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Patriot quits surface mining – will others follow?

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  • Many WV coal counties losing revenue

    Many WV coal counties losing revenue

    Monday, August 8 2016 10:15 AM EDT2016-08-08 14:15:05 GMT

    As Appalachian coal production continues its drastic decline, West Virginia’s coal-producing counties are  not only losing people as lifelong residents are forced to flee their homes in order to find work, but in many cases, they’re also relinquishing millions of dollars from their budgets.

    As Appalachian coal production continues its drastic decline, West Virginia’s coal-producing counties are  not only losing people as lifelong residents are forced to flee their homes in order to find work, but in many cases, they’re also relinquishing millions of dollars from their budgets.

The major announcement that Patriot Coal – a significant player in the state's mining industry – would quit the practice known as mountaintop removal electrified opponents of the process this week.

Can they expect more companies to follow?

A number of organizations and individuals counted the announcement of a settlement stipulating the phase-out of Patriot mountaintop removal operations as a major victory.

President Bill Raney of the West Virginia Coal Association said that's how the story will be told, but he says it doesn't reflect the reality of the future of West Virginia coal.

"That was a unique decision that was made by one company based on its efforts to restructure and certainly doesn't look at -- it should not have any impact on other companies seeking permits or currently operation on those permits," Raney said.

Environmental groups cheered the decision and many pointed out hope in Patriot's official statement that it had admitted mountaintop removal is a destructive practice.

"Patriot Coal recognizes that our mining operations impact the communities in which we operate in significant ways, and we are committed to maximizing the benefits of this agreement for our stakeholders, including our employees and neighbors," the company stated. "We believe the proposed settlement will result in a reduction of our environmental footprint."

Raney said he interpreted the "significant" impact referenced differently than those who believed the CEO was nodding toward the destructive nature of surface mining.

"I look at significant to be beneficial," Raney said. "They support the people, the employees, the Little Leagues and all of the things they do not on only in the communities they're operating with, but many of the surrounding communities. … I don't read that negatively as opponents of mining would like to believe what it says. It says significant; it doesn't say problematic."

Congressman John Yarmuth, D-Ky., is one who viewed the settlement as an acknowledgement strip mining was damaging to the community in a statement issued alongside a number of environmentalists' comments on the matter.

"I commend Patriot Coal for acknowledging the destructive impact of mountaintop removal and for taking steps to protect the communities where it operates," Yarmuth said. "An industry leader finally recognizing that it can be successful without employing this devastating practice is significant progress. Now it's time for Congress to step up and enact legislation protecting all of Appalachia."

Among West Virginia's delegation in Congress, Only Rep. David McKinley, R-W.Va., has issued statements on the settlement.

"Our sympathy goes out to the miners impacted by this decision as they face an uncertain future in a sluggish economy. We are concerned for both the miners who may be laid off over time and for the families in surface mining communities," McKinley said.

No jobs were immediately impacted according to Patriot.

"Like many other companies in the industry, Patriot is being forced to make some painful choices," McKinley added. "Faced with a difficult situation, Patriot is making an effort to ensure its long term health for its employees while being sensitive to the environment."

Patriot Coal is currently going through Chapter 11 bankruptcy reorganization. The deal came out of a settlement that would also extend the timetable for Patriot to cleanup selenium at some of its operations.

The obligations to install the expensive selenium controls, alongside pension obligations, have been repeatedly referenced as one of the main obstacles to the company emerging from bankruptcy. In agreeing to the extension, Patriot said it will phase out current surface mines as well as vow to not apply for new surface mining permits.

The no-more-surface-mining pledge was significant, evidenced by opponents' concession in allowing delay of hard-fought selenium clean-up controls.

Rob Goodwin with Coal River Mountain Watch said selenium treatment technology is expensive and the delay will allow Patriot to focus resources on retiree benefits. Meanwhile, opponents of mountaintop removal and/or other aspects of coal mining say they can claim a bigger victory in stopping potential surface mines.

"Phasing out (mountaintop removal) has much more benefit to communities than treatment of selenium because it protects communities from (mountaintop removal) flooding and air pollution, and less hunting and ginseng land is destroyed," Goodwin said. "Those are real benefits that the courts and the state and federal agencies interpretation of the law do not address in any way shape or form."

Goodwin said the victory is an acknowledgement of mining impacts beyond what federal courts have acknowledged. He said that the transition away from surface-mined coal and back to underground mining methods is something that would satisfy many of the industry's opponents without compromising the industry.

Metallurgical coal, which largely must be mined underground, sells at higher margins, and projections for that market to expand has made the field more appealing than steam coal for domestic use.

"Part of this incentive is that citizen groups are willing to accept this, but the War on Coal rhetoric gets in the way of companies and political leaders seeing this as an option," Goodwin said. "Patriot has set forth here a plan for what I would say is a managed decline in (Central Appalachian) production that acknowledges impacts on communities."

A shift in focus to metallurgical coal, Patriot said in its official statement, is consistent with its overall business plan.

"Patriot Coal urges the Court to approve the settlement because it strengthens the Company's ability to continue operating with our nearly 4000 employees, and significantly increases the likelihood that we will emerge from the chapter 11 process as a viable business, able to satisfy our environmental and other obligations," the statement reads.

Goodwin hopes the move will be validated where it counts for most companies –- in the marketplace.

"I hope that Patriot gets some market preference for its met coal as it deserves better treatment in the market than Alpha or met coal prospects In Mongolia or the new developments in Alaska or the longwall mines under ranchers' land in Montana," Goodwin said.

In 2014, Patriot's surface mined coal tonnage will be capped at 6.5 million tons and ratcheted down to less than 3 million by 2018. Comparatively, about 90 million tons of coal was surface mined from Central Appalachia in 2011. Just over 51 million tons came from West Virginia surface mines.

The delay in selenium cleanup will save the company about $27 million in expenses that may be vital to the company emerging from bankruptcy.

The company is being watched closely, particularly by miners whose post-retirement benefit costs are on the line and up for negotiation.

"My first concern about this agreement is what impact it may have on our members and their jobs. It appears that there will be no immediate job losses, which is good," the United Mine Workers of America said in a statement. "As we move further down the road, we will have to see what Patriot's specific plans are with respect to its new focus on underground and smaller surface operations. Obviously, events related to the company's bankruptcy and how it intends to deal with its active and retired workers in that process will play a role in all of this."

Raney said the impact of the decision is more about fueling a trend of action, less than a significant new development in the surface mining debate.

"There's been a war on coal, and there's been this uncertainty created by a federal bureaucracy that every time someone turns around they file another suit. That uncertainty just gets amplified with all of that," Raney said. "… There's a lot of concern in the industry, and it's very real and it goes beyond low natural gas prices and a mild winter. It reaches right to the heart of uncertainty being created, and it continues today."


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