History of Mississippi Power Southern Company Lignite Plant

It is enlightening to look back at the process, thoughts, and players in the early plans of Kemper County Lignite Coal Plant.

Worth the risk?

Some Kemper County residents have health and environmental concerns over proposed mine

By Georgia E. Frye / staff writer

Just outside Barbara Correro’s rural Kemper County home is an organic garden, where you can see various species of waterfowl and farm animals that provide sustenance for herself, her family and her friends.

But Correro and her daughter, Nancy, fear their organic way of life may be disrupted if a coal plant is constructed within 12 miles of their homes.

“More than anything, their argument with us is that this is a clean gasification plant,” Nancy said. “But to cut through it all, there is still going to be a 180-foot-deep hole cut down and then they are going to swath out the land. Where are the animals going to go? Where are you going to go fishing?”

The proposed coal gasification plant would be constructed in the Liberty community in Kemper County. The plant would be built 6 or 7 miles north of the Lauderdale County line, between Highway 493 and Highway 495, and south of Old Jackson Road.

Why a mine?

Tommy Pinkerton, an engineer for Mississippi Power and project manager for the proposed plant, said the company will know in early 2008 if it is feasible to build the plant in Kemper County. If it is, construction will begin in the spring of 2010, and would be up and running by 2013.

The plant would turn lignite into a gas for use as a fuel. Lignite, or “brown coal,” is young coal used almost exclusively for electric power generation. It is brownish-black in color and has a high moisture and ash content. It tends to disintegrate when exposed to the weather.

The initial investment in the plant is estimated to be about $1.8 billion, with an annual investment of $200 million to $300 million each year for operation and maintenance of the facility. Mississippi Power Co. received more than $133 million in tax credits from the U.S. Department of Energy for the project as part of the National Energy Policy Act of 2005.

The plant is expected to create about 260 permanent jobs.

Health concerns

Some question whether the much-needed jobs in East Mississippi are worth what some environmental groups believe the plant would do to the environment and the natural heritage of Kemper County.

Kemper County resident Karen Wink’s group, the Coalition for a Greener Mississippi, says the jobs aren’t worth the health risks associated with a coal plant or worth interrupting Mother Nature.

“There is no possibility in the fact that it is a health issue,” Wink said. “Everybody has heard of Black Lung, that’s a respiratory disease from coal dust and it’s not just miners that are affected by this. The rates of asthma in Virginia and Kentucky and the coal mining areas among the population of children in the area are very high. When they pull the coal out, particulate matter gets into the air and it hangs in the air, and when there is more moisture in the air, particulate matter goes up, and obviously, Mississippi is extremely humid.”

But Pinkerton said those health issues are nonexistent with this plant because the lignite is wet when it is pulled out of the ground and no dust particles are present.

“You won’t see any coal dust in a lignite mine,” Pinkerton said. “There are no explosives used and there will be no run off, no slurry pits, nothing going into the streams and no trucks on the highway.”

Differing views

Anthony Topazi, president and chief executive officer of Mississippi Power, said at a December press conference at the Meridian Regional Airport that the technology for the gasification plant was created in Mississippi by the Southern Company, which owns Mississippi Power. He said plans call for the site to be the home of the most advanced, clean coal power plant in the world.

He said instead of burning the coal like is done in a traditional power plant, the coal is heated in the absence of oxygen. The process creates a synthetic gas that is then burned to make power.

But John Wathen, who heads up an environmental watch-dog group, Friends of Hurricane Creek, said the power companies and its cohorts are well-paid to convince people that the plant will not damage the environment.

Wathen said the Surface Mining Control and Reclamation Act of 1977 mandates that coal companies reclaim mined land after they are finished extracting the coal. But Wathen doesn’t believe that will happen.

“There is no way you can strip mine without disturbing the environment,” Wathen said. “Once this is done, they are going to have to bring it back to the way it was — that is impossible.”

Wathen’s group, Friends of Hurricane Creek, based in Tuscaloosa, Ala., is part of the Waterkeeper Alliance. His job is to monitor the Hurricane Creek Watershed for pollution. He said in all his experience with mines, he has never seen them turn out to the common citizen’s advantage.

“It is disemboweling the earth, no matter what name you give it,” Wathen said.

Members of another local conservation group, the East Mississippi Foothills Land Trust, which oversees the Chunky Okatibbee Watershed Project, have said they aren’t concerned about the proposed plant.

Melissa Pringle of Eco Systems said last week that the strip mine will follow Department of Environmental Quality guidelines.

But Wathen said he has seen over and over again water pollution caused by coal companies such as high levels of mercury. It is the coal companies, he said, that cause the water to be laden with mercury, which makes eating some fish unsafe for pregnant women because it can harm their unborn child.

A lease on the land

Michael Thomas, manager of land, government and public affairs for the North American Coal Corp., said the Red Hills Mine in Ackerman has not caused any health issues in the area. He said the mine is similar to the proposed plant in Kemper County and is heavily regulated by the Mine Safety and Health Administration, which is controlled by the U.S. Department of Labor’s office in Birmingham, Ala.

And while he admitted that the mine will temporarily destroy the surface of the land, the law requires them to reclaim it, which they will do to the land-owners specifications if possible.

Thomas said North American Coal Corp. signs a 25-year lease with property owners for the use of their land. He said if the land owner agrees to lease their property to the coal company, the company notifies them within 180 days of the time they will start mining the land.

“At that time, they can take any crops they may have on the land and sell them,” Thomas said. “But they have to vacate the property.”

He said the company then pays the land owner for the land and any property or improvements they have made to it. He said the coal company pays the landowners royalties for the amount of lignite that would be taken from their land, and when they are done, they reclaim the land and turn it back over to the land owner.

He said for the most part, Kemper County residents have been cooperative. He said they are not required to sign leases with the coal company and if they do not, the company will have to work around them. He said the area in question is around 12,000 acres and about 200 to 300 property owners are involved.

But Wink believes the promise of money and jobs is confusing the real issue, that the mine will forever change the landscape of Kemper County. She said there are other renewable energy sources that Mississippi Power Co. could invest in, such as wind and solar power that could provide much-needed energy while not harming the environment.

But Pinkerton said wind and solar power aren’t feasible in Mississippi because it’s too cloudy and not windy.

Wathen said that’s “hogwash,” however.

“When the sun is not out, the wind is blowing because a storm is coming,” he said. “But as long as the country is run by extractionists, we will never see the advancement of renewable energy sources. You can only extract so much until there is no more, but the sun shines or the wind blows every day.”

TYPES OF MINES

Here’s a look at the different types of surface mines used to extract coal from the ground. The proposed lignite mine in Kemper County would use surface mining — a type of mining in which soil and rock overlying the mineral deposit is removed.

Surface mining is the opposite of

underground mining, in which the overlying rock is left in place and the mineral is removed through shafts and tunnels.

i Strip mining — the practice of mining a seam of mineral by first removing a long strip of overlying soil and rock. It is most commonly used to mine coal or tar sand. Strip mining is only practical when the ore body to be

excavated is relatively near the surface. This type of mining uses some of the largest machines on earth, including bucket-wheel excavators which can move as much as 12,000 cubic feet of earth per hour.

i Open-pit mining — a method of extracting rock or minerals from the earth by their removal from an open pit or borrow. Although open-pit mining is sometimes referred to as strip mining, the two methods are different.

i Mountaintop removal — a relatively new form of coal mining that involves the mass restructuring of earth in order to reach the coal seam as deep as 1,000 feet below the surface. It is used where a coal seam outcrops all the way around a mountain top. All the rock and soil above the coal seam are removed and the spoil is placed in adjacent lows such as hollows or ravines.

i Dredging — a method often used to bring up water and mineral deposits, it can also recover significant amounts of underwater

minerals relatively efficiently and cheaply.

Additional Information

——————————————————————————————————————————————————————

THE COAL TRUTH

© H. DAVID SEAWELL/CORBIS

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A West Virginia coal-fired powerplant releasing steam and smokeinto the atmosphere.

Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

The alarm clock rings even before the sun crests the horizon. You

rub your eyes, flip on the lights, maybe start the coffee pot or turn on the

radio or TV, power up the computer… Your day begins with a surge of energy

consumption that will typically last through the day, only to subside somewhat when the television set is finally switched off in the evening, lights are

dimmed and the house settles down for the night.

But just where is all this electricity coming from?

And is it really just as easy as the flip of a switch?

The Coal Truth

PEOPLE, WATER, ENERGY AND APPALACHIA

By Cindy Rank, West Virginia Headwaters Waterkeeper

Contributors: Beverly Braverman, Tracy Carluccio, Scott Edwards, Vivian Stockman, Terri Taylor, John Wathen and David Whiteside.

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

29

THE COAL TRUTH

Dirty Power, Dangerous Air

The United States consumes more energy

than any other country in the world.

Electric utility plants dot our landscape

creating power from a myriad of sources —

nuclear, hydro, wind and fossil fuels — yet fifty

percent of our electricity comes from a source

that mankind has been using for over 1,600

years — coal. Today, the United States is home to

almost 1,100 coal-fired utility units, with much

of our coal being torn from the ground in eastern

coal-producing states of Appalachia. And there

are plans to add hundreds more coal-fired power

plants in the coming years. Why? Because coal is

cheap – or at least that’s what we’re told by

industry and by our government. But how

“cheap” is it really? Are we being told the whole

story about the true cost of coal? What goes on

behind King Coal’s black curtain?

Appalachian residents bear the brunt of the health Coal must be mined, transported, washed,

impacts from our reliance on coal transported again, stored, burned and converted

to the electricity that flows through transmis-

The nation is facing a health crisis from coal-fired power plant pollution. EPA has used sion lines and into our homes. Each step of the

research from the American Cancer Society, Harvard School of Public Health and other process is rife with hidden economic and social

research institutions to predict how many premature deaths are caused in the U.S. each year costs, shady backroom politics and harmful

by coal-fired power plant pollution. Clear The Air used this data to develop this map and a impacts on human and environmental health.

power plant pollution locator (available at http://www.cleartheair.org/dirtypower/) that It is a myth that recent technological advances

allows you to get the facts about your state. have somehow solved all the problems associated with the use of coal to power our world.

Energy companies have cast an illusion that the bad days of dangerous mining and dirty burning are over: that strong laws are in place

and law abiding King Coal is strictly following the law. Nothing could

be farther from the truth.

The truth is, there is nothing “cheap” or “clean” about coal. The

cost of burning coal for electricity is far beyond what Americans outside of the coalfields ever consider or imagine. It is not reflected in

this month’s utility bill, but in devastated lives and communities,

forests and streams across Appalachia. It is a price we all pay in poisoned waterways and lost cultural and natural heritage.

Extraction

Mining has always been a dangerous mess. In the 1980’s machines

and mining practices developed in the wide-open space, and 100foot thick coal seams of Wyoming were brought east to the steep

hills of the Appalachian Mountains. These practices are unaccept-

Picking Up

Steam able anywhere, but in Appalachia they proved downright apocalyptic. Longwall mining replaced traditional underground mining

while mountaintop removal mining took the place of strip mining.

In the U.S., more than 90 percent of the coal produced is used to Each of these practices is far more massive in scale, requires fewer

generate electricity. And despite its ancient origins and toxic legacy, miners and chews up much more earth; these new technologies for

coal is the fastest growing source of energy. Worldwide coal extracting coal have raised the level of destruction to new heights.

consumption has increased 25 percent over last four years.

Coal-fired power plants produce 52% of our nation’s electricity.

Pollution from power plants cuts short the lives of nearly 24,000

Americans nationwide every year.

Coalfields of Appalachia

30

Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

TERRI TAYLOR

Longwall Underground Mining

Most coal today is mined underground, and much of

that comes from longwall mining operations where

huge (1,500 feet or wider) toothed machines tear into the

ground, chewing out all the coal in one to two mile under-

Longwall panels are lined upseparated by un-mined “gates”

where the surface remains

supported. Subsidence averagesthree to five feet. Each panel is up to1,500 feet wide and two miles long.

ground swaths, called panels. The cut coal falls onto a conveyor for removal to the surface.

In traditional deep mining, pillars of coal were left to

support the earth, leaving the surface relatively unaffected. Longwall mines, in contrast, remove virtually all the

coal in the seam. Armadillo-like steel plates support the

earth while machine operators shear away the coal. The

machine excavates all the coal and moves forward

through the seam, allowing the earth to drop into the void

left behind. Removing six feet of coal leaves the surface

unsupported. The ground sinks, leaving in its wake broken homes and poisoned wells, sucking water out of

springs and farm ponds, drying up streams. Industry calls

this “planned subsidence.” Affected communities know it

as total destruction.

TERRI TAYLOR TERRI TAYLOR TERRI TAYLOR TERRI TAYLOR BILL SCHIFF

TERRI TAYLOR

The Thomas B. Kent, Jr. Farm is a 102-acre Pennsylvania farm with an 1850 brick and stone farmhouselisted on the National Register of Historic Places. The property was undercut by longwall mining in the1990s. 540,000 tons of coal was removed from under the farm’s property, generating millions of dollarsof revenue for the coal company, but leaving the home, creek and streams destroyed.

The coal company shored up the house before the longwall operation passed underneath. However,

subsidence left the foundation cracked and destroyed the spring-fed pond, leaving no source of potablewater for drinking or farming.

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

31

THE COAL TRUTH

MARK HERSH/RAYMOND PROFFITT FND.

The mining companies excuse the

devastation by arguing that it’s best to

get the subsidence over quickly, rather

than wait for the mines to cave slowly

over the next 50 years or so. People living with the aftermath will tell you the

shifting, cracking and settling permanently impacts homes, waterways and

the lives of those who live over these

operations. Although precautions are

taken to protect homes, i.e. by boarding

up walls, taping windows, digging wide

moats around the foundations to lessen

the impact of the shifting and heaving

earth as it settles into its new repose,

foundations crack and windows break.

Homeowners have no control as coal

companies control the rights to coal

under their property.

As the underground riches are stripped

away, property values plummet and residents are left to pick up the pieces.

Subsidence turns narrow, quick-running streamsinto sediment-clogged pools, suffocating aquaticlife and changing groundwater-fed streams intostormwater ditches.

Under hundreds of square miles of

Pennsylvania’s Greene and Washington

Counties, longwall mining leaves the Earth’s

surface unsupported. Longwall mining dam-

ages entire watersheds, depriving the land

and its occupants of springs, streams, ponds

and wells, creating an environmental disaster

of local and national importance.

This 15-minute documentary portrays the

experience of two families as they struggle to

cope with extensive longwall subsidence

damage to their historic homesteads.

Written and directed by Emmy Award

winning journalist Terri Taylor. Produced by

the Raymond Proffitt Foundation. Funding

provided by The Heinz Endowments.

Info & screening copies: Ten Mile Protection

Network, info@tmpn.org, 724-267-4633

A revealing documentary exposing the impacts and

legacy of longwall mining.

SUBSIDED GROUND… FALLEN FUTURES

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Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

Mountaintop Removal Mining

A massive dragline, dwarfed by the hugescale of the operation, at work on amountaintop removal operation nearKayford Mountain, WV.

VIVIAN STOCKMAN THANKS TO SOUTHWINGS

Where strip mining involves clearing

away the layer of earth above a seam to

access coal deposits, mountaintop removal is

strip mining on steroids. It means complete

deconstruction of once ecologically diverse

and verdant mountains, the suffocation of biologically rich headwater streams and the displacement of generations-old communities.

In central Appalachia, hills are steep and

valleys narrow. Coal seams are layered

throughout these mountains much like the

frosting in a multi-tiered layer cake, proving

often difficult to deep mine. Until the mid1980’s miners used traditional deep mining to

remove the thicker seams of coal that honeycombed the steep mountains and traditional

surface mining to expose and remove the

outer edges of the thinner seams close to the

surface around the sides of the mountains.

Technological advances have hit

Appalachia like a sledgehammer. Today, huge

Politics

Over Public Interest

The 2005 Programmatic Environmental Impact Statement on mountaintop removal mining –

a legally required government study begun in 1998 in response to litigation by local citizens –

is a prime example of politics over public interest. The purpose of the study was to explore

ways to limit the impact of mountaintop removal mining. But while the government

included extensive scientific research documenting damage of this practice to communities

and the environment, and in the face of 80,000 public comments against this practice, the

Bush administration used the study to endorse mountaintop removal, and recommend

streamlining the permitting process.

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

33

THE COAL TRUTH

VIVIAN STOCKMAN

mining machines tear away at mountaintops, first blasting apart the

uppermost layers of rock, pushing it into valley streams below to

expose a seam of coal and then bulldozing the coal into huge trucks to

be transported to preparation plants.

The process is repeated over and over again until at last the entire

mountain (often 600 – 1,000 feet) has been dismantled, all the coal

removed (often 6 to 15 different seams), and the leftover millions of

tons of rock and debris that now fill the stream valleys are “sculpted”

into short flat or sloped hills.

Over 800 square miles of the most productive and diverse temperate hardwood forests no longer exist. Twelve hundred miles of streams

have been buried or otherwise impacted by these operations.

Groundwater – perched aquifers that once fed mountain springs and

replenished streams in dry times – have been eliminated, ancient

mountaintops replaced with rubble and rock that has been put

through the giant mix-master of modern day mining, spit out and

bulldozed into sterile, manmade moonscapes.

Mountaintop removal mining has already turned hundreds of

thousands of acres of Appalachia’s mountains into a barren wasteland. Lives are destroyed as families are uprooted and forced to move,

communities disappear and a chain

of generations living from the land is

broken. No one can question that

moving mountains has a certain godlike quality about it. But these

arguably amazing engineering feats

have consequences of unbelievable

Valley fills are created when waste rock is dumped from the mining area intonearby stream valley – sometimes over two miles long. This is a picture of asmall valley fill in its early stages. The pond at the toe of the fill is meant toprevent sediment from entering the rest of the stream. Fills underconstruction often contribute to downstream flooding when rains rush offthe denuded mining area above overwhelming the ponds and causing themto break or overflow.

proportion.

The Definition of Fill

In 2001, King Coal found itself faced with a federal district court

VIVIAN STOCKMAN

ruling that would have shut down mountaintop mining operations

all across West Virginia as a violation of the Clean Water Act. King

Coal’s response was to immediately cash in some of its political

markers and get its cronies in the Bush Administration to change

how EPA and Army Corps of Engineers define a single word in

the Act, the word “fill.” Changing the definition of fill effectively

insulated the industry from any further Clean Water Act attacks and

negated the court’s decision, allowing the coal industry to continue

burying Appalachian streams and valleys with mine waste and

rubble without interruption.

Now, Washington’s eagerness to kowtow to the coal industry is

having far-reaching implications in other areas of the country where

industry wants to use our waterways as unpermitted waste disposal

sites. In Alaska, gold mining companies are taking advantage of this

bureaucratic, regulatory change to dump waste from gold

mines into nearby lakes. Only time will tell how many other

industries will jump on the regulatory bandwagon and fill our

nation’s waterways with their toxic mess.

Poisoned water discharged belowa coal sludge impoundment.

Stream Buffer Zone Rule

Under the 1977 Surface Mining Control and

Reclamation Act, the Buffer Zone Rule prohibits

mining within 100 feet of intermittent or

perennial streams. Insisting the rule was never

meant to prevent the dumping of millions of

tons of waste rock from mining operations into

headwater streams, the Federal Office of Surface

Mining has proposed a regulatory change to

“clarify” the rule. A 1998 federal district court

ruling upheld the clear meaning of the rule, but

was returned to the state courts on

jurisdictional ground by the Fourth Circuit Court

of Appeals. The Office of Surface Mining is

currently conducting an environmental review

of the proposed change. Permitting continues

for the burying of hundreds more miles of

ecologically rich streams.

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Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

COURTESY COALFIELD SUSTAINABILITY PROJECT AND SOUTHWINGS

Coldwater Creek

VIVIAN STOCKMAN

One picture says it all…

Marsh Fork Elementary School in Raleigh County, WV, (green patch and white building visible

in the foreground, left) sits across Little Coal River from Massey Energy’s Goals Coal

Processing plant (blue building) and their Shumate Coal Sludge Impoundment – a slurry

dam permitted for 2.8 billion gallons of coal sludge (center). The 385-feet-high earthen dam

sits about 400 yards from the school. A coal silo sits within 150 feet of the school. The towns

of Pettry Bottom and Naoma, WV, are also visible in the photo. A 1,849-acre strip mine is also

Sludge Spill

On October 11, 2000, 300 million gallons of

visible above the impoundment – blasting from this new mine imperils the dam and

communities below.

coal sludge broke through a coal slurry

impoundment at Kentucky’s largest

mountaintop removal site. (The Exxon

Massey Energy

Massey and other coal companies spend

millions each election cycle to shape the

political debate in West Virginia. Blankenship

personally spent $3.5 million during the state

Supreme Court campaign, propelling political

novice Brent Benjamin onto the bench. This

month, Massey agreed to pay $2.5 million to

settle – without admitting any wrongdoing –

a shareholder lawsuit alleging that under

Blankenship’s leadership Massey had become,

“a recidivist environmental violator as a

result of the knowing and willful conduct of

its Board of Directors.”

Author Cindy Rank, West Virginia HeadwatersWaterkeeper, and Don Blankenship, head ofMassey Energy Company (the region’s largest coalproducer) debate in 2004.

Valdez spill was “only” 11 million gallons.)

The black goo poured into Coldwater and

Wolf Creeks and traveled 100 miles

reaching the Ohio River, closing down

community water supplies and devastating

aquatic life. The impoundment contained

two billion gallons of sludge and sits atop

abandoned underground mines. Regulatory

agencies had rated the “pond” a moderate

risk for failure. This photo was taken 15 days

after the Oct. 11, 2000 spill, downstream

from the areas most affected by the spill.

Illegal roadblocks, staffed probably by coal

company employees, kept the public from

getting close to the worst areas. There are

hundreds of similar sludge “ponds” across

Appalachia, at mountaintop removal and

other coal mining sites.

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

35

THE COAL TRUTH

AP PHOTO/JEFF GENTNER

Moving, Washing,

Preparing and Moving

TERRI TAYLOR

Coal preparation plant operations.

Once coal is mined, it must be transported to preparation plants, washed and then moved

again to power plants. At several points along the way coal is stockpiled in huge

amounts. Runoff from coal piles contaminates groundwater – the primary drinking water

source throughout rural America. Coal particulates fill the air, impacting surrounding communities and waterways. These particulates, called coal “fines,” can be

found contaminating the air, waterways and communities everywhere that coal is transported and stored.

At the prep-plant, usually near the mine, coal is mixed with water

and chemicals, “sluiced and juiced,” to remove impurities that complicate the burning process. The refuse from the coal washing is a toxic,

liquid slurry of chemicals and coal waste that is then pumped to a slurry impoundment – a former valley that is now filled with billions (yes

“b”) of gallons of toxic sludge behind a manmade dam. These

impoundments are often located above communities. Many are at

high risk of failing because they can be undermined by underlying

abandoned, or even active, underground mines.

While coal companies are required by law to treat water that flows

out of the impoundment into streams and rivers, these slurry

impoundments can overflow in heavy rains or when dams fail.

These slurry impoundments remain a permanent threat to downstream communities.

Once washed, the coal is loaded back onto trucks, trains and barges for

transport to the power plant, again, spreading toxic coal fines to communities and waterways far beyond the coalfields.

Coal is loaded into a truck from a Brooks Run Mining Co. mine Friday, Nov. 18,2005 near Erbacon, WV.

YOUGHIOGHENY RIVERKEEPER

Coal trucks, typically weighing over 12,000 pounds, create a hazard on theroads of coal country, costing state taxpayers money to repair the highwaysand bridges. For those who share the narrow, winding country roads withthese behemoths, sometimes the price is much higher.

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Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

Burning

Coal Fly Ash Basin Blows Out:

Miller Steam Plant on Locust Fork of the

Black Warrior River, AL, one of 1,100 coal-

fired power plants in the U.S.

After coal has been mined,

transported, washed and

delivered to utility units, it is

burned to create electricity.

Unfortunately, because it’s cheaper and easier to build power

plants near the source of the coal,

the very same populations that

pay the highest price of mining

are also disproportionately

impacted by the burning of coal.

Nevertheless, the effects of

burning coal reach far beyond the

coalfields. Towering power plant

smokestacks churn out massive

amounts of mercury, greenhouse

gases and more smog-causing

nitrogen oxide emissions than all

of the nation’s cars, vans, and

SUVs combined. By some estimates, these pollutants cause

almost 30,000 deaths each year,

extending the risks of coal min-

NELSON BROOKE, BLACK WARRIOR RIVERKEEPER

1000 Million Gallons Spill

Into Delaware River

On August 23, 2005, a leak began

in Pennsylvania Power and Light’s

(PPL) coal fly ash storage basin at

their Martins Creek power plant.

By the next day, the leak turned

into a flood over the roads and

fields adjacent to the basin, then

an eruption of coal fly ash slurry

ing far beyond the coalfields. Add to those impacts acid rain, mercury contamination and climate change from carbon dioxide emissions.

New “clean coal” technologies that remove some of the toxics

now being spewed into the air may sound noble, but even these fail

to address the significant problems associated with mining and the

disposing of coal waste and ash. Much of the heavy metal laden ash

and waste is stored in landfills or in slurry impoundments that can

leak or fail.

Coalbed methane well pads and the dirt roads

that connect them dominate ridgetops in the

Village Creek basin, AL.

Coalbed Methane

Coalbed methane extraction is closely associated with coal

mining, and also very destructive. Coalbed methane is a gas that

is given off by coal seams deep in the ground. The seam is

fractured, or fracked,” and pumped full of highly-pressurized

water, allowing gas from throughout the seam to flow to the

that lasted for several days. In the

end, at least 100 million gallons (company estimate) of coal fly ash

effluent gushed into the Oughoughton Creek and the Delaware River.

Easton, about 10 miles downstream, had to shut down its water

intakes for several days; the river was dark gray with a slick of light

gray for more than a week. Known components of the fly ash

include arsenic, mercury, lead, silica, crystalline silica, barium,

chromium and other heavy metals. The toxin-laden slurry paved the

river bottom, smothering aquatic life for several miles downstream;

as far as 40 miles south the gray sludge was visible in between rocks

NELSON BROOKE, BLACK WARRIOR RIVERKEEPER, FLIGHT PROVIDED BY SOUTHWINGS WWW.SOUTHWINGS.ORG

in the river.

The blow out, the slow and mishap-riddled cleanup, and poor

decision making by the company and state officials has resulted in

prolonging the pollution event, causing pollution from the coal fly

ash to spread, and making a very bad situation much worse.

Delaware Riverkeeper Network will continue to advocate for the

surface, where it is captured and can be piped into homes for

permanent shut down of the coal fired units and the removal of the

heat, cooking and industrial uses. Some coal companies claim

open impoundments, which represent outdated technology and are

degasification in underground mines increases mine safety.

not environmentally protective.

However, according to the United Mining Workers of America,

there are more explosions in degasified mines than mines that

do not use this process.

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

37

THE COAL TRUTH

Acid Mine Drainage:

where you scratch the earth, it bleeds

Even after the coal is removed

from the earth, completed

mining operations often remain

an ecological threat. Toxic mine

drainage from abandoned deep

and surface mines plagues

groundwater and streams

throughout Appalachia.

A poisonous brew is created

when pyrite-containing rock is dug

or bulldozed out of its eons-old rest

deep within the earth and exposed

to the air and rain. A chemical reaction with water forms a rust-like

substance that washes into

streams and groundwater. The

water has a low pH (meaning it’s

sour like vinegar or lemon juice)

and contains metals such as iron,

manganese and aluminum.

In deep mining, toxic mine

drainage is formed when the coal

itself is full of pyrite. As mined

out voids fill with toxic water

laced with metals, pressure builds

and eventually pushes the toxic

brew out of hillsides in seeps, and

through fissures in the earth, into

our groundwater and waterways.

In strip mining, toxic mine

drainage results from pyritic rock

STEPHEN SIMPSON

Noxious mine

discharge alongRt. 837 runninginto the

MonongahelaRiver near New

Eagle, PA.

around and above coal seams being exposed to water. When that rock

is blasted apart and bulldozed back into place as “backfill,” drainage

through the disturbed material releases toxic chemicals and metals.

Acidic and metal-laden water can also pool up into toxic underground lakes in interconnected deep mine workings. While the mines

are active, the mining company is required to pump and treat the discharge. In theory, the oxygen supply is cut off in abandoned mines,

stopping the production of acid. In practice however, mines continue

to produce acid drainage long after they are abandoned. The

“Pittsburgh Pool” alone encompasses over one million acres of metal-

laden groundwater that stretches from the Monongahela River to the

Ohio River in Northern West Virginia. Toxic water from this underground lake seeps out into streams and wells. The absence of any legally “responsible parties” have the academics, government and industry

personnel madly searching for the money and technical know-how to

deal with the problem.

Acid mine drainage is a gift that keeps on giving, killing fish and

other aquatic life, poisoning the soil and creating expensive treatment

problems downstream. Thousands of miles of streams are rendered

unusable. Untold numbers of individual well users, public water supplies and wildlife are harmed. Long-term treatment costs are necessary but astronomical.

The Abandoned Mine Lands

Challenge of 2006

June 30, 2006 will be an important date for our nation’s coalfield

communities. That is when the Abandoned Mine Lands (AML) Program

must be re-authorized, and hopefully strengthened, by Congress. AML

was created to collect fees from coal companies to reclaim lands, rivers

and streams damaged by mines abandoned by the coal industry.

The AML program was supposed to have completed the cleanup

job and come to an end in 2004, but decades of Congressional raids

on the fund to cover other spending programs have left it

inadequately funded. The federal Office of Surface Mining (OSM)

reported that 3.6 million people lived within a mile of a Priority 1 or

2 site – those that pose the greatest health and safety threats.

But it isn’t just coalfield communities suffering from this

pollution – the Susquehanna River and the Chesapeake Bay are

being badly damaged by polluted waste coming from abandoned

mines in Pennsylvania, and there is no hope for cleaning up the

Chesapeake Bay until abandoned mine contamination in

Pennsylvania is stopped.

—Louise C. Dunlap

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Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

Where Coal Reigns King

“King Coal” refers to the coal companies, their associations

and the politicians who throw open the public trust, clearing the way for their worst mining practices. One might think that

our government would work diligently to minimize impacts and

safeguard our communities. Unfortunately, when it comes to protecting the public from the harmful effects of the mining and

burning of coal, Congress and this Administration have chosen to

turn a blind eye.

Mine Reclamation Projects

In 1977, Congress set up the Abandoned Mine Land Fund to raise the

funds needed to clean up mines that were abandoned prior to the

1977 passage of the Surface Mine Act. Active mining companies are

required to pay into the fund at the rate of 35 cents per ton of surface-mined coal and 15 cents per ton of underground-mined coal.

Congress ordered the money to be used to correct problems created

by mining done prior to 1977, especially to fix dangerous or emergency situations, replace water supplies and repair and reclaim

abandoned mine sites. Congress estimated in 1977 that repairs

could be accomplished in 15 years.

Now, nearly 30 years later, many hundreds of sites remain unreclaimed. Money in the fund has been used for highly questionable

projects, and reauthorization of the fund to require continued payment from companies actively mining and making profits is a politically charged battle.

In West Virginia alone, more than $375 million has been spent out

of the fund over the last 20 years to re-grade scarred land, stabilize

dangerous slides, fix hazardous mine waste and otherwise clean up

abandoned mine sites. But, measured by estimated cleanup costs, the

federal government estimates that less than one-quarter of the

state’s inventoried abandoned mine problems have been reclaimed.

Since the program began, coal operators have paid more than $7

billion into the fund. But as the West Virginia Charleston Gazette

outlined in a series of articles last year, more than $1.3 billion of

money from the fund has been diverted to low-priority cleanups or

other non-essential projects.

Reclamation At Its Finest

This shot from the Hurricane Creek,

AL, watershed shows two separatereclamation attempts with a slurrypit in the middle. The upper side ofthe picture was strip mined andreclaimed by Tuscaloosa Resourceswithin the past 5 years. They werecareful to leave a narrow band of

trees along highway 216 to block theview of the site from the road.

The lower side of the photo is theDrummond Coal mine and

reclamation site from the 1970’s.

Drummond received an award for

reclamation from the federal

government for their excellent workat this site. So what’s the result 30

years after the reclamation effort? Afew scrubby pine trees andcontinued poison runoff.

unof

The pit in the middle was bondedfor reclamation by Drummond thensold to Jim Walters Resources who

continues to use the pit today. UnderDrummond’s 1970’s permit, theywere supposed to close and reclaim

wer

the pit. This is another case of a so-

called minor permit revisionallowing coal companies to ignoreregulatory requirements and put offcleaning up their mess.

JOHN WATHEN

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

39

The Warrior Coal Basin

THE COAL TRUTH

NELSON BROOKE, BLACK WARRIOR RIVERKEEPER

Birmingport is a barge loading facility onthe banks of the Locust Fork of the Black

Warrior River. This port is Birmingham’sgateway to Mobile Bay, providing for thetransport of coal, asphalt, chemicals,

wood chips, and steel. Flight provided bySouthWings http://www.southwings.org

David Whiteside, Interim Executive Director

Black Warrior Riverkeeper

Coal is plentiful in the Black Warrior River watershed, which, combined with Alabama’s ranking as dead last in the United States in

environmental protection, adds up to tremendous water pollution.

Coal was first discovered here in the 19th century. “Stonecoal” was

mined by driving crowbars into river ledges while divers recovered

falling minerals from the water. Expert navigators guided riverboats

through the narrow passages of the free-flowing Black Warrior to haul

the coal to market. The tales of these river captains became local legends.

Today the Black Warrior, straightened and dammed by the Corps of

Engineers for easy navigation, is a silent giant in Alabama’s economy,

serving as a major shipping route for coal, cotton, steel, wood chips

and other products, and connecting

Birmingham with Mobile Bay and The Drummond Company’s

the Gulf of Mexico. Shoal Creek Mine currently

In the 1980s, Alabama coal had a crosses underneath the main

market value of $22 a ton. Today, stem of the river west of

the market value is well over $100 a Birmingham. Miners there

ton. As a result, Alabama is experi-pump 40 million gallons of

encing a resurgence in coal mining. now toxic water out of the

New mines are being permitted mine each day, sending water

throughout the Black Warrior loaded with heavy metals and

watershed on almost a monthly acid cascading down a bluff

basis. But King Coal has already back into the river.

picked clean the richest and most

accessible coal seams. Now, to remain profitable, these operations

must dig deeper, and flaunt environmental laws and worker safety, to

harvest coal that was previously unprofitable to mine. Black Warrior

Riverkeeper is reviewing dozens of mining permits, monitoring mines

by air and pursing Clean Water Act violators.

Tugboat “Alabama” motors its way down the Black Warrior River with six fully loaded barges of coal.

NELSON BROOKE, BLACK WARRIOR RIVERKEEPER

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Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

The true cost of coal is measured

in human lives

HURRICANE CREEKKEEPER

John Wathen

Hurricane Creekkeeper

On September 23, 2001, a

blast ripped through Jim

The JWR #5

mine in

Tuscaloosa

County, AL.

Eighteen men have been

killed in this mine

between 2000 and 2004: 13

in one blast in 2001. The

large building in the

center is the vertical shaft

into the mine where the

coal comes out and men go

in. This mine is the deepest

vertical mineshaft in the

U.S. The green roofed

buildings to the left of the

massive coal pile is the

church and graveyard

where the JWR 13 widows

and families waited while

the search went on for

their men after JWR

prevented them from

entering the property.

materials and coal dust” in the

coal dust.

Walter Resources (JWR) Blue

Creek mine #5 killing 13 of

Brookwood’s fathers, brothers,

and sons. Federal regulators

had conducted several inspections and written 31 violations,

including 12 for “combustible

HURRICANE CREEKKEEPER

HURRICANE CREEKKEEPER

The church grounds have to becleaned constantly to remove

months leading up to the blast.

JWR had been ordered to correct

these problems prior to the

time of the blast. Each of these

violations was a serious threat

to safety. But JWR is used to

ignoring safety violations, and minor slaps on the wrist from regulators.

This fall, five years after the blast, the courts lowered the fine that Jim Walter Resources

must pay to $3,000 from $435,000. That comes to $298.70 per man. Judge Barbour and the

federal Mine Safety and Health Administration sent a clear message to Jim Walter Resources

that it is okay to kill our neighbors if the profit is right.

Coal is not cheap in Alabama. And it costs a lot more than dollars and cents. It costs lives,

habitat and quality of life for everyone, except maybe those who thrive on our loss.

To say that 13 miners are not worth more than pocket change for King Coal is an atrocity.

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

41

THE COAL TRUTH

Environmental Regulation

As they apply to coal, the multitude of environmental laws passed in the 1970’s were

meant to strike a reasonable balance between producing coal and protecting human

health and the environment. These laws were meant to create a safety net of minimum standards below which industry could not go. With these standards fully enforced, the total cost

to mining and energy industries for maintaining these standards would be reflected in the

market price of energy. The desire for and pursuit of a coal-based energy would then be

determined by the true cost of coal and we, as consumers, would pay the cost of acceptable,

even sustainable, mining and burning practices.

With the passage of the Clean Water Act, Clean Air Act, Surface Mining Control and

Reclamation Act, Resource Conservation and Recovery Act, and other laws in the 1970’s,

things got better, at least for a while. The blatant abuses of rip-and-run mining eased and the

public outcry decreased. Congress and the country were somewhat comforted.

However, as people were lulled into complacency, industry was busy refining its image.

High power public relations efforts were changing the startling image of Appalachian coalfields from devastated lands, downtrodden miners and impoverished communities to green

rolling reclaimed hills. While the façade got prettier and the words were fine-tuned, industry

Mercury

Hypocrisy

Last fall, Waterkeeper magazine focused on the impacts of mercury

emissions from the nation’s 1,100 coal-fired power plants, including

EPA’s estimate that 630,000 children are born each year in the U.S.

with unsafe levels of mercury in their blood from their mother’s

consumption of mercury contaminated fish.

One of the Bush Administration’s favorite arguments against

effectively controlling power plant mercury emissions is that much

of the mercury in our waterways comes from sources outside the

U.S. (nearly 1,500 tons of mercury are released globally each year.)

EPA claims that U.S. emissions account for only three percent of the

manmade sources worldwide, and that Asia emits 860 tons, while

North America accounts for only 105 tons per year.

But a closer examination of the issue speaks volumes about how

disingenuous this Administration truly is when it comes to stopping

mercury pollution. Last February, mercury was on the table for

discussion when the United Nations Environment Programme

(UNEP) met for its 23rd Governing Council in Nairobi, Kenya. During

committee meetings, the European Union called for a legally

binding agreement that would force global reductions in mercury

emissions. Asian countries were largely on board. But U.S.

representatives opposed any mandatory reduction standards,

instead calling for a voluntary partnership program – in other

words, an unenforceable agreement that would not burden their

industry friends back home. So while the EPA is quick to deflect

blame to other parts of the world, the U.S. government will not

embrace international regulation of mercury emissions.

As a result of U.S. opposition, internationally binding reductions

on mercury emissions failed. The U.S. response? If you don’t want to

fix it, throw money at it and hope it will go away. Instead of

endorsing any meaningful mercury reduction agreement, Bush

officials pledged $1 million to the UNEP mercury program. So much

for international leadership.

devised new mining practices and employed new technologies far

more destructive than anyone dreamed possible when the legislation

of the 1970’s were enacted.

At the same time the roots of coal’s political influence grew longer

and stronger. Coal companies leaped into political campaign financing, and otherwise influenced the tenor, tone and texture of regulations. With control of the political process King Coal orchestrated

decreases in funding for enforcement agencies and shifted primacy

and power away from the federal government to the coalfield states,

where industry has even more direct control and influence.

With its now deep seated political influence, new “improved” technologies and the illusion of “cheap” energy, King Coal went to work on

the environmental laws, twisting regulations to their wishes and discouraging enforcement. In one of the more egregious policy-making

decisions coming out of the EPA in recent years, the Agency changed

the definition of “fill” under the Clean Water Act to allow mining companies to dump tons of mining debris into valley streams without

being in violation of the Act. The federal Office of Surface Mining has

proposed a change to the Buffer Zone Rule that would legalize the filling of hundreds more miles of valuable headwater streams. And just

last year, EPA enacted a rule that allows coal-fired plants to continue to

spew tons of mercury into our air and waterways for decades to come.

Who’s running West Virginia?

February 24, 2005 West Virginia Governor Joe Manchin III

(2nd from left) discusses details of his legislative agenda

during a briefing with members of the state Legislature in

the House Chamber, State Capitol, (that’s Bill Raney from

the WV Coal Association on the far right.)

42

Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

0

Two legislative bodies in Congress, the

Senate Committee on Energy and

Natural Resources and the House

Committee on Resources, have

jurisdiction over mining, energy policy,

public lands and mineral leasing. But

who are these Senators and Congress

members really working for?

The League of Conservation Voters

publishes a National Environmental

Scorecard, an impartial evaluation of

each Congressional members’

commitment to environmental issues

such as public health and safety,

natural resource conservation and

spending on environmental

programs. Experienced

conservationists from nineteen

environmental organizations use key

legislation to grade Congress

members. Depending on their voting

record on these issues, Senators and

Representatives receive a grade from

0, the worst, to 100, the best.

Waterkeeper has identified the

Resource Committee members who

have received a zero on the Scorecardin 2003 or 2004. There are others

with abysmally low scores – but

these are the true zeros. These are

King Coal’s champions in Congress,

letting the people of the coalfields

and our nation down.

Marilyn Musgrave,

Colorado

These are Waterkeeper’s BIG FAT ZEROSDon Young, Alaska

JD Hayworth, Arizona Richard Pombo, California

George Radanovich,

California

Elton Gallegly, California Tom Tancredo, Colorado

Barbara Cubin, Wyoming

Jim Gibbons, Nevada Steve Pearce, New Mexico

Henry E. Brown, South

Carolina

Lisa Murkowski, Alaska Conrad Burns, Montana George Allen, Virginia Craig Thomas, Wyoming

Pete Domenici, New Mexico

Lamar Alexander, Tennessee

Jim Bunning, Kentucky

Jim Talent, Missouri

SENATE

COMMITTEE

ON ENERGY

AND

NATURAL

RESOURCES

Christopher Cannon, Utah John J. Duncan, Tennessee

HOUSE COMMITTEE ON RESOURCES

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

43

THE COAL TRUTH

VIVIAN STOCKMAN

VIVIAN STOCKMAN

Image Refinery

Though the years the coal industry has worked hard to “clean up” it’s image. The greening of

coal continues to this day with roadside billboards throughout coal country, General

Electric’s “eco-imagination” campaign of buff coal miners and dancing rainforest creatures

and Massey Coal Company’s “total environment” campaign that asserts that it is King Coal,

not loudmouthed environmentalists, who are looking out for the people of Appalachia.

John Amos coal-fired powerplant in Nitro, WV.

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Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

Every basket is power and

civilization. For coal is a

portable climate…and coal

carries coal, by rail and by

boat, to make Canada as

warm as Calcutta.

—Ralph Waldo Emerson

The Wa

Forward

PAUL WIEGMAN

Emerson, considered by many people to be the founding father of

the conservation movement with his 1836 treatise on nature,

wrote these words in praise of coal almost 150 years ago. With the

dramatic impact that the burning of coal and other fossil fuels is

having on our planet’s climate, how ironically prophetic his statements have proven to be.

The gathering and burning of coal as an energy source has been

documented as far back as 400 A.D. in Roman-controlled Britain.

Now, many centuries later, when the combustion engine has displaced horse-drawn chariots and missiles have supplanted swords,

coal still remains a primary source of energy. At what cost do we

desperately hold onto this antiquated supply of power? In order to

facilitate the continuing use of coal, the Bush Administration has

rewritten environmental laws to allow mining companies to dump

their wastes into valley streams and other waterways and implemented regulations that allow utility companies to avoid any meaningful reduction of mercury emissions from power plants. Under the

guise of free trade, “cheap” Appalachian coal is shipped across the

border to use in Ontario power plants whose very emissions blow

back across this same border to poison our Northeastern states.

We are long past asking ourselves the pivotal question: is the true

cost of coal truly worth it’s cost?

The answer is painfully obvious.

It is time to replace coal with better, cleaner, more efficient

sources of energy. Coal is as obsolete as the antediluvian life forms

that make up its substance – it’s time to move on. Instead of making

excuses for the continued use of coal, this country’s leadership must

take affirmative steps to phase out our dependency on this destructive energy source.

Give all stakeholders a place at the table when formulating energy policies. Our current energy policy came out of Vice-President Dick

Cheney’s energy task force — made up entirely of industry representatives who donated millions of dollars to his election campaign.

When profit-driven energy interests dictate the energy policies of this

nation we’ve gone way beyond letting the fox guard the henhouse.

Our government needs to promote energy conservation instead

of subsidizing increased expenditures to further coal use. In 1998

the Environmental Protection Agency noted in a report to Congress

that coal-fired power plants account for 48 tons per year of mercury

being emitted into our air and waterways. Our government’s

response? To permit the building of even more coal-fired power

plants and gut Clean Air Act requirements that would mandate

strict control of mercury emissions from these very facilities. It is

time to take conservation seriously.

The fact is, coal could not be mined in the destructive manner

that it is and burned with wanton disregard for human and environmental health if we simply enforce the laws of the United

States as intended. Instead, with the help of a more than willing

Bush Administration, the mining industry has turned to undermining the very basic principles of our bedrock environmental statutes

like the Clean Air Act and the Clean Water Act. Compliance with

these laws and regard for our environment and public health would

help insure that the cost of coal is truly reflective of the devastation

it’s use entails.

Aggressively pursue alternate, renewable and clean sources of

energy. The coal industry is determined to keep the country reliant

on coal until Appalachia has been leveled, every last coal seam has

been mined and every last coal chunk has been burned. Why? So

they can squeeze every last drop of profits from an infrastructure

that has been paid for by the American people many times over. As

long as these same interests script the nation’s energy policies, there

will never be any real push for alternate sources of energy.

WK

http://www.waterkeeper.org Waterkeeper Magazine Winter 2006

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46 Waterkeeper Magazine Winter 2006 THE COAL TRUTH

BeautifulAppalachiaSTEPHEN SIMPON

CLIFTON McGILL

STEPHEN SIMPONCINDY BLALEY/GREENSPEAK

PAUL WEIGMANBARRY LAVERY

STEPHEN SIMPSON

VIVIAN STOCKMANVIVIAN STOCKMAN

STEPHEN SIMPSONBARRY LEVERY

STEPHEN SIMPSON

47Waterkeeper Magazine Winter 2006 http://www.waterkeeper.org

DONALD GIBBON

VIVIAN STOCKMAN

U.S. Government Projections for Mississippi Power, Southern Company

In 2010, the U.S. Energy Information Administration projected that coal would drop to 44% of America’s electrical generation by 2035. Actual generation dropped to that level in 2011.

This week, the agency again adjusted its long-term figures for coal in the U.S., projecting that generation will fall to 39% by 2035. But groups on the front lines of fighting coal plants say those figures are still far too conservative.

Due to a combination of cheap natural gas, higher coal prices, increasingly cost-competitive renewable energy, and an aggressive community of activists working to prevent the build of new coal plants, the coal sector is facing an unprecedented decline in generation. At least, that’s what leaders of Sierra Club’s Beyond Coal campaign are saying.

“The pipeline has essentially dried up,” said Bruce Nilles, the senior director of the Beyond Coal campaign, to Climate Progress. “Our view is that the rush is almost over.”

Here are some of the top indicators for coal’s future that Sierra Club pointed to after this week’s release of the EIA’s figures:

  • At least 33,000 megawatts worth of existing coal-fired power plants are expected to retire in the coming decades, not including any retirements due to the recently-finalized mercury and air toxics standard from the Environmental Protection Agency. For reference, an average-sized coal-burning power plant is approximately 500 megawatts.
  • The biggest difference from last year’s EIA projection is that more coal retirements will be driven by rising coal prices, state renewable energy standards and EPA clean air standards. All these signs point to reduced market share for coal and expanded market share for clean energy.
  • No new coal plants are predicted to be constructed in the time period, beyond those few that are already under construction.
  • The share of electricity production from clean energy sources (including hydropower and biomass) should increase from 10 to 16 percent during the time period.
  • Overall electricity demand growth is expected to remain below one percent annually.

Certainly, the outlook for coal isn’t good. But there’s a common misconception that coal is completely dead.

A look at the pipeline for projects in the top chart shows that there are still a fair amount of projects underway. EIA projects the portfolio of plants in various stages of development will actually increase coal generation after 2015.

But the EIA reference case assumes no change to existing policy — meaning it doesn’t factor in a price on carbon or any upcoming Environmental Protection Agency standards for power plant emissions. The combination of those two policies could dramatically change the prospects for coal.

“I’d say that coal is on the ropes,” says Nilles. “Many of the plants you see in development are rural electric cooperatives and municipal projects — no merchant projects because of sticker shock. Our view is that the rush is basically over.”

There’s one other factor being ignored by current conservative analysis: the dramatic changes in cost of renewable energy versus the increase in cost for constructing coal plants. For example, In Mississippi, the $2.4 billion, 500-MW Kemper County coal plant is expected to raise rates by more than 45% — increasing the average monthly bill by roughly $60.

Compare that to the stunning drop in the price and installed cost of solar technologies. According to some estimates, the changing economics for coal plants — assuming a new one actually gets built — makes the resource less competitive than solar photovoltaics in many areas of the country over the next few years.  HERE

Barclays Closes US Carbon Desk is Southern Company’s Mississippi Power Latest Cap-And-Trade Setback

Barclays Closes US Carbon Desk In Latest Cap-And-Trade Setback: ‘A major European bank closed its US carbon trading business this week in sign that 2012 is a “make-or-break” year for cap-and-trade’

By

A major European bank closed its US carbon trading business this week in a sign that 2012 is a “make-or-break” year for cap-and-trade programs designed to fight climate change.

London-based Barclays determined the US carbon market, currently comprised of a handful of states, is too small to justify the expense of a dedicated trading desk in New York, according to sources familiar with the decision. Barclays was a major player in US greenhouse-gas trading programs on the East and West coasts and remains active in Europe’s carbon market, the largest in the world. Seth Martin, a Barclays spokesman, declined to comment.

Barclays Global Investors headquarters on Howa...

Image via Wikipedia

“That is not good news for carbon-dioxide trading, especially not in the US,” says Gary Hart, a market analyst for ICAP Energy and a veteran pollution-rights trader. “There’s such uncertainty around the use of carbon cap-and-trade programs.”

The carbon cap-and-trade concept, which regulates the greenhouse gases linked to climate change by letting companies buy and sell pollution allowances, has suffered a major reversal of fortune since President Barack Obama’s election in 2008. Obama pushed Congress to create a national carbon market, by some estimates worth roughly $100 billion a year. The proposed market, similar to the European Union Emissions Trading System, caught the attention of major financial institutions, such as Barclays and JP Morgan, which saw U.S.-issued carbon allowances as a potentially lucrative new commodity.

“2012 could possibly be the make-or-break year” – Hart

But Obama later backed away from cap-and-trade when it floundered in the US Senate. That left a state-run carbon market in the US Northeast, where prices have crashed by more than 40 percent since 2008 and one of its members, New Jersey, quit the program entirely. Another state-level carbon market, estimated to be worth about $9 billion a year, was scheduled to start in California this year. But it was delayed until 2013 amid a legal challenge from environmental-justice activists who oppose carbon trading.

Even Europe’s carbon cap-and-trade program, in place since 2005, has been rocked by tax-fraud and computer-hacking scandals. Since Obama’s election, carbon prices there have plummeted about 60%, according to Paris-based environmental-trading exchange BlueNext, amid weak economic growth.

After a troubled few years on both sides of the Atlantic, carbon cap-and-trade advocates need to start turning things around this year, Hart says. “2012 could possibly be the make-or-break year,” he says.

Cap-and-trade supporters can already look forward to some wins in 2012. Australia plans to start a carbon tax in July, which will transition to a carbon market over three years, and Europe’s cap-and-trade program for greenhouse gases is expanding to include emissions from aircraft. In the US Northeast, the states of the Regional Greenhouse Gas Initiative are conducting a comprehensive review of their cap-and-trade market this year, and may recommend changes that lead to higher carbon prices.

But Hart says carbon-market observers will mostly be watching California this year to see if its environmental officials stick with the revised 2013 start date for the state’s cap-and-trade program. Few things could boost the carbon cap-and-trade concept more than the active involvement of California, the most populous U.S. state and ninth-largest economy in the world, Hart says. “That would keep it on life support, at least,” he says.

Here

Trial Over Removal of Spent Nuclear Fuel SYSTEM FUELS, INC., SYSTEM ENERGY RESOURCES, AND SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION, V. UNITED STATES

SYSTEM FUELS INC. v. U.S.

SYSTEM FUELS, INC., SYSTEM ENERGY RESOURCES, AND SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Cross Appellant.

Nos. 2010-5116, 2010-5117

United States Court of Appeals, Federal Circuit.

Decided: January 19, 2012.

ALEX D. TOMASZCZUK, Pillsbury Winthrop Shaw Pittman, LLP, of McLean, Virginia, argued for plaintiffs-appellants. With him on the brief were JAY E. SILBERG, of Washington, DC; and EVAN D. WESSER, of McLean, Virginia. Of counsel on the brief was L. JAGER SMITH, JR., Wise Carter Child & Caraway, P.A., of Jackson, Mississippi.
ALAN J. LO RE, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-cross appellant. With him on the brief were TONY WEST, Assistant Attorney General, JEANNE E. DAVIDSON, Director, HAROLD D. LESTER, JR., Assistant Director, SHARON A. SNYDER, Trial Attorney, MARIAN E. SULLIVAN and ANDREW P. AVERBACH, Senior Trial Counsel; and SCOTT R. DAMELIN, Trial Attorney. Of counsel on the brief was JANE K. TAYLOR, Attorney, Office of General Counsel, United States Department of Energy, of Washington, DC.
Before RADER, NEWMAN and DYK, Circuit Judges.
Opinion for the court filed by Chief Judge RADER. Opinion concurring-in-part, dissenting-in-part filed by Circuit Judge NEWMAN.

 

 RADER, Chief Judge.

On summary judgment, the United States Court of Federal Claims determined that the United States breached its contract with Plaintiffs-Appellants System Fuels, Inc., System Energy Resources, and South Mississippi Electric Power Association (collectively “Plaintiffs”) for the removal of spent nuclear fuel. Sys. Fuels, Inc. v. United States, 66 Fed. Cl. 722, 732-33 (2005) (“SFI I“). The trial court also granted summary judgment in favor of the Government regarding the implied covenant of good faith and fair dealing. Id. at 735. The trial court set damages for the breach at $10,014,114 as well as the cost of borrowed funds for financing the construction of the dry fuel storage project. Sys. Fuels, Inc. v. United States, 78 Fed. Cl. 769, 809 (2007) (“SFI II“). On reconsideration, the trial court reduced damages to $9,735,634 and denied the cost of borrowed funds. Sys. Fuels, Inc. v. United States, 92 Fed. Cl. 101, 114 (2010) (“SFI III“). This court affirms the trial court’s denial of borrowing costs and reverses the denial of overhead costs. On damages, this court affirms the trial court’s award.

I.

In 1983, Congress enacted the Nuclear Waste Policy Act of 1982 (“NWPA”), Pub. L. No. 97-425, 96 Stat. 2201 (codified at 42 U.S.C. §§ 10101-10270 (2006)), to provide for the Government’s collection and disposal of spent nuclear fuel (“SNF“) and high-level radioactive waste (“HLW“). The NWPA authorized the Department of Energy (“DOE”) to contract with the owners of SNF and HLW for disposal. 42 U.S.C. § 10222(a)(1). In return for the payment of fees into the Nuclear Waste Fund, the Standard Contract provided that the DOE would begin to dispose of the SNF and HLW “not later than January 31, 1998.” 42 U.S.C. § 10222(a)(5)(B); 10 C.F.R. § 961.11 (2011). The Standard Contract provides that “[t]he Purchaser shall arrange for, and provide, all preparation, packaging, required inspections, and loading activities necessary for the transportation of SNF and/or HLW to the DOE facility.” 10 C.F.R. § 961.11 (Article IV.A.2). Because collection and disposal of SNF and HLW did not begin on January 31, 1998, this court held in Northern States Power Co. v. United States, 224 F.3d 1361, 1367 (Fed. Cir. 2000), and Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1343 (Fed. Cir. 2000), that the DOE had breached the Standard Contract with the nuclear energy industry. This case examines another chapter in the lengthy search for remedies for breach of the Standard Contract.

On June 30, 1983, System Fuels, Inc. entered into the DOE’s Standard Contract on behalf of itself, System Energy Resources, and South Mississippi Power Association. SFI I, 66 Fed. Cl. at 725. System Energy Resources and South Mississippi Power Association own Grand Gulf Nuclear Station (“Grand Gulf”). System Fuels, Inc. served as the purchaser under the Standard Contract. Id. The Nuclear Regulatory Commission issued a license to System Fuels, Inc. and South Mississippi Power Association to operate Unit 1 of Grand Gulf, whose SNF is stored in a “wet pool.” Id. In 2002, Plaintiffs began preparations to construct an Independent Spent Fuel Storage Installation (“ISFSI”) capable of holding additional dry storage containers of SNF until DOE complied with its removal obligations. Plaintiffs anticipated that the “wet pool” would reach capacity in 2007. Id.; SFI II, 78 Fed. Cl. at 783. The record shows that System Energy Resources and South Mississippi Power Association have paid almost $148 million into the Nuclear Waste Fund in accordance with the terms of the applicable fee schedule of the Standard Contract. The Government has not begun performing its duties and responsibilities under the Standard Contract. SFI I, 66 Fed. Cl. at 725, 730. As of March 4, 2005, Plaintiffs alleged that they had spent approximately $4.75 million to construct the ISFSI. Id. at 732-33. After this court rendered its decision in Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005), Plaintiffs amended the complaint to allege that they had incurred $12,178,000 in costs to plan and construct the ISFSI at Grand Gulf to mitigate breach damages. SFI II, 78 Fed. Cl. at 771.

Every 18 months, the reactor at Grand Gulf shuts down to facilitate removal of fuel assemblies, which are then placed in two onsite storage facilities for 20 to 25 days during routine maintenance. Id. at 779. In an effort to explore their options for dry fuel storage, Plaintiffs sought guidance from an engineering services firm in the commercial nuclear industry. This firm recommended the “best short-term option for increasing spent fuel storage capacity at Grand Gulf was to recover cells currently inaccessible in the existing [onsite storage facilities].” Id. at 780. Plaintiffs also contracted with a dry cask storage system company and explored long-term options. Plaintiffs undertook construction of dry fuel storage because the core of the Grand Gulf reactor would reach capacity in 2007, and, by their estimates, the Government would not remove waste until 2022. Id. at 781. As a business practice, Plaintiffs maintain a full core reserve—a practice beyond current federal requirements. Id. at 782. Plaintiffs determined that they could maintain this business practice through 2005 and, with cell recovery efforts, accommodate the SNF and HLW discharges through 2007. Id. at 782-83.

In constructing the ISFSI, Plaintiffs created six categories of capital work operations: spent fuel studies, ISFSI design and construction, cask fabrication facility, dry fuel equipment storage building, ISFSI electrical and security systems, and auxiliary building door modification. Plaintiffs recorded and tracked costs associated with the dry fuel storage facility. Id. at 783. Plaintiffs sought damages for the capital work operations, totaling $10,591,000, and cost of capital to finance these operations, totaling $1,587,000. Id. at 783, 785.

The trial court held an eight-day trial on damages. Id. at 773 n.2. The trial court did not specify an acceptance rate of spent fuel but determined that Plaintiffs should be awarded over $10,014,114 in mitigation damages for their capital work operations. Id. at 794, 809. The award did not include the cost of borrowed funds because, even though the trial court determined that Plaintiffs were entitled to recover this amount, it needed clarification and sought additional expert testimony before making a final decision concerning mitigation damages. Id. at 809-10.

The trial court revisited its causation analysis after this court rendered the following decisions: Yankee Atomic Electric Co. v. United States, 536 F.3d 1268 (Fed. Cir. 2008); Pacific Gas & Electric Co. v. United States, 536 F.3d 1282 (Fed. Cir. 2008); Sacramento Municipal Utility District v. United States, 293 Fed. Appx. 766 (Fed. Cir. 2008). SFI III, 92 Fed. Cl. at 102. The trial court held evidentiary hearings concerning causation and addressed the claim for the costs of borrowed funds. Id. at 103-05. The trial court reduced the amount of damages previously awarded to Plaintiffs for their “cell recovery efforts” and determined that England v. Contel Advanced Systems, Inc., 384 F.3d 1372, 1379 (Fed. Cir. 2004), barred the grant of an award for the cost of borrowed funds. 92 Fed. Cl. at 108, 111-12.

Plaintiffs appeal the trial court’s refusal to award the cost of borrowed funds and overhead costs as mitigation damages. The Government appeals on the ground that the trial court’s causation analysis did not include a comparison of breach and non-breach worlds under the Standard Contract. This court has jurisdiction under 28 U.S.C. § 1295(a)(3).

II.

This court reviews the factual findings of the United States Court of Federal Claims for clear error, Ind. Mich., 422 F.3d at 1373, including “the general types of damages awarded . . ., their appropriateness . . ., and rates used to calculate them . . .,” Home Sav. of Am. v. United States, 399 F.3d 1341, 1347 (Fed. Cir. 2005). “A finding may be held clearly erroneous when . . . the appellate court is left with a definite and firm conviction that a mistake has been committed.” 422 F.3d at 1373 (quoting In re Mark Indus., 751 F.2d 1219, 1222-23 (Fed. Cir. 1984)). This court reviews the trial court’s legal conclusions without deference. Yankee Atomic, 536 F.3d at 1272. This court provides the trial court with wide discretion in determining an appropriate quantum of damages. Hi-Shear Tech. Corp. v. United States, 356 F.3d 1372, 1382 (Fed. Cir. 2004).

III.

Plaintiffs sought $1,587,000 as damages for the cost of borrowed funds to construct their dry fuel storage facility. SFI II, 78 Fed. Cl. at 785. The trial court stated that its authority to award interest on a claim of damages is governed by the Judiciary and Judicial Procedure Rules of Decision Act, which states that “interest on a claim against the United States shall be allowed in a judgment of the United States Court of Federal Claims only under a contract or Act of Congress expressly providing for payment thereof.” SFI III, 92 Fed. Cl. at 110 (quoting 28 U.S.C. § 2516(a)) (internal citations omitted).

As this court stated in England, “[t]he no-interest rule is an aspect of the basic rule of sovereign immunity.” 384 F.3d at 1379 (citing Library of Cong. v. Shaw, 478 U.S. 310, 315 (1986); Smith v. Principi, 281 F.3d 1384 (Fed. Cir. 2002)). This no-interest rule denies claims for interest and “interest costs incurred on money borrowed as a result of the government’s breach or delay in payment.” 384 F.3d at 1379 (citing J.D. Hedin Constr. Co. v. United States, 456 F.2d 1315, 1330 (Ct. Cl. 1972); Komatsu Mfg. Co. v. United States, 131 F.Supp. 949, 950 (Ct. Cl. 1955); Ramsey v. United States, 101 F.Supp. 353, 356-57 (Ct. Cl. 1951); Myerle v. United States, 33 Ct. Cl. 1, 25 (1897)).

Although expressing concerns about the policy and uniform application of England, the trial court ultimately applied the rule of that case and denied interest. In Energy Northwest v. United States, issued after the trial court’s judgment in the present case, this court addressed those concerns and reaffirmed England, distinguishing it from cases where the Government has been held liable for interest. 641 F.3d 1300, 1310-12 (Fed. Cir. 2011). England therefore controls this case. Because the trial court properly applied England, this court affirms the trial court’s denial of the cost of borrowed funds.

IV.

Plaintiffs incurred additional overhead costs when managing the six capital work operations. Plaintiffs maintained a separate accounting for overhead costs, consistent with the Generally Accepted Accounting Principles and Federal Energy Regulatory Commission (“FERC”) regulations. The separate accounting, referred to as the “capital suspense loader,” includes the cost of administrative and engineering personnel supporting capital construction projects. J.A. 348-49, 351. These overhead costs consist of two pools: (1) administrative and general costs for personnel at corporate headquarters and (2) nuclear-specific costs for personnel at the Nuclear South headquarters and Grand Gulf site. J.A. 349. The trial court acknowledged that “DOE was aware that Plaintiffs were required to account to FERC for all costs incurred.” SFI II, 78 Fed. Cl. at 791. Originally, the trial court withheld these costs for lack of proof with “reasonable certainty.” Id. at 800. Plaintiffs then provided additional analysis showing that costs associated with the “capital suspense loader” were $497,619. The trial court then offset the overall damages awarded to Plaintiffs by this amount. SFI III, 92 Fed. Cl. at 104-05, 108.

As explained in Indiana Michigan, “[d]amages for a breach of contract are recoverable where: (1) the damages were reasonably foreseeable by the breaching party at the time of contracting; (2) the breach is a substantial causal factor in the damages; and (3) the damages are shown with reasonable certainty.” 422 F.3d at 1373 (citing Energy Capital Corp. v. United States, 302 F.3d 1314, 1320 (Fed. Cir. 2002)). In Carolina Power & Light Co. v. United States, this court affirmed the trial court’s awarding of overhead costs to a utility whose “internal accounting system uses specific codes to allocate a portion of [the overhead expenses] to particular projects . . . .” 573 F.3d 1271, 1276-77 (Fed. Cir. 2009). This court has previously determined that “the amount of damages need not be `ascertainable with absolute exactness or mathematical precision,’ [but that] recovery for speculative damages is precluded.” Ind. Mich., 422 F.3d at 1373 (quoting San Carlos Irrigation & Drainage Dist. v. United States, 111 F.3d 1557, 1563 (Fed. Cir. 1997)). In Energy Northwest, this court found that “mitigation activities generally were supported by certain overhead services that Energy Northwest provided for the benefit of all its operations (not only its mitigation activities).” 641 F.3d at 1309. This court made such a determination based on testimony “estimating the portion of . . . overhead costs fairly allocated to support . . . the mitigation via generally accepted accounting practices . . .” Id.

Thus, Plaintiffs may recover overhead costs incurred for mitigation-related work. The record shows that Plaintiffs used an internal accounting system with particular codes for the “capital suspense loader.” Further, the record shows that the internal accounting system allocates on a monthly basis the overhead associated with the pool and charges accounts for the appropriate project. J.A. 348-50. Thus, Plaintiffs used accounting procedures “as mandated by FERC,” J.A. 349, and “consistent with Generally Accepted Accounting Principles,” J.A. 351. The trial court clearly erred in finding that these accounting records did not “demonstrate the effect of the mitigation project on the capital pools entitlement with `reasonable particularity.'”

Therefore, because the record fully supports Plaintiffs’ proof of overhead costs, this court reverses the trial court’s grant of offset of damages for the “capital suspense loader” overhead costs.

V.

In Yankee Atomic, this court determined that a SNF utility company “had the burden to provide the contractual acceptance rate and apply that rate before suggesting that the Government’s breach was a substantial factor in causing the [Plaintiffs’] claimed expenses.” 536 F.3d at 1273. This court went further to state that “[w]ithout record evidence about the [utility’s] condition with full Government performance, the Court of Federal Claims could not perform the necessary comparison between the breach and non-breach worlds and thus could not accurately assess the [Plaintiffs’] damages.” Id. Plaintiffs bear the burden to establish the alleged mitigation costs were caused by the breach. Energy Nw. v. United States, 641 F.3d 1300, 1307 (Fed. Cir. 2011). “[A] defendant must move forward by pointing out the costs it believes the plaintiff avoided because of its breach,” but “with respect to both claimed costs and avoided costs, plaintiffs bear the burden of persuasion.” S. Nuclear Operating Co. v. United States, 637 F.3d 1297, 1304 (Fed. Cir. 2011); see also Boston Edison Co. v. United States, 658 F.3d 1361, 1369 (Fed. Cir. 2011) (the Government “may be responsible for affirmatively pointing out costs that were avoided” due to the breach, but once the Government has identified the plaintiff’s avoided costs, “the plaintiff must incorporate them into a plausible model of the damages”); Energy Nw., 641 F.3d at 1308 n.5 (“Once the defendant has properly articulated an offset, the burden shifts to the plaintiff to incorporate those saved costs into its formulation of a plausible but-for world.” (internal quotation marks omitted)). While in some places the trial court, without the benefit of our most recent cases, inaccurately placed the burden of proof on the Government, we do not think that this error affected the result.

In SFI II, the trial court determined that Plaintiffs’ mitigation was foreseeable:

[T]he record contains clear and convincing evidence that on June 30, 1983, it was “foreseeable” to DOE that, if performance could not be commenced by January 31, 1998, Plaintiffs would have to make interim arrangements to store SNF and HLW and DOE could have foreseen that such interim arrangements could entail the need to plan, design, and construct dry fuel storage and the [sic] incur costs to borrow funds to finance those mitigation efforts.

78 Fed. Cl. at 791. Additionally, the trial court determined that the costs of modification of the auxiliary building were “incurred to mitigate the Government’s partial breach.” Id. at 801. The trial court analyzed the costs associated with the auxiliary building modifications, procedures and programs to use the casks and dose assessment, implementation of the transfer and haul paths for the casks, and scaffolding. Id. at 800-06. The trial court’s analysis was based on the costs included in Plaintiffs’ claims for damages, offsets asserted by the Government, and comparison of “the real world versus the costs of the modifications in the non-breach world.” Id. at 800. The trial court determined that Plaintiffs’ costs were reasonable for several of the auxiliary building modifications and implementation of the transfer and haul paths for the casks. Id. at 801-04, 805. In contrast, the trial court awarded offsets for (i) the procedures and programs to use the casks and dose assessment and (ii) a portion of the scaffolding costs. Id. at 804, 805-06.

In SFI III, the trial court weighed evidence concerning causation of the contested damages and application of the 1987 Annual Capacity Report Rate. 92 Fed. Cl. at 103-04. The trial court heard testimony concerning Grand Gulf in breach and non-breach worlds and “determine[d] that [Plaintiffs] would have performed the cell recovery project even if DOE accepted SNF at Grand Gulf in 2006” and offset Plaintiffs’ award for damages based on the “appropriate `related’ costs.” Id. at 104. The trial court stated that Plaintiffs “advised the court that three adjustments should be made to the prior costs claimed,” which related to offsetting costs associated with Plaintiffs’ claims for “payroll loader,” “capital suspense loader,” and “equipment purchased, sequence design, and dose assessment.” Id. at 104-05.

The trial court also weighed evidence regarding the “cell recovery effort.” After comparing the breach and non-breach worlds, the trial court determined that Plaintiffs were “not entitled to include[ ] $184,208 for the cell recovery effort as damages.” Id. at 105-06. The trial court then applied this court’s holding in Yankee Atomic, 536 F.3d at 1268, and determined that the “reasonable foreseeability element was satisfied” and “the necessity to proceed with dry fuel storage at Grand Gulf . . . was caused by both the partial breach and DOE’s inability to guarantee the commencement of performance by 2005, when the spent fuel pool would reach capacity.” SFI III, 92 Fed. Cl. at 107. The trial court discredited Plaintiffs’ expert testimony regarding performance in a non-breach world because the expert was “not qualified to testify about nuclear power plant operations.” Id. at 108. The trial court offset Plaintiffs’ damages by $184,208 and awarded Plaintiffs $9,735,634 in nominal damages because the trial court determined that Plaintiffs did not meet their burden to prove that Plaintiffs would not have engaged in “cell recovery efforts” but for the Government’s breach. Id. at 108.

Review of the record shows that the trial court’s damages analysis in SFI II included comparison between breach and non-breach worlds, and offsets were awarded where appropriate. In SFI III, the record confirms the trial court’s application of the 1987 Annual Capacity Report Rate and also applicable additional adjustments. The record evidence further supports the trial court’s comparison between the breach and non-breach worlds for the assessment of damages. This court discerns no error in these determinations. Thus, the trial court accurately addressed causation as set forth by Yankee Atomic and applied offsets as necessary. This court affirms the trial court’s causation analysis and its revised nominal damages award.

VI.

Because the trial court properly adhered to the decision of England, this court affirms the denial of Plaintiffs’ claim for the cost of borrowed funds. This court reverses the trial court’s denial of overhead costs. This court affirms the trial court’s causation analysis and revised award of nominal damages.

AFFIRMED-IN-PART AND REVERSED-IN-PART.

COSTS

Each party shall bear its own costs.

NEWMAN, Circuit Judge, concurring in part, dissenting in part.

In this arena of varied Federal Circuit pronouncements on diverse facts, the court now carves an exception into the rule that damages due to breach of contract shall render the injured party monetarily whole. The rule, applicable to the government as to all contracting entities, is that when the non-breaching party is required to incur expenditures in order to mitigate the consequences of breach, the cost of those expenditures is compensable as damages. That cost of mitigation is not “interest on a claim,” but a component of damages. Thus the “no-interest rule” is inapplicable. I respectfully dissent from the portion of the court’s decision that denies recovery of such damages.

DISCUSSION

Analytical care is required to avoid blurring the distinction between the cost of money expended to mitigate a breach and interest awarded on a judgment for damages. The “non-interest” statute is directed to interest on an adjudicated claim:

28 U.S.C. §2516. Interest on claims and judgments

(a) Interest on a claim against the United States shall be allowed in a judgment of the United States Court of Federal Claims only under a contract or Act of Congress expressly providing for payment thereof.

This statute does not apply to the System Fuels situation. System Fuels incurred capital costs to construct an Independent Spent Fuel Storage Installation, a facility that was required to be constructed in view of the government’s partial breach of the Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste. “All capital raised by a corporation has a cost . . . .” LaSalle Talman Bank, F.S.B. v. United States, 317 F.3d 1363, 1375 (Fed. Cir. 2003). The Court of Federal Claims stated that the record establishes that System Fuels incurred $1,587,000 as cost of the capital expended to mitigate this breach.1 This cost is not “[i]nterest on a claim . . . in a judgment,” and denial of recovery of this cost contravenes the principle that “[t]he remedy for breach of contract is damages sufficient to place the injured party in as good a position as it would have been had the breaching party fully performed.” Indiana Michigan Power Co. v. United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005). System Fuels’ cost of the capital required to mitigate the government’s breach is substantive damages, not interest on a claim.

This distinction has long been recognized. In Library of Congress v. Shaw, 478 U.S. 310, 314 (1986), the Court explained that “interest is an element of damages separate from damages on the substantive claim.” In Shaw the Court denied the enlargement in Title VII attorney fees due to delay in payment of the fees; the Court did not state a rule about costs of capital. Precedent well illustrates that the “no-interest rule” is not a bar to substantive damages. E.g., Peoria Tribe of Indians of Okl. v. United States, 390 U.S. 468, 471, 473 (1968) (rejecting the government’s invocation of the no-interest rule, and holding the government liable “for its failure to invest the proceeds that would have been received had the United States not violated the treaty”); Larson v. United States, 274 F.3d 643, 646 (1st Cir. 2001) (explaining that the award by the United States of investment proceeds on seized funds in United States v. Kingsley, 851 F.2d 16 (1st Cir. 1988) was not an award of prejudgment interest because “the award was in the form of damages directly caused by” the government’s breach of a plea agreement).

Recognition that damages include the cost of the money expended in mitigation is exemplified in the FIRREA cases, e.g., Bluebonnet Sav. Bank, F.S.B. v. United States, 266 F.3d 1348, 1357 (Fed. Cir. 2001) (“the increased financing costs” represented in the Economic Benefits Agreement are recoverable as damages); LaSalle Talman, 317 F.3d at 1374-75 (damages can include “the cost of capital”); Citizen Fed. Bank v. United States, 474 F.3d 1314, 1320 (Fed. Cir. 2007) (damages include the “expenses it incurred in replacing its regulatory capital after FIRREA had precluded thrifts from using regulatory goodwill or subordinated debt as regulatory capital”). The analogy is apt, for here System Fuels expended capital to provide storage facilities after the government breached its contract to store the spent fuel.

“Government liability in contract is viewed as perhaps `the widest and most unequivocal waiver of federal immunity from suit.'” United States v. Mitchell, 463 U.S. 206, 215 (1983) (quoting Developments in the Law — Remedies Against the United States and Its Officials, 70 Harv. L. Rev. 827, 876 (1957)); see United States v. Emery, Bird, Thayer Realty Co., 237 U.S. 28, 32 (1915) (the Tucker Act is a “great act of justice”).

Law and precedent establish government liability for the cost of mitigation, where government breach requires expenditures in mitigation. In Mobil Oil Exploration & Producing Se., Inc. v. United States, 530 U.S. 604, 607-08 (2000) the Court reinforced that “[w]hen the United States enters into contract relations, its rights and duties therein are governed generally by the law applicable to contracts between private individuals,” quoting United States v. Winstar Corp., 518 U.S. 839, 895 (1996) (plurality opinion). This court in Indiana Michigan applied “the general principle is that all losses, however described, are recoverable.” 422 F.3d at 1373 (quoting Restatement (Second) of Contracts § 347 cmt. c (1981)). The Restatement explains that “the injured party is entitled to recover for all loss actually suffered. . . . includ[ing] costs incurred in a reasonable effort, whether successful or not, to avoid loss.” §347 cmt. c.

The government’s argument that recovery of mitigation costs is precluded by its reinterpreted “no-interest rule” is as inappropriate as it is incorrect, and should be rejected by the court, not adopted and enlarged. As stated in Indian Towing Co. v. United States, 350 U.S. 61, 69 (1955), the court is not a “self-constituted guardian of the Treasury.” My colleagues err in holding that the cost of mitigation of governmental breach of contract cannot include the cost of the money expended in mitigation. I respectfully dissent.


Judge refuses to halt DOE Assistance for Mississippi Power’s Kemper Lignite Coal Plant

What about the economic impact?   The economic impact was not included? Someone needs to bring that forward to a judge as well.

A federal judge in Washington, D.C., has rejected Sierra Club’s attempt to stop the Department of Energy from providing money or a loan guarantee on a 582-MW coal-fired power plant in Mississippi, until it has fully examined environmental impacts (Sierra Club v. U.S. Department of Energy, 11-514 JDB, D.D.C.).

The issues are not ripe for adjudication, U.S. District Judge John D. Bates said in a 21-page opinion issued today.

DOE “has not yet made an ‘irreversible and irretrievable commitment of resources’ with respect to loan guarantees,” Bates wrote, referring to DOE’s pending decision on whether to provide guarantees for up to 80 percent of the project cost, estimated to exceed $2 billion.

“Until [DOE] issues a Record of Decision on a guarantee, it is not committed to making one,” Bates said. “The Sierra Club may be correct that the department is closer to making a decision than the agencies were in Wyoming, Center for Biological Diversity, or Nevada.”

But “[u]ntil DOE actually commits to a loan guarantee, it is not relevant that DOE has committed other resources to the Kemper project or that DOE seems to the Sierra Club to have made up its mind,” the judge said. “Furthermore, it is not clear that there will be no further development of the issues here. Although the EIS did discuss a loan guarantee and was entitled ‘final,’ the EIS does not itself commit resources, and the agency could very well undertake further analysis (environmental or otherwise) before actually committing resources or deciding not to commit resources. Finally, it is not relevant that deferred review might make the agency more likely to continue on its course of action or make the ultimate decision harder to undo, since that is true in virtually every situation in which courts defer review on ripeness grounds.”

Arguing for a preliminary injunction, Sierra Club said, “Mississippi Power’s current activities at the construction site are destroying acres of forest, degrading local air quality, and disrupting an otherwise peaceful, rural community. Further construction and eventual operation of the coal plant and strip mine will destroy over 50 miles of streams and thousands of acres of wetlands, industrialize an estimated 13,925 acres of prime farmland and undeveloped forest, and burden surrounding communities with toxic air and water pollution.”

The plaintiffs also asserted that the project “is expected to lead to electricity rate hikes of nearly 50 percent for local residents” and that “[w]hile DOE and Mississippi Power seek to justify this project’s expense and enduring environmental impacts on grounds that it will advance the development of carbon capture technology, the plant will not be required to capture, much less sequester, the 5.7 million tons of carbon dioxide equivalent1 (“CO2e”) that it will generate each year.”

Bates said issuing an injunction would not provide the relief sought by Sierra Club:

“Mississippi Power has provided a sworn affidavit indicating that it will proceed with the Kemper project with or without [Clean Coal Power Initiative] assistance or a loan guarantee. The Sierra Club has produced evidence that the project was unlikely to have commenced without federal funding, but has not made such a showing regarding the continued viability of the project without federal funding.  Hence, the Sierra Club has failed to meet its burden of showing that it will be irreparably harmed by DOE’s funding of the Kemper Project absent the injunction it seeks.”

Excerpts from opinion

[T]he court will deny the Sierra Club’s motion for a preliminary injunction and grant the federal defendants’ motion to dismiss.  The case shall proceed only on the Sierra Club’s remaining claims.

The Sierra Club’s complaint presents five causes of action.  First, the Sierra Club alleges that DOE violated NEPA by selecting the Kemper project for CCPI funding without giving detailed consideration to alternatives other than building the plant proposed by Mississippi Power.  Compl. ¶¶ 46-49.  Second, the Sierra Club alleges that DOE violated NEPA by selecting the Kemper project for a loan guarantee without giving detailed consideration to alternatives. Compl. ¶¶ 50-53.  Third, the Sierra Club alleges that DOE violated NEPA by preparing the EIS with a specified “purpose and need” that was too narrow.  Compl. ¶¶ 54-58.  Fourth, the Sierra Club alleges that DOE violated NEPA by neglecting to consider the cumulative impact of emissions from the Kemper project in combination with emissions from other coal plants.  Compl. ¶¶ 59-62.  Fifth, the Sierra Club alleges that DOE violated NEPA by failing to disclose all the environmental impacts of the Kemper project and failing to identify mitigation measures.  Compl. ¶¶ 63-64.

Excerpts – Sierra Club brief in support of P.I. motion (5/16/2011)

DOE’s final EIS authorizes “a $270 million grant award and federal loan guarantees of up to $1.9 billion. Without this federal assistance, the Mississippi Power Company, a subsidiary of Southern Company, would be unable to finance its proposed ‘Plant Ratcliffe’—a new 582-megawatt (“MW”) coal plant that will burn lignite coal from a proposed 12,275-acre strip mine.  Already, DOE has disbursed nearly $50 million, which is funding ongoing construction work at the Ratcliffe site.”

HERE

Steve Davies
Editor/Publisher
Endangered Species & Wetlands Report (www.eswr.com)

EPA Moves Forward with GHG Regulations for Power Plants

November 9, 2011

EPA Moves Forward with GHG Regulations                    for Power Plants

POWERnews

The Obama administration on Tuesday posted a notice on the White House Office of Management and Budget (OMB) website that indicates the Environmental Protection Agency (EPA) has filed a copy of proposed rules to limit greenhouse gas (GHG) emissions from new, modified, and existing power plants.

The EPA sent the regulations governing Greenhouse Gas New Source Performance Standard for Electric Generating Units to the OMB, as is consistent with the Supreme Court’s ruling in Massachusetts v. EPA (2007), the landmark ruling that included GHGs within the Clean Air Act’s definition of air pollutants, said EPA spokesperson Betsaida Alcantara in a statement.

“EPA will work with OMB throughout the interagency review process and will issue the proposal when this review is complete,” she said. “EPA has engaged in an extensive and open public process to gather the latest and best information. The agency is fully considering this input as it develops smart, cost-effective and protective standards.”

The agency will be soliciting additional comment and information at the time that it proposes the new source rule and will take that input fully into account as it completes its process for this rule, she added.

The EPA had missed a court-imposed deadline to propose the rules by July 26, 2011, to more thoroughly review public comment on draft rules. In September, just weeks before its self-imposed deadline of Sept. 30, 2011, the EPA again deferred the proposal, not specifying a new date.

The agency had been expected to finalize the rule by May 26, 2012, as required by a December 2010 settlement agreement between the agency, several states, and environmental groups, including the Sierra Club and the Environmental Defense Fund.

The review by the OMB could take up to 90 days.

Floodplain Statement and Findings Dept of Energy for Kemper Lignite Coal Project

 

 

HERE

Liberty Fuels & Public Opposition to IGCC Plant & Environmental Impact

This Document includes Testimony from Liberty Fuels.♠

U.S. Dept. of Energy & Army Core of Engineers
3rd Volume of responses to questions concerning the Kemper County Lignite IGCC Project Final Environmental Impact statement.

Created 5-4-2010 But was MODIFIED 6-28-2011 @ 2:37 pm.

I am not aware of what portion of this document was changed a year later, nor the reason why, nor did I find a statement of changes for transparency.

Downloaded PDF here EIS-0409-FEIS-03-2010 so we can compare any future modification to this public document.

See website here

The EPA Will Save Us From No Threat For $100 Billion – Mississippi Power’s Role

The EPA Will Save Us From No Threat For $100 Billion

October 11, 2011 by

 

Armstrong Williams

Syndicated columnist Armstrong Williams has recently noted that the EPA is now on a jihad to protect Americans from the chemical known as perchlorate. Never heard of it? Few people have. It’s a salt manufactured and used primarily by the military and the aerospace industry, according to Williams.

Perchlorate also occurs naturally and in low amounts in water supplies, soil, agricultural crops and dairy cattle. It’s also found in fertilizers that farmers use to grow their crops.

Radical environmentalists have convinced the zealots at the EPA that this chemical is a dangerous pollutant that must be regulated. This is in spite of the fact that the National Academy of Sciences has stated that this chemical has no observable effect on the human body in its naturally occurring form.

The same can be said for the Carbon Dioxide.  The United Nations declared CO2 to be a dangerous killer.  It sent instructions to the EPA and the EPA regulates the companies and Southern Company complies and cooperates.   

In addition, the EPA’s own Inspector General in 2010 concluded that the EPA’s regulation of this chemical will not protect human health in any meaningful way. But, the economic impact of the EPA regulating this chemical will be catastrophic to our nation’s farmers. The EPA’s IG stated: “The potential regulation of perchlorate is a critical environmental decision that has significant social and economic consequences. The regulation of perchlorate could adversely affect $70 billion dollars worth of U.S. agricultural exports…when one considers both the agricultural and environmental clean-up costs, the potential regulation of perchlorate represents at least a $70–110+ billion dollar decision.”

Mississippians will be paying for a costly experimental CO2 capturing device for the benefit of the Stock Holders of Southern Company Southern Co. pretends to be angry at the EPA, but then cooperates fully when it serves them. Mississippi Power follows Southern Company, their mother. 

In short, the EPA’s regulation of this chemical will produce no health benefits to humans, but will cost an estimated $100 billion to American farmers for “clean-up.”

Isn’t this just like the EPA? Lisa Jackson and her tree-huggers will find a non-existent problem, issue regulations to control it, and let farmers go belly up as a result of their irrational earth-worshipping ideology. Some might call this an unintended consequence of overregulation, but we’re way past the point of thinking these policy decisions are unintended. These areintended consequences. They’re deliberately working to destroy capitalism and to reduce our nation to a Third World status.

We completely agree that the actions of the EPA are calculated in accordance with something called the Kyoto Protocols.  Look Kyoto Protocols up, it is a United Nations plan to redistribute wealth from America to  Third  World countries using environmental issues.  

Senator James Inhofe (R-OK) Calls for a New EPA Investigation

Senator James Inhofe (R-OK), the minority leader on the Senate Committee on the Environment & Public Works issued a call for a new investigation into the EPA’s flawed endangerment findings on carbon dioxide.

 

Two days ago, Senator James Inhofe (R-OK), the minority leader on the Senate Committee on the Environment & Public Works issued a call for a new investigation into the EPA’s flawed endangerment findings on carbon dioxide.

Inhofe’s call was related to the EPA Inspector General’s report showing that the EPA failed to follow the correct procedures before it issued its finding that CO2 is a dangerous pollutant that must be regulated by Lisa Jackson’s jack-booted zealots.

As Inhofe stated:

“The Inspector General’s investigation uncovered that EPA failed to engage in the required record-keeping process leading up to the endangerment finding decision, and it also did not follow its own peer review procedures to ensure that the science behind the decision was sound. EPA Administrator Lisa Jackson readily admitted in 2009 that EPA had outsourced its scientific review to the United Nations’ Intergovernmental Panel on Climate Change.  This is an institution whose credibility has already been called into question. Even so, EPA still refused to conduct its own independent review of the science.  As the EPA Inspector General found, whatever one thinks of the UN science, the EPA is still required – by its own procedures – to conduct an independent review.”

Of course, as Inhofe points out, the IPCC is notoriously unreliable when it comes to accurate information on climate change or “global warming.” The IPCC is biased towards climate warming hysteria and the so-called “experts” who feed the IPCC information are climate change zealots with a clear political agenda.

Anyone who has read through the Climategate emails will easily understand that these zealots cooked the numbers, suppressed data that they didn’t agree with, and tried to suppress the writings of climate change skeptics.

It is clear that the EPA is using flawed resources to reach flawed conclusions. It is not basing its decisions on “science” but on the politically-motivated data provided by “experts” who wish to use climate change hysteria to destroy capitalism, destroy American sovereignty, and to redistribute income to “poor” nations from hard-working American taxpayers. This must stop.

Please access Senator Inhofe’s Minority Member web site and use his excellent research materials rebutting climate change hysteria.

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