, and hay bales prevent runoff from hitting the Chesapeake Bay.

"We're not going to let it happen," Marsh said of coal dust and other pollution.

But the terminal's record is not spotless. In recent weeks, U.S. EPA announced a $34,600 proposed fine for excess water discharges under the facility's Clean Water Act permit. A spokesman said inspectors found the violations in 2008 and 2009.

Marsh acknowledges it's sometimes challenging for terminals like his to follow the rules, especially during large rainstorms or on windy days. But, he said, "Don't whine about it. Rise to it. We see it as a competitive advantage."

CONSOL isn't alone in fighting coal dust pollution. Down the coast in Norfolk, Va., sits another massive coal-export facility. Norfolk Southern Corp.'s Lamberts Point terminal, the largest on the Eastern Seaboard, has the capacity to export almost 50 million tons of coal every year and the ability to load two ships at once.

The massive facility, which environmentalists say is permitted to release up to 50 tons of coal dust into the air every year, is next to homes, a sports complex and a golf course. Some neighbors complain of coal dust coating their cars and homes.

A study published in the journal Water, Air and Soil Pollution in 2007 found that coal dust from the terminal contributed to arsenic contamination in nearby soil. The authors said health consequences, if any, were likely minor but couldn't quantify resulting environmental problems.

To Asia in 48 days

With a sluggish demand for coal in the United States and a booming export market, those problems aren't likely to go away anytime soon.

Coal's share of power generation in the United States dropped to a low of 34 percent this year amid tough competition from natural gas, but worldwide coal use grew by 5.4 percent in 2011, according to BP PLC's latest global energy review. Analysts called it the fastest-growing form of energy outside renewables.

The Energy Information Administration said 76 percent of coal exports last year went to European and Asian markets, with the Asian share on the rise since 2009.

"That changed the game," Marsh said about China becoming a net coal importer. "All they have to do is lean a percent or two, and we do well."

EIA predicts coal exports will remain above the 100 million short ton mark this year but slightly dip in 2013. Companies such as CONSOL are eager to ride the wave.

"CONSOL continues to leverage our export capabilities through our Baltimore terminal," Sales and Transportation Executive Vice President Robert Pusateri said during an April conference call. "Shipments for the rest of the quarter should be at record levels."

A web of railroads gathers coal from the company's mines in Pennsylvania, Ohio, West Virginia and Virginia and transports it to the Baltimore facility. The Buchanan Mine in southwestern Virginia, roughly 250 miles away, is one of the port's biggest feeders. Marsh said the network can easily move the rocks in as little as 30 to 40 hours.

But ships sometimes anchor near Annapolis, Md., waiting for dock space at CONSOL's single 1,300-foot pier. When employees see them lining up from the Chesapeake Bay Bridge, they know business is good.

To be sure, the CNX terminal has seen its share of ups and downs in the coal markets over the years since it began operations in 1983. It processed 12.4 million tons of coal in the mid-1990s when exports peaked but shipped only about 3 million tons during a down market in 2003.

Last year, CONSOL's Baltimore terminal processed a record 12.6 million tons. To help meet expected demand, the company has been modernizing its aging pier and expanding railroad facilities to boost inbound train traffic from three to four at a time. Both CSX Corp. and Norfolk Southern serve the facility.

The rocks end up in Europe, South America, India, China and Japan. The trip to Asia from the U.S. East Coast takes about 48 days, Marsh said.

Westward expansion

EIA said late last year that almost all U.S. coal exports leave the country through the ports of Baltimore, Norfolk, New Orleans and Mobile, Ala. But with increased demand in Asia, some U.S. companies have made deals to use Canadian ports like Ridley Terminals Inc.'s facility in Prince Rupert, British Columbia, and Westshore Terminals LP's port at Roberts Bank south of Vancouver, British Columbia.

Potential new coal export facilities

Several companies have expressed interest in dramatically increasing the capacity to export U.S. coal to Asian markets.

Projects Approximate Location Potential Coal Shipping Capacity Companies Involved Notes
Gateway Pacific Terminal Cherry Point, Wash. About 50M tons per year SSA Marine, Peabody Energy Corp. Peabody Energy announced deal with port last year.
Millennium Bulk Terminals Longview, Wash. 44M tons per year Ambre Energy Ltd., Arch Coal Inc. Submitted permits in February.
Grays Harbor Hoquiam, Wash. 5M tons per year RailAmerica Inc.  
Port Westward Near Clatskanie, Ore. 30M tons per year Ambre Energy and Kinder Morgan Energy Partners LP Port of St. Helens commissioner granted companies lease options in January.
Port of Morrow Boardman, Ore. 8M tons per year Ambre Energy Port would receive coal from Western mines and send it down the Columbia River to Ambre's Port Westward facility before heading overseas.
Coos Bay Coos Bay, Ore. 6M to 10M tons per year Unknown Exclusive negotiating agreement with unnamed coal company.
Source: Compiled from company, environmental, press and regulatory sources.

And if a series of coal companies, shipping interests and politicians have their way, export capacity would make a dramatic shift to the Pacific Northwest. The area could go from handling almost no coal traffic to having an export capacity of almost 150 million tons every year.

"There is a growing demand for coal in the Pacific Rim," Ken Miller, chief executive of Millennium Bulk Terminals-Longview LLC, said in an interview.

Earlier this year, Millennium -- a subsidiary of Australian company Ambre Energy Ltd. and Arch Coal Inc. -- submitted permitting documents to local, state and federal regulators, including the Army Corps of Engineers. The company is looking to invest $600 million and eventually gain the ability to ship more than 40 million metric tons of coal from a Longview, Wash., facility.

"This is just an excellent location to redevelop a [polluted] brownfields site in a facility that will support trade in the United States and job creation," Miller said.

The Millennium proposal is among the more advanced of the six potential export terminal projects in the states of Washington and Oregon. Ambre is also involved in two other proposals on the Oregon side of the Columbia River.

In January, commissioners for Oregon's Port of St. Helens voted to grant Ambre and Kinder Morgan Energy Partners LP lease options for terminals at Port Westward Industrial Park northwest of Portland. Another shipping facility along the river -- the Port of Morrow -- would serve as a relay point for Ambre.

Despite early victories, the permitting process is still in the early stages, and environmentalists are hoping to use delay tactics and appeals to prevent any of the terminals from coming to fruition. They have become allied with many area residents who fear their region becoming a coal-traffic bottleneck.

"Coal exports threaten our health and public safety," Cesia Kearns, a campaign representative for the Sierra Club's Beyond Coal campaign, said in an interview. "This has been garnering public outcry like I have not seen before. People are up in arms about it."

Environmentalists' concerns

The strongest points of contention have to do with coal dust, more ships traveling up and down the Columbia River, and increased railroad traffic. Environmentalists and other critics say there is the potential for dozens of additional trains to crisscross local communities each day.

"With more trains and longer trains and a double track and additional traffic, that's going to deteriorate significantly, and that's going to become a health and safety issue," Tom Trulove, the mayor of Cheney, Wash., said in a conference call. He said he's also worried about the lack of funds to build overpasses or other projects to help residents avoid the trains.

K.C. Golden, policy director for the Seattle-based environmental group Climate Solutions, which lobbied lawmakers and administration officials on the issue this month, said the availability of cheap U.S. coal would encourage countries like China and India to continue developing coal power plant fleets.

Although the Pacific Northwest is working to move away from coal-powered electricity, exports from the region would essentially "lock in" coal-fired power abroad for decades to come, he said.

"Lower coal prices reduce the incentives to retire older, inefficient, coal-using production processes and discourage additional investments in the energy efficiency of new and existing coal-using enterprises," researcher and export opponent Thomas Power wrote in a widely circulated white paper last year.

EPA, Oregon Gov. John Kitzhaber (D) and almost 90 elected officials from the region have asked for a broad analysis of the impacts of increased coal shipments, rather than allowing agencies like the Army Corps of Engineers to review individual pieces of the puzzle. Variables could include everything from train traffic and climate change to increased mining in the Powder River Basin.

"This is a titanic decision that should not be left to what amounts to local zoning authorities," Eric de Place, senior researcher for the Sightline Institute who keeps track of the terminal projects, said during the conference call.

Environmentalists know and welcome the likely yearslong lead time the Army Corps will need to conduct a comprehensive environmental impact statement of the projects. The Army Corps is reviewing permit applications for three of the sites and has received nearly 20,000 comments on the Morrow project alone.

Corps public affairs officer Michael Coffey said an areawide environmental impact statement remains a possibility, despite a letter from Jo-Ellen Darcy, assistant secretary of the Army for civil works, appearing to suggest the corps wouldn't stray far from studying individual projects.

"We are taking a look at an areawide EIS," Coffey said in an interview. "We are early in the process; we are trying to figure things out."

Reps. Cynthia Lummis (R-Wyo.) and Denny Rehberg (R-Mont.), both boosters of Powder River Basin coal, joined dozens of other lawmakers in sending Obama administration officials a letter opposing a broad review, calling it "dangerous."

"In a country in need of jobs, expanding export operations on the West Coast seems like a no-brainer," Lummis said. "An expansion of environmental review like the kind EPA has requested is unrealistic and unnecessary."

Other obstacles to development may include pro-environment regulators, concerns about sensitive species like whales and salmon, and opposition from American Indian groups. Some activists in Bellingham, Wash., are pushing for a ballot initiative to ban coal from moving within the community.

"We have a really strong coordinated coalition in the Northwest of groups that came together," said the Sierra Club's Kearns. "We have been working in the Northwest to become coal free, and this is setting us back in that progress."

Industry, labor fight back

The coal and shipping industries aren't taking the criticism without a fight.

BNSF Railway Co., which is owned by Warren Buffett's Berkshire Hathaway Inc., is one of the railroads that would carry some of the coal to port. The company denies allegations that increased coal shipments would delay traffic for other goods, one of the opposition's main arguments.

CEO Matthew Rose told Washington Gov. Christine Gregoire (D) in a letter last month that "much of the public discussion is misleading and incorrect."

Rose said BNSF Railway planned to spend roughly $1 billion in energy-efficient and lower-emission locomotives. He added that companies also require dust controls to prevent derailments.

Environmentalists question the effectiveness of the procedures and note that coal companies have resisted dust-abatement measures in the past.

But BNSF spokeswoman Suann Lundsberg said, "Rail is a safe way to move freight. It's environmentally friendly. It's efficient. And we need more surface transportation."

Still, there were more than 11,000 railroad accidents last year, according to statistics compiled by the Federal Railroad Administration. More than 700 people were killed.

That statistic is lower, however, when excluding accidents involving employees or people who trespass into rail facilities. There were 236 fatal train-crossing incidents last year.

"Train volumes ebb and flow based on several drivers. Those ebbs and flows are independent on whether these facilities get built," Lundsberg said. "The market demand is for stuff to move."

Then there's the argument that has divided politicians and residents across the Pacific Northwest -- jobs. Planners of the Gateway Pacific Terminal, which involves shipping company SSA Marine and coal mining giant Peabody Energy Corp., said it will help sustain more than 1,000 direct and indirect family wage jobs.

Millennium's Miller said his facility could help create more than 100 direct jobs and support about 200 more. And during the interview, he was careful to stress that talking point.

"This is a revitalization of a brownfield industrial site," he said. "We have the opportunity to turn this into a world-class import-export facility that will create hundreds of direct and indirect family jobs."

Opponents of the terminals say other industries would create more stable jobs. They point to coal's boom-and-bust cycle and remember how Los Angeles and Portland worked to develop coal terminals in the 1980s and '90s only to see them fail.

Climate Solutions' Golden argues that promoting coal exports would be tantamount to the United States helping fuel China's growth in competition with domestic workers. Not only will cheap coal help with that country's power generation, but metallurgical coal, which accounts for most U.S. exports, could help build China's infrastructure.

Still, labor leaders, who generally support the terminals, represent a valuable constituency for Democratic politicians, the same ones the environmental community is trying to woo.

"I don't get a sense of absolute outrage from local folks about this," said Jeff Johnson, president of the Washington State Labor Council, a state federation of the AFL-CIO. "I get the sense that folks are very concerned, they're very interested, there's mixed feelings on both sides."

Washington Democratic Reps. Jim McDermott and Adam Smith have called for comprehensive reviews of the proposed terminal, while Rep. Rick Larsen, a Democrat who represents the Bellingham area, is swayed by the employment argument.

"It's a bizarre thing from the point of view of a labor leader," Mark Lowry, president of the Northwest Washington Central Labor Council, said in an interview. "Here I am in opposition with my historical allies, and working in tandem with the people who time and time again have tried to cut us off at the knees.

"It's a bizarre thing and doesn't make us at all comfortable," Lowry added.

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