MiningWeek Online
June 18, 2004 Volume 10, Issue 24

This Week's Issue:

• Mining Industry TRI data reflect reporting and production changes
• Emerson visits NMA headquarters
• Cap-and-trade would achieve larger mercury reductions at lower cost, EPRI official says
• Bid by environmental groups to force BLM protection of potential wilderness dismissed by High Court
• Illinois fertilizer plant to convert from natural gas to coal
• DOE carbon sequestration program adds partners
• NMA generally supports draft mitigation guidance, but expresses some concerns
• Appeals court affirms lower court decision on insurers’ CERCLA liability
• Newsbits

• Overall, reported releases from mining facilities were significantly reduced from prior years due to the aforementioned factors;
• The impact of the court decision varied widely from facility to facility because the de minimis exemption is based on the concentration of a listed material that is naturally occurring in a mixture such as waste rock, and those concentrations varied significantly among naturally occurring materials and reporting operations; and
• Over 98 percent of the weight of substances reported by mining operations occurs naturally in the local rock and soil, and remains in low concentrations in the large amount of this material handled and managed at the mine sites. This single characteristic continues to set mining operations’ reports apart from those provided by other reporting industries.
• The data reflect the influence of changing production levels on mining reports.

• Listed chemicals and chemical compounds that are used in the extraction and processing (i.e. “beneficiation”) of metals and ultimately become subject to TRI reporting as either air, water or land releases;
• Reported amounts of Persistent Bio-available and Toxic (“PBT”) substances, as they are not subject to the de minimis exclusion; and
• Releases to on-site landfills and tailings impoundments that were a direct result of the wear and tear on equipment.

• 0.2 percent of all air releases reported under TRI;
• 0.5 percent of all releases to surface waters;
• 3 percent of total transfers for offsite treatment;
• 10 percent of total releases to underground injection;
• 80-82 percent of releases to land for on-site management; and
• 35 percent of total TRI releases, based on the naturally occurring listed materials that exceed de minimis concentrations found in the rock and dirt the mining industry moves and manages on-site.

  TRI is a weight-based report covering nearly 650 chemicals and substances and is not intended to evaluate risk, but rather to provide very general information to the public. This is the fifth year data from the mining industry have been reported. Health, safety and environmental protection at mining operations are governed by other local, state and federal requirements. For additional information on TRI, the court decision and prior mining industry reports, please visit NMA’s web site, www.nma.org/policy/tri/tri_index.asp.

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  Emerson visits NMA headquarters

  
  Rep. Jo Ann Emerson (R-MO), at left with NMA President & CEO Jack Gerard, visited NMA headquarters this week and thanked the mining industry for working to register voters for the upcoming election. She noted the economy in her mostly rural district is improving, but that “rural America is always the last to reap the benefits of any improvement in the economy.” Health care, she said, is the most important issue in her district. Emerson is a member of the Appropriations Committee, and sits on the Agriculture, Homeland Security, and Energy and Water Development Subcommittees. Her district includes The Doe Run Co., a major lead producer and NMA member.

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  Cap-and-trade would achieve larger mercury reductions at lower cost, EPRI official says

  The Bush administration’s proposed cap-and-trade approach would achieve greater reductions of mercury emissions from coal-based power plants at less cost than the Maximum Achievable Control Technology (MACT) approach, an Electric Power Research Institute (EPRI) official said this week.
  
  Speaking at a Resources for the Future (RFF) seminar in Washington, Michael Miller, EPRI vice president of environment, said 150 micrograms (Mg) of mercury are currently being deposited in the U.S. on an annual basis; this would decrease to 142 Mg under a MACT program, but would drop even further, to 139 Mg, under cap-and-trade.
  
  In addition, the cost of MACT would be $10 billion, versus $2 billion for cap-and-trade. “So you get a larger reduction in mercury for less cost,” he noted. Miller was on a panel with Michael Murray, staff scientist at the National Wildlife Federation, and Paulette Middleton, president of Panorama Pathways, an air quality consultant who has done research for Environmental Defense.
  
  Miller said EPRI research indicates that U.S. deposition is dominated by sources outside the country, especially from Asia. EPR and Environmental Protection Agency (EPA) modeling reveals that of global total anthropogenic mercury emissions of 2,122 Mg/year, only 131 Mg emanate from the U.S. By comparison, Asia (especially China) is responsible for 1,138 Mg annually, followed by Europe (326), Africa (246) and South America (176).
  
  Miller said the large amount of deposition coming from outside the U.S. “limits the amount we can manage effectively from inside this country.” He added that while significant progress is being made in mercury control technologies, further testing on long-term performance is necessary before they can be deployed widely in the marketplace. He noted that some mercury is currently being removed from power plant emissions through controls for other pollutants.
  
  NMA has filed comments in favor of a phased-in national cap-and-trade program – for more information, visit NMA’s website at www.nma.org and click on the mercury link.

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  Bid by environmental groups to force BLM protection of potential wilderness dismissed by High Court

  The U.S. Supreme Court this week unanimously rejected a bid by a Utah environmental group to force the Bureau of Land Management (BLM) to limit off-road vehicle traffic in potential Utah wilderness areas.
  
  Writing for the court, Justice Antonin Scalia said forcing BLM to act would insert the court into the day-to-day operations of the agency. A ruling for the Southern Utah Wilderness Alliance (SUWA) “would divert BLM’s energies from other projects throughout the country that are in fact more pressing. While such a decree might please the environmental plaintiffs in the present case, it would ultimately operate to the detriment of sound environmental management,” he said.
  
  Writing further, Scalia said Congress never envisioned “pervasive oversight by federal courts over the manner and pace of agency compliance.” He said the land management agency has discretion to oversee lands being considered for wilderness designation, including allowing off-road vehicles there. He wrote the agency is doing what it can with “scarce resources and congressional silence with respect to wilderness designation.”
  
  The case centered on 14,830 acres of forested high desert land abutting Coral Pink Sand Dunes State Park that are being considered for wilderness designation. The park, located about 250 miles south of Salt Lake City near the Utah-Arizona border, is a popular destination for off-road vehicle users.
  
  SUWA had argued that BLM had an obligation to protect undeveloped western land from off-road vehicles. Justices were asked to clarify when a federal agency can be sued for failing to allegedly failing to follow a congressional mandate – in this case, to preserve the pristine quality of lands being considered for wilderness designation.
  
  An Interior Department spokeswoman praised the decision, saying it allows federal resource managers to “use their expertise to make day-to-day management decisions without unnecessary litigation.” Sen. Orrin Hatch (R-UT) said, “We’ve about had it in Utah with environmental groups trying to micromanage, through the courts, decisions that should be left to the professionals on the ground. Today, the Supreme Court has said, ‘enough is enough, let’s let the professionals do their jobs.’”

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  Illinois fertilizer plant to convert from natural gas to coal

Escalating prices for natural gas will result in conversion of the East Dubuque Nitrogen Fertilizer Plant to Illinois coal, say Royster-Clark Inc. and Rentech Inc. “This is necessary to keep the plant open because of escalating prices of natural gas,” Royster-Clark Nitrogen Inc. said.

The conversion will use advanced clean coal technology to co-produce fertilizer, ultra-clean Fischer-Tropsch diesel fuel, which will reduce vehicle emissions and electric power, the companies said. They said the conversion “will be a model for the nation to keep existing industry as well as help the agriculture sector.”

The East Dubuque plant is the last Illinois fertilizer plant, the highest paying employer in the Greater Dubuque area and supplies fertilizer to Midwest farmers. The conversion will mean keeping the existing 109 jobs, adding 122 more full-time jobs, plus 1,500 construction jobs during the two-year construction period, and 200 additional Illinois coal jobs.

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DOE carbon sequestration program adds partners

The Department of Energy’s (DOE) has added several new states and organizations to its Carbon Sequestration Regional Partnership Program (CSRPP). The program, which began last year, is a nationwide network of federal, state and private sector partnerships that have the goal of determining the most suitable technologies, regulations and infrastructure for future carbon capture, storage and sequestration in different areas of the country.

The new states added were: Virginia and Texas to the Southeast Regional Carbon Sequestration Partnership (SRCSP); Nebraska, Iowa, Missouri and Wisconsin to the Plains CO2 Reduction Partnership (PCO2RP); and Michigan and Maryland to the Midwest Regional Carbon Sequestration Partnership (MRCSP). The organizations added included: Ducks Unlimited Canada and the Institute for Wetland and Waterfowl Research Northern Prairie Wildlife Research Center to the PCO2RP; and Michigan State University, the University of Maryland, Western Michigan University, the Maryland Geologic Survey, AES Warrior Run Power Plant, the Maryland Energy Administration, DTE Energy, Alliance Resources Partners and Constellation Energy to the MRCSP.

With the new additions, the partnership now has leaders from 154 organizations spanning 40 states, three Indian nations and two Canadian provinces. For more information, visit DOE’s website at www.fossil.energy.gov.

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NMA generally supports draft mitigation guidance, but expresses some concerns

NMA this week said it generally supports the concept of off-site and out-of-kind mitigation where it is voluntarily proposed, but expressed concerns with the apparent trend toward mandating such mitigation projects as requirements for Clean Water Act (CWA) Section 404 authorizations.

NMA made the points in comments filed with the Federal Interagency Mitigation Workgroup’s (FIMW) on its Draft Federal Guidance on the use of Off-Site and Out-of-Kind Compensatory Mitigation under Section 404 of the Clean Water Act.

“NMA encourages and supports a federally coordinated effort toward a clear and concise mitigation policy,” the association said. “To the extent the Site/Kind Compensatory Mitigation Guidance moves the agencies in this direction, NMA is supportive.”

The association said it agrees with the concept of adopting a watershed-based approach to compensatory mitigation decision-making, saying it “can be beneficial to overall water quality and the environment. For example, the Site/Kind Guidance recognizes there are instances where on-site mitigation opportunities are limited and where off-site mitigation within the same or a designated watershed will provide more meaningful ‘environmental lift’ to the system.”

In addition, NMA said it also agrees with the guidance “that there are cases where it is environmentally preferable to deviate from strict adherence to the in-kind preference.”

In general, NMA said the Draft Site/Kind Guidance represents a “common sense approach to addressing impacts associated with activities authorized under CWA Section 404. However, we are concerned whether the guidance really achieves its goal of ‘summarizing and consolidating existing guidance on off-site and out-of-kind compensation.’” NMA said it is “concerned that the document lacks commitment of the relevant agencies that the Site/Kind Guidance represents the latest word on the subject of compensatory mitigation and therefore, supersedes all guidance which precedes it. Without such a commitment,” NMA said, “the Guidance will go unnoticed.”

Regarding bonding and deed restrictions requirements, NMA noted: “The guidance states that inclusion of long-term protection provisions, such as financial assurances, site protection mechanisms . . . should be considered. While NMA agrees that a bond, voluntarily posted, may be an acceptable tool for ensuring mitigation projects are completed, NMA does not agree with the (U.S. Army) Corps (of Engineers) practice of “double bonding”, i.e. requiring industry to post bonds in the amount estimated to ensure the proposed mitigation, notwithstanding another regulatory agency may have already required such a bond.”

NMA said the bonding and deed restrictions requirements are “overly burdensome” and create conditions that are prohibitively expensive or difficult to comply with – “NMA requests the Corps suspend the bonding requirements until such time as the Corps establishes the proper mechanisms for compliance and asses the availability of surety bonds for this type of obligation.” In addition, the Corps should “revise the guidance such that flexibility to consider voluntarily proposed restrictive covenants is maintained while refraining from making such requirements mandatory.”

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Appeals court affirms lower court decision on insurers’ CERCLA liability

The U.S. Court of Appeals for the Fourth Circuit last week affirmed a lower court ruling that government and private potentially responsible parties (PRPs) could not use provisions of the Resource Conservation and Recovery Act (RCRA) to sue insurance companies directly to recover costs incurred in conducting a Superfund site cleanup.

The action in South Carolina Department of Health and Environmental Control et. al. v. Commerce and Industry Insurance Company et. al. arose because of a Superfund cleanup conducted at a former fertilizer site operated by Stoller Chemical Co. in South Carolina. Stoller had obtained a RCRA permit for its operations; in doing so, the company obtained required RCRA financial assurance in the form of insurance policies from the defendant/appellee insurance companies. Stoller did not, however, have any insurance in place under the Comprehensive Environmental Response, Compensation, and Liability Act’s (CERCLA) financial assurance provisions; in spite of CERCLA’s explicit requirement, the Environmental Protection Agency (EPA) failed to issue any CERCLA financial assurance regulations.

In 1992 Stoller ceased operating the South Carolina site and later filed for bankruptcy. EPA and South Carolina subsequently initiated CERCLA proceedings against Stoller and other companies that had provided or transported fertilizer production materials for Stoller to obtain cleanup of the site. Corporate defendants agreed to clean up the site pursuant to a CERCLA settlement agreement with EPA and South Carolina. These PRPs then attempted to obtain reimbursement of their costs from the bankrupt Stoller company’s RCRA insurers, arguing that RCRA allowed for direct suit against insurance companies to recover the costs of cleanup, and thus the PRPs should be allowed to recover their CERCLA cleanup costs via direct suits against Stoller’s RCRA insurers.

The court held that while RCRA does allow for such direct actions against RCRA insurers, it is only to recover costs expended pursuant to RCRA, not CERCLA. In the court’s view, PRPs were attempting to have the insurance companies stand not only as RCRA insurers but also as CERCLA insurers, despite the fact that none of the companies had ever provided Stoller with any CERCLA financial assurance coverage.

Declaring that RCRA is a “preventative” statute, the appeals court noted that one of RCRA’s purposes is to prevent sites from becoming Superfund sites. The court cited with approval the Supreme Court decision in Meghrig v. KFC W., Inc.: “…RCRA is not principally designed to ‘compensate those who have attended to the remediation of environmental hazards’.” Compared to RCRA, CERCLA “serves goals that are remedial and curative” the court declared.

 Given the differing (albeit complementary) purposes of the two statutes, the court found that liability coverage issued pursuant to one statute could not be transformed into insurance for liability under a separate statute. The court ruled: “In seeking to use the RCRA provision [for direct suit against insurers] to assert their CERCLA claims directly against the insurers, the appellants are undertaking to circumvent CERCLA’s direct action provision.” Such attempts, the court said, “…must fail because nothing in the statutes or legislative history of either CERCLA or RCRA indicates that Congress intended to authorize a party to rely on the RCRA [direct suit] Provision to the exclusion of the more specific statutory requirements of CERCLA.” Op. at 17-18.

 There is as yet no indication of whether any party will seek rehearing before the 4th Circuit or petition the Supreme Court for certiorari.

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Newsbits

Joy Global Inc. and Oldenburg Group Inc. say they have signed a letter of intent authorizing Joy Mining Machinery and P&H Mining Equipment to become the exclusive distributor for selected Oldenburg Group products and related parts and service in certain countries. The letter of intent provides for further discussions between the two companies prior to a formal contract and formation of an alliance between the . . . . Peabody Energy has signed a definitive agreement to purchase a 25.5 percent interest in the Paso Diablo Mine in Venezuela from RAG Coal International AG for $37.5 million. The transaction is expected to be accretive to earnings in the first 12 months. Paso Diablo is a 6.5-7 million tonne-per-year operation that exports coal for electricity generators and steel makers in North America and Europe . . . . Kennecott’s Greens Creek Mine in Alaska has received a certificate of special recognition from David D. Lauriski, assistant secretary of labor for the U.S. Mine Safety and Health Administration, for working more than 600,000 hours without a lost time injury from Jan. 1, 2003 through Dec. 31, 2003. The Greens Creek Mine is located on Admiralty Island near Juneau and produces silver, zinc, gold and lead . . . . Secretary of Energy Spencer Abraham recently commissioned a new $215 million West Virginia atmospheric-pressure circulating fluidized-bed combustion plant that will serve as the anchor tenant for a new “Eco-Park” site in Rainelle, WV. The project is a joint venture between DOE and Western Greenbrier Co-Generation LLC, and will use nearby waste coal to generate electric power with ultra-low emissions.

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