Red Flag: Coal Export Facilities, Plus Cargo, Under Scrutiny

The battle over coal has spread from where it is mined or burned to generate electricity to the possible points from which it could be exported.

Last April, Oregon Gov. John Kitzhaber sent a letter to the Secretary of the Army "to request that a federal agency prepare a programmatic and comprehensive Environmental Impact Statement (EIS… to look at the unprecedented number of coal export proposals pending in the Pacific Northwest as well as the potential effect in this country of the use of this coal in Asia. " The issues and tone of Kitzhaber's letter makes clear he is not focused upon the economic benefits of coal exports but is raising environmental issues.

Kitzhaber's missive came on the heels of similar comments sent from the EPA Regional office in Seattle to the Army Corps of Engineers. Kate Kelly, the Director of Ecosystems, Tribal and Public Affairs, submitted comments in response to a public notice for a permit application under the Rivers and Harbors Act. The permit application was for a coal transloading facility proposed for the Port of Morrow, Ore.

Among other things, in its comments EPA asked the Corps to "[c]onsider for example the cumulative impacts to human health and the environment from increases in greenhouse gas emissions… and the transport of ozone, particulate matter and mercury from Asia to the United States." Transport in this context means as a pollutant, something to be analyzed under the National Environmental Policy Act or NEPA.

These letters were early gambits on the chessboard of administrative law. The intent was clear – they were designed to use NEPA to slow if not stop proposals to construct coal export facilities. NEPA received some national infamy when President Obama's "shovel ready" stimulus projects were stymied. Should the anti-coal activists successfully invoke NEPA this time, the statute may be expanded far beyond any previous application and make any stimulus controversy seem trite.

The incentives for establishing coal export facilities on the Pacific Coast are obvious. The U.S. has massive coal supplies, including large low sulfur coal deposits in the Powder River Basin of Wyoming and Montana. Moreover, the boom in U.S. gas reserves, coupled with the regulatory burdens imposed on coal, have driven down domestic demand.

What the U.S. lacks are facilities on the Pacific Coast so that this coal can be sold to China and India. Those two nations account, according to the Energy Information Agency, for 90 percent of the growth in coal consumption between 2000 and 2010, inspiring a half-dozen proposals to construct export facilities.

That any such facilities would have to go through the NEPA process is not in question. What is in question is what kind or kinds of NEPA reviews and just how wide-ranging the scope of impacts analyzed would be. NEPA has provisions for different kinds of reports including environmental assessments (EAs and environmental impact statements (EISs. The former is much less time-consuming than the later. There are also provisions for conducting a programmatic EIS.

Programmatic EISs tend to be more generic and conceptual rather than project-specific. In the case of the coal export facilities issue, the anti-coal forces hope a programmatic EIS would include all the proposed facilities and, uncommonly if not precedential, address the cumulative impact on climate change from the greenhouse gas emissions of the coal shipped to China and India.

Lisa Jaeger, former acting General Council of the EPA and partner at Bracewell Giuliani, would consider such analysis inconsistent with NEPA: "The law was intended to review the impact on human health and the domestic environment of major federal actions. No reading of NEPA can get you to the conclusion that Congress intended to regulate the end use of every product sold in international commerce and that's exactly where this rationale would take you."

Ross Eisenberg, Vice President, Energy and Resources Policy at the National Association of Manufacturers, offers a similar caution. "By expanding this focus to include the environmental impact of the cargo," he warns, "the Corps could be laying the foundation for similar exercises for just about any port or rail expansion to transport any type of cargo…The possibilities are endless. "

On Capitol Hill there are identical concerns. "It is difficult… to see," says Sen. John Barrasso (R-Wyo., "how Boeing planes, General Motors automobiles, or heavy equipment from Caterpillar could ever pass a climate change litmus test." He and fellow Wyoming Sen. John Enzi, (R gibe that EPA stands for "export prevention agency." Dozens of their House counterparts have waded into the issue, with a letter to the Secretaries of the Army and of the Interior, urging that they "…direct [their] agencies to expedite their consideration of permits for coal export facilities. "

Exactly how the Corps will handle the matter is unclear so far. With regard to one of the relatively smaller facilities – part of the Morrow Pacific Project – the Corps has announced that it will conduct an environmental assessment and limit consideration to reasonably close effects. Two other projects appear headed for more complex EISs. As for the possibility of a more time-consuming programmatic review, EE reporter Manuel Quinones writes that a Corps public affairs officer has stated that an area-wide environmental impact statement is still a possibility.

The Corps has reportedly received some 30,000 comments on the Morrow Pacific Project already. According to Oregon Public Broadcasting, a number of public hearings for the Gateway Pacific Terminal have already taken place and more are planned. The expected response for one was so great that it was moved from a community college gymnasium to the Washington State Convention Center.

Comments can also be submitted online and the Sierra Club's Oregon Chapter is hosting a website to generate them. Website visitors simply supply their name and contact information and it is attached to comments against the Morrow Pacific Project: "…Burning coal in Asia will release staggering amounts of greenhouse gas emissions… Urge the Army Corps of Engineers to conduct a full Environmental Impact Statement… as well as a Programmatic EIS…"

The left will clearly be pushing hard against coal exports. As David W. Kreutzer, Research Fellow in Energy Economics and Climate Change at the Heritage Foundation, puts it, "The opponents of coal exports have swapped an economic argument, 'the price of coal does not fully reflect external costs' for a religious one: 'coal is sinful.' That is, they have determined that the energy from coal cannot provide net benefits to anyone, anywhere, at any time—regardless of how great is the value generated; how scarce and costly are the alternatives; and how poor are the users."

Robert Gordon is Senior Advisor for Strategic Research at The Heritage Foundation.

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