COAL:

After mine deaths, how much political trouble is industry in?

A mine explosion in West Virginia this week that killed at least 25 workers inflicted further political damage on the already weakened coal industry, raising questions about whether it will face new safety rules even as it is already confronting a host of new environmental regulations and accusations about its role in climate change.

Coal critics yesterday blasted Massey Energy Co., owner of the Upper Big Branch site where miners died. Clean Energy Works, a coalition about 60 groups that want climate legislation, sent an e-mail to reporters with the headline "Coal Mine Owner Puts Profits Before Safety." It cited a number of reports about Massey's safety violations, fines paid by the company and controversial comments from CEO Don Blankenship.

J.W. Randolph, legislative associate for the environmental group Appalachian Voices, predicted that the latest fatalities would stoke public outrage against the coal industry and pave the way for a host of new safety and environmental regulations. The explosion was caused by the same profit-at-all-costs culture that leads coal companies to ignore the ecological consequences of mountaintop-removal mining, he said.

"Now the country has seen that companies like Massey are willing to do things as ecologically irresponsible as mountaintop removal while at the same time racking up horrible safety records," Randolph said. "Change is inevitable at this point."

The industry's biggest trade group and some analysts, however, argued that the explosion was unlikely to translate into a significant shift in environmental policy. The past two years have been the safest on record for coal mines, said Luke Popovich, spokesman for the National Mining Association, a coal industry trade group.

"I don't think there are facts on the table that will persuade this Congress or this administration to destroy an industry that's as important to the economy as this one is," Popovich said, adding, "that's more fantasy on the part of green critics than it is a realistic expectation."

Coal already is fighting challenges from the Obama administration, Congress and the courts.

The administration last fall froze nearly 80 permit applications for surface coal mines to conduct "enhanced reviews" under the Clean Water Act. A handful of the permits have been approved under the new review policy, and U.S. EPA last week announced new water quality regulations that the agency said would block mine operators from dumping waste into surrounding streams in nearly all cases (E&ENews PM, April 1). Bills in the House (H.R. 1310) and Senate (S. 696) would amend mining law to impose an outright ban on the dumping practice, known as a "valley fill."

While politics do not turn based on one event, they can embolden one side's arguments. During the pitched battle over health care reform, the Obama administration and Democrats grabbed onto the case of Anthem Blue Cross, California's largest for-profit health insurer, announcing it planned to hike rates up to 39 percent.

It is likely that safety arguments will become part of the regulatory push, said Kevin Book, managing director of Washington-based consulting firm ClearView Energy Partners.

"There's almost a perfect universe where coal is being regulated more strictly every link of the value chain," Book said, adding that coal is being hit "from the mine shaft to the smoke stack."

"It's almost guaranteed that it weakens the negotiating domain for senators who want to protect coal," Book added.

Even before the explosion, Book said, there were signs that coal's backers are willing to negotiate on regulatory changes. Sen. Jay Rockefeller (D-W.Va.) offered along with Sen. George Voinovich (R-Ohio) draft legislation that would "promote research and create incentives to develop and deploy full scale carbon capture and sequestration technologies for a strong energy future," Rockefeller said in a press release. But that discussion draft also had a little-noticed provision in it, Book said, that would charge power generators a fee to pay for the technology efforts. That fee was in the House climate bill, Book said, but Rockefeller and Voinovich's bill would triple it.

That bill was offered as part of the negotiations on a climate bill from Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.), Book said. It was a "bargaining" move from Rockefeller to change the outlook for coal, he said.

Massey Energy did not respond to requests for comment.

Arguments for change

The death of 25 miners highlights the need for a transition away from coal and toward safer jobs such as wind turbine manufacturing, said Randolph with Appalachian Voices. And as Appalachia's most accessible coal stores are exhausted, new projects are going to send miners deeper underground and further into harm's way, he said.

The mine explosion could help the arguments of environmentalists who say that coal supporters fail to calculate the environmental, health and safety costs of coal when they promote the fuel as plentiful and inexpensive.

"Coal is enormously destructive, especially to the health and safety of communities where it is mined and burned," said Joe Smyth, spokesman for Greenpeace. "While companies like Massey and the rest of the coal industry lobby for further subsidies, lawmakers should remember that there will be serious impacts to people and our planet as long as we remain dependent on dangerous sources of energy like coal."

Phil Smith, spokesman for the United Mine Workers of America, said he expected environmentalists to use the mine disaster to push an anti-coal agenda, but he said he doubted the arguments would carry much weight.

"I think policymakers understand there's a big difference between the future of energy and climate change in this country and whether or not companies are operating safely," he said. "It makes sense for the federal government to look at those companies from a safety point of view, but there is no real reason why this should be used to get into the energy mix argument. What happened has nothing to do with the environment."

There are other economic factors on the positive side that are not included in coal's cost, Popovich said, such as that it pays high-wage jobs to miners.

Coal has many allies in the Senate, Popovich said, as many senators come from states that either mine coal or use it as part of power generation. Those lawmakers, he said, know that coal is important for inexpensive power. That is unlikely to change because of the mine explosion, he said.

"The prospects of an economywide cap and trade are no greater than Sudan winning the next Olympics," Popovich said.

Some industry analysts said that energy economics will keep coal's place secure.

"I don't think there's any question that the mining accident gives the coal industry a black eye, and a big black eye," said Kenneth Green, resident scholar at the American Enterprise Institute think tank. "But a single accident, however tragic, does not change the fact that coal provides half of U.S. energy and does not have a ready replacement. The basic economics of coal won't change until there's a cheaper, non-carbon alternative."

Capital costs of mining projects and coal plants -- many of which have 30- to 60-year life spans -- provide the energy source with staying power past the immediate shock of the accident, Green said.

While there could be a push for new safety requirements and a call to prosecute anyone believed negligent in the Upper Big Branch mine, Green said, the accident was unlikely to have much of an effect on the industry as a whole.

Energy policy is not written overnight, said Scott Segal, co-head of the federal relations and strategic communications groups at Bracewell & Giuliani LLP, which represents electric utilities and coal and energy companies.

"Issues like climate change, mountaintop-removal mining and clean air regulations take time to resolve," Segal said. "I don't think the momentary reaction to an incident is likely to change the path that those broader issues take."

As the policy process moves forward, people will see that coal mine safety has improved dramatically since sweeping new safety regulations were enacted as part of the Mine Safety and Health Act of 1977, Segal said. One hundred thirty-nine coal miners died that year. Deaths in the 2000s have ranged from a high of 47 in 2006 to a low of 18 last year, according to the Labor Department.

Fatalities dropped sharply after 2006, when stricter enforcement and tougher penalties were put in place as the result of the Jan. 2, 2006, Sago mine explosion that killed 12. Congress passed and President George W. Bush signed legislation that tightened mine safety rules and increased penalties for violations.

"The dramatic narrative of underground mine fatalities has somehow obscured the improving [safety] record in the minds of people," Popovich said.

But for environmentalists and other critics "to seize upon accidents to say there's no place for coal is ludicrous," Popovich said.

Industry lobbying

The mine explosion and any follow-up from federal investigators also come as the coal industry has cut back on lobbying. The sector as a whole paid $14.4 million for influence efforts in 2009, a decline of 14 percent from the previous year, according to data from the Center for Responsive Politics.

The National Mining Association last year spent $2.8 million on lobbying, a drop of 38 percent from 2008. The spending dropped because the trade group did not immediately fill jobs when staff members left, said spokeswoman Carol Raulston. As well, the group reduced member dues last year because of the recession. Energy use declined, and companies saw their revenues fall, she said. NMA also shifted some advertising to the Internet.

Massey Energy does not spend money on lobbying, according to Center for Responsive Politics. Peabody Energy Corp. and its subsidiary Peabody Investments spent the most on lobbying in the coal sector last year, $5.8 million. But that was a drop of 31 percent from 2008. Peabody did not respond to a request for comment.

After the Sago mine explosion, the trade group also created a commission to study ways to improve safety. Mining companies combined spent about an additional $1 million toward that commission's work. Lobbying by the mining industry also increased as Congress considered and then passed the tougher mine safety rules.

It is too soon to know whether the Upper Big Branch mine explosion will create a need for more lobbying or other efforts that require funds, Raulston said.

"We want to look at what were the causes of this," Raulston said. "Was there something that was truly unique, or was there something that was just missed?"

Because coal mining is an established industry, declines in lobbying for one year won't have a large effect, said Green with AEI. Coal primarily is lobbying to preserve its market share, he said, trying to prevent new regulations and making sure competitors do not gain any advantages.

Having a recent drop in lobbying might be a good thing for the industry with the latest mine deaths, Green said.

"When your industry is looking bad, you want to keep a low profile," Green said.