Coal Firm Swears off Mountaintop Removal

By Peter Galuszka

In what may become a widespread trend, a major American coal firm, Patriot Coal, has agreed in a court case to ween itself from mountaintop removal mining practices in the Central Appalachian region of West Virginia, Virginia, Kentucky and Tennessee.

Bankrupt Patriot agreed to shut down a huge drag line at its Catenary Mine in southern West Virginia and retire another one at its Hobet mine in 2015 as part of a court agreement made before a federal judge in Huntington, W.Va. Patriot had been sued for water violations by the Sierra Club, the Ohio Valley Environmental Coalition and the West Virginia Highlands Conservancy.

The agreement appears to be the first of its kind and could set a precedent to halt the profitable. efficient but highly destructive practice of ripping apart tops of mountains to get at coal seams at mine sites that can stretch for thousands of acres.

Defunct Massey Energy, formerly based in Richmond, was a major practitioner of the practice as is Alpha Natural Resources of Bristol, which bought Massey in 2011. Most mountaintop removal mines are in West Virginia and Kentucky but some exist in southwest Virginia. It wasn’t immediately clear if Alpha would follow Patriot’s example.

The agreement coincidentally comes after the coal industry launched a major attack on President Barack Obama for killing coal jobs through over-wrought regulation. In his alleged “War on Coal,” Obama had toughened permit requirements for mountaintop removal. President George Bush, by contrast, had engineered “fast-track” permitting that allowed the coal companies to start such surface mining more quickly.

The coal industry poured twice as much money into the 2012 presidential campaign as it did in 2008 to defeat Obama. Alpha is a major donor. During the campaign prominent Virginia politicians including Lt. Gov. Bill Bolling and former Sen. George Allen appeared at rallies in Southwest Virginia to claim that over-regulation was killing coal.

Other pressures against current mountaintop removal involve a more skeptical attitude by banks in lending to firms that use the practice. Wells Fargo, Credit Suisse, Morgan Stanley, J.P. Morgan, Bank of America and Citibank  are becoming more discriminating in lending funds for such mining. Major mountaintop lenders remain, including banks PNC and UBS.

Simple economics may be one reason why Patriot Coal agreed to the move. Racked by a major slump in coal prices and rising mining costs, Patriot declared bankruptcy earlier this year. The agreement, according to the Associated Press, improves its finances and increases its prospects for emerging from Chapter 11.  Firms like Patriot have trouble battling cheaper natural gas now favored by many electrical utilities.

Indeed, the writing may be on the wall not just for mountaintop removal, but for the entire Central Appalachian coal industry. Peabody Energy, the No. 1 U.S. coal producer, spun off Patriot in 2007 because it no longer wanted to be involved in high-cost Appalachian coal. Peabody instead is focusing on the rich Powder River Basin coalfields of Wyoming and Montana, the revived Illinois Basin and overseas operations in places such as Mongolia and Australia.

This could be more evidence that Appalachian coal is in for a major downsizing. Whether the region is ready for it is another issue.

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