factors affecting coal production and use

Chapter IV

FACTORS AFFECTING

COAL PRODUCTION AND USE

Chapter IV.— FACTORS AFFECTING COAL PRODUCTION AND USE

TABLES

13.

14.

15.

16.

17.

18.

19.20.21.

14.

15.

16.17.

18.

F I G U R E S

S u l f u r D i o x i d e . . . . . . . . . . . . . . . . . . . . 1 6 3

Chapter IV

FACTORS AFFECTINGCOAL PRODUCTION AND USE

Chapter I I shows a range of projections for coal use. Actual growth will depend on thedecisions of users and producers. The major factors affecting these decisions are the cost,convenience, and availability of coaI relative to competing fuels.

Unlike oil and gas, coal will not be subject to absolute resource constraints or the result-ing scarcity-induced price increases over the next few decades. But the availability of coaI

depends on much more than its presence in the ground. The legal right to mine a specific re-serve must be established through ownership or leasing arrangements, A mining companymust decide whether it can sell its product profitably for the life of the mine. A number ofstudies and extensive planning must be carried out, and a host of permits secured to complywith various reguIatory processes. Arrangements must be made for adequate capital, equip-ment, and labor. Once mining starts, recent laws and reguIations (e. g., the Surface Mine Con-trol and Reclamation Act (SMCRA) and the Coal Mine Health and Safety Act (CM HSA)) affectmethods and costs. Labor-managernent conflicts can Iimit coal availability and colorcustomers’ perceptions of future reliability. Transportation of coal is a problem in the Eastand will demand attention in the West,

On the demand side, the Clean Air Act makes coal combustion more complicated andcostly and presents new problems of waste disposa1. SmaIIer users may have difficuIty i nphysicalIy accommodating the necessary equipment or obtaining regular coal supplies, Con-verting current oi1- and gas-f i red equipment to coal wiII be especialIy difficult. Public opposi-tion to particular sites for surface mines or coal-burning facilities may cause substantialdelays or force expensive plant modifications. Other regulatory requirements do not imposeconstraints on local combustion as severe as those of the Clean Air Act, but their cumuIativeimpact will also make combustion more complicated and costly.

The factors Iisted above increase either the cost or the difficulty of producing and usingcoal. (The environmental, health, and social benefits from these restrictions are discussed inchapters V and VI. ) But powerful incentives are at work, on the other hand, for users to turnto coal. Given favorable market conditions, many of the potential constraints on coal maynever materialize. Others, such as Government regulation, are not directly subject to marketpressures and may slow the growth in coal demand, especialIy in very high-growth scenarios.

This chapter analyzes the factors that affect the components of the coal system out-lined in chapter I I I Analysis provides a framework for policy discussion of the problems ofincreasing coal output and consumption and for determining the effect on coal developmentof measures designed to ameliorate its negative impacts.

COAL AVAILABILITY

Coal is plentiful enough on a national basisto meet even rapidly growing demand. As de-scribed in chapter 11, a massive increase ofWestern coal production is underway becauseof its low production cost and low-sulfur char-acteristic. Unlike Eastern reserves, however,which are almost all privately owned and moreaccessible, about 65 percent of all Western

reserves are owned by the Federal Governmentand can be mined only under Federal lease.Much of the remaining Western coal is ownedby States or Indian tribes. As more than half ofall domestic coal reserves are found in theWest, Federal leasing policy is an importantfactor in determining long-run coal availabili-ty. Federal leasing law is analyzed in chapter

109

110 The Direct Use of Coa/

VI 1. This section discusses the eftect of currentleasing policy on Western coal production.

The Interior Department’s Bureau of LandManagement (BLM)–the agency responsiblefor administering Federal leases–reports thatabout 5 percent of federalIy owned coal re-sources has been competitively leased. Thisnow represents 17,3 bill ion tons of known coalreserves. ’ About 9 billion tons is subject toexisting applications for preference-right(noncompetitive) leases, obtained when a pros-pector demonstrates that commercial quan-tities of coal have been found in an areapreviously not known to have any.

Since 1971 a Federal leasing moratorium hasbeen imposed and the amount of Ieased re-serves has remained relatively constant (only30,460 additional acres leased). Short-term (3-year) leasing criteria were developed to allowcurrent coal producers to obtain mining rightson adjacent Federal lands, but a successful suitby the National Resources Defense Council(NRDC) resulted in the criteria for short-termleases being Iimited to those required to main-tain an existing operation or to meet existingcontracts. The moratorium was imposed be-cause most leaseholders were not mining theirleases. This gave rise to the charge that Federalcoal reserves were being held primarily forspeculative purposes. I n the mid-1 970’s, coalproduction from leased reserves stepped upconsiderably as rising coal prices and increas-ing demand made Western coal economicaland attractive. Western coal production hasmore than t r ip led s ince 1971. About 166milIion tons were mined there in 1977. One re-cent study reports that total output from the67 active Federal coal leases in 1977 was 52.4mill ion tons, a 241-percent increase since1973. ’ Those leases represented about 14 per-cent of the total of all Federal leases. Federalcoal lands under lease contributed about 31

‘An Analysis of Exist ing Federal C o a / L e a s e s(Washington, D C U.S Department of the Interior,Bureau of Land Management, 1976), p 6

‘Reserve Data System Report No. 2A (U.S. Departmentof the Interior, Geological Survey, Dec 31, 1976).

‘James Cannon, Mine Control: Western Coal Leasingand Development (New York, N Y.: CounciI on EconomicPriorities, 1978), p 7

percent of Western coal production in 1977.Coal production on Indian lands doubled be-tween 1973 and 1977 to almost 23 miiIion tons.

Because coal Ieases are often not contig-uous, some operators have found it difficult toassemble the 20 to 30 years’ worth of reservesneeded for a mine large enough to be econom-ical. The moratorium and the NRDC suit havecreated uncertainty among operators, whomay defer opening a new mine until they canlease Federal coal adjacent to their currentholdings. Some operating mines must alsoknow soon whether they will be allowed tomove into adjacent areas or should plan toclose down when present leases are exhausted.Regardless of what the Carter administrationchooses to do about leasing, prolonged uncer-tainty is a constraint on rapid Western coal ex-pansion. A continuation of the moratoriumpast 1980 will affect coal development if de-mand approaches current forecasts. In anycase, if leasing were to be resumed, regionalenvironmental impact statements would haveto be prepared before mining could begin, aprocess that may take more than a year. Addi-tional delay in the form of court challenges torenewed Ieasing can also be expected. Despitethese constraints, sufficient Western coal hasbeen leased to meet anticipated increases indemand through the 1980’s. However, current-ly leased reserves would not be adequate tosupport expected coal production levels in the1990’s. The long Ieadtime required to put amine into operation requires a resumption ofleasing in the early 1980’s to meet these levels.

There is l ittIe chance that a significantnumber of new leases will be offered beforethe 1980’s, according to the best available in-formation. ’ The terms of any future leasing areunresolved. If leasing is reinstituted, the newcriteria may limit the amount of coal avail-able. If the administration chooses to initiate aleasing policy soon, this coal would probablybe commercially available after 1985.

“’Completion of Interior’s Coal Leasing Program Tar-geted for Mid-1980,” U S Department of the InteriorNews Release, Oct. 25, 1977,

Ch. IV—Factors Affecting Coal Product/on and Use ● 111

INDUSTRY PROFILE

Coal is mined by companies ranging frommajor corporations to one-family operations.The future of the coal industry depends inlarge part on how these companies react tochanging conditions. This section describesthese companies and how they market theircoal. The competitive situation in the industryis examined. FinalIy, the mechanisms for set-ting prices for coal are analyzed.

Ownership and Markets

The coal industry has evolved from a largenumber of small- and medium-sized independ-ent companies to a smalI number of very largecompanies (most of whom are subsidiaries)and a large number of smalI independentsMost major, noncaptive producers are nowowned by energy companies or conglomerates.Of the top 15 coal producers in 1977, as shownin table 13, only two were independent. Fivewere captives of steel companies or utiIities,three were subsidiaries of conglomerates, andfive were owned by integrated energy com-

panies. Sixteen years ago, all major coal com-panies were independent except for those fewowned by industrials.

The terms “commercial” and “captive”arose in an earlier time when companies couldbe differentiated by their markets and whethertheir product competed freely. “Commercial”is a term that no longer means quite what it didin the 1930’s and 1940’s. Then, a commercialoperator sold to a variety of customers andoften in several markets. As the utility marketascended after 1950, big operators negotiatedlong-term contracts with major uti l it ies, atrend that is stilI increasing. I n 1976, 86 percentof all coal shipped to utilities was under long-term contract. Sometimes these contracts span20 years or more and, in effect, turn “commer-cial” coal into dedicated or “capt[ve” coal, asthe coal no longer competes in an open mar-ket. Such coal is in market competition onlywhen the buyer is evaluating bids.

Most modern coal-supply agreements con-tain price-escalation provisions that allow up-

Table 13.—Top 15 Coal Producers and Parent Companies, 1977

1977Coal company Tonnage Statusa Controlling company

Peabody Group .,.. . . . . . . . . . . . . . . . . . . . . . . . 65,425,088

47,994,00028,127,16116,749,85914,309,04913,959,00012,600,000

11,988,90610,609,97010,298,63010,223,0009,773,7009,720,4478,905,2038,202,640

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278,886,654

c

eceise

uscuue

Ie

112 ● The Direct Use of Coa/

ward price adjustments to offset the seller’scost of infIation, overhead, new labor agree-ments, and taxes. Some contracts have “mar-ket reopener” provisions, which allow eitherparty to reopen the contract’s negotiated pricewhen the market price for substantially similarcoal sold from relevant market areas rises orfalls. Typically, a coal supply agreement willcontain a force majeure cIause, which excuseseither party from meeting its obligations whenunforeseen or uncontrolIable events — such aslabor disputes, equipment breakdowns, faultsin the coal seam, or new laws — frustrate per-formance. Most long-term contracts run fullterm with various price adjustments along theway.

Coal is also sold in a “spot” market. Unliketerm contracts, spot sales are totally thecreature of short-term, supply and demandforces, Most spot-market suppliers are smallercompanies operating small mines, thoughsome big mines sell excess production thisway. Many spot sellers enter the market whenprices rise. Between 1973 and 1978, the num-ber of mines increased 33 percent from 4,650to almost 6,200 as the average price per tonrose 140 percent from $8,53 to $20.50. Spotprices rose faster and went higher than con-tract coal because of the perceived fuel short-age created by the 1973 OPEC embargo andother factors, Because many long-term con-tracts have reopener clauses pegged to spotprices, industrywide coal prices can be pushedup by very short-term or unique price pressuresin the spot market. Although reopener clausesare supposed to work both ways, recent exper-ience suggests that contract prices flow upmore readily than down.

Captive producers historically were orga-nized as wholly owned subsidiaries of steel-maker, auto manufacturers , or ut i l i t ies toassure the parent company of a steady supplyof a certain kind of coal. UsualIy, most cap-tive-produced coal was (and is) sold to theparent company, In 1973, utilities mined about8.9 percent of their total burn; in 1977, 14.5percent. Many of the giant new strip mines inthe West are uti l ity captives. The FederalPower Commission (now absorbed into the De-partment of Energy (DOE)) estimated “cap-tive” (utility) coal production will triple from

1975 to 1985, reaching 145.1 million tons peryear, about 18.8 percent of the projected 770mill ion tons of coal to be consumed by theelectric utilities in 1985.”5 DOE estimated thatutilIties control led 11.6 biIIion tons of re-coverable coal reserves as of December 31,1975.

A utility reaps many advantages from min-ing its own coal, Supply is made more depend-able. Protection is gained against noncost-related price increases. Tax shelters are avail-able, Leverage can be exercised in negotiationswith independent coal suppliers, Prices may beadjusted to achieve the “potential for greaterreturn on equity than afforded by regulatedutiIity operations.”6

The economic implications of this “verticalintegration’ in the coal industry are disputedand have not been studied adequately, Util-it ies argue that vertical integration allowsthem to effect supply reliabiIity and cost con-trol — both to the benefit of the consumer, Inreturn, critics say that utilities sometimes holdback their captive production in order to just-ify rate increases. A second charge is that util-ities have little incentive to keep down produc-tion costs in their captive mines as long as theycan be passed through to electricity con-sumers. Consumer advocates say some utilitiespay more for their own coal than do utiIitieswithout captive production, Utility profits areincreased through this inflationary process, itis said. Further analysis is beyond the scope ofthis report,

Horizontal integration, the ownership ofcoal companies by companies that produceother forms of energy, has received more at-tention than vertical integration. In 1963 GulfOil took over Pittsburg & Midway Coal Co., be-ginning what became substantial energy-com-pany (oil and gas producers) investment incoal-producing companies and reserves. TheCongressional Research Service reported that77 percent of all coal producers mining more

Ch. /V—Factors Affecting Coal Production and Use 113

than 3 million tons annually were controlledby noncoal companies. 7

Heated debate over the significance ofenergy-company ownership of coal producersand reserves was sparked by the unprec-edented increase in coal prices, which ac-celerated after the 1973 OPEC oil embargo.Has horizontal integration of energy produc-tion affected coal supply, price, profits, invest-ment, competitiveness, and markets? Did oil-owned coal suppliers, for example, raise theircoal prices after the embargo to keep high-priced oil competitive with coal in the Atlanticcoast market? Does oil and gas ownership ofcoal reserves mean anything for the future?Conclusive answers to such questions cannotbe offered because the data are unavailable.Some of the needed information may be con-sidered proprietary by coal subsidiaries andparent corporations. It is often difficult toisolate the variable of oiI/gas ownership as be-ing the only cause of coal production andprice patterns, as many other factors are alsoat work. However, the general scope of hor-izontal ownership can be sketched,

Coal production by oil and gas companysubsidiaries totaled 166.6 million tons in 1976(table 14), or 25 percent of national produc-tion. Of this, about 125 million tons was steamcoal, As much as 35 percent of noncaptivesteam coal is currently mined by oil- and gas-owned coal producers.

Energy-company production is expected toincrease its share of the total in the yearsahead. All horizontalIy integrated producersplan to increase production. In addition, anumber of other major energy companies,such as Sun Oil Co,, Kerr-McGee, ARCO, ShellOil Co., Natural Gas Co., and Mobil Oil, a are inthe process of opening large surface mines inthe West.

Horizontally integrated energy companiesaccount for about 40 percent of all planned


Table 14.—Oil and Gas Ownership of Coal Producers(In millions of tons produced, 1976)

1976Coal company Parent company production

Total

1976

55.923.118.017.69.78.07.95.25.23.93.62.82.11.0

.9

.5

.4

.4

.3

.1

166.6

Ch. IV—Factors Affecting Coal Production and Use . 115

Table 15.— New Steam-Coal’ Capacity of Horizontally IntegratedEnergy Companies by 1986 (In millions of tons)

(Continued)

State Tonnage State Tonnage

17,6

5.62

7.6

45.07.2

30.024.0

5.05.0

30.08.0

19,014.0

4.0

191.2

335.75

SOURCE 1978 Keystone Coal /ndustry Marrua/

Ch, /V—Factors Affecting Coa/ ProductIon and Use . 117

Patterns of reserve ownership may shape thefuture structure of the coal industry, especiallyif Federal leasing does not resume soon. Re-serve ownership affects major market factors:supply, price, and the ability of potential coalproducers to enter the field, Six of the top tenreserve holders are wholly or partially ownedby energy companies: Continental Oil, EXXON,El Paso Natural Gas, Standard Oil of Califor-nia, occidental Petroleum, and Mobil. Energy-company representatives argue that coal re-serves are widely dispersed, that the share oftotal reserves controlled by oil companies isnot substantial, 4 that large reserve holdings arenecessary for long-range development plans,and, finally, that supply, price, and competi-tion have not been adversely affected byenergy-company ownership. As the FederalGovernment sti l l controls most reserves, in-dustry spokesmen say any potential anticom-petitive situations can be control led byFederal policy.

The research has not been done that wouldconfirm or deny the actual market implica-tions of coal-reserve control by horizontally in-tegrated energy companies. The major chargeagainst energy companies has been that byspeculating and waiting higher coal prices,they did not develop their Western reserves inthe late 1960’s and early 1970’s. Had Westerncoal been readily available in these years,prices might not have increased. It is worthnoting that the major purchasers and Ieasers ofcoal reserves in the last decade have beenenergy companies. Conglomerates do not havesignificant holdings. As energy companies addto their reserves, it may be increasingly dif-ficult for new entrants to acquire enough long-term reserves to justify the high start-up costsof mining. Smaller companies may not be ableto compete with bigger companies because oftheir capital constraints.

It is worth noting that the major purchasersand Ieasers of coal reserves in the last decadehave been energy companies. Other conglom-erates do not have significant holdings.

118 ● The Direct Use of Coal

Kentucky coal does not sell in the Northeast.Further, high-grade metallurgical coals do notgenerally compete against steam coals. Cap-tive coal, moreover, does not generally com-pete against noncaptive coal. ” Similarly,1 977’s 54 million tons of export coal – most ofwhich was metallurgical — does not competedomestically, except when foreign demandslumps. A true assessment of concentration inthe coal industry must disaggregate produc-tion data and look at concentration in muchmore precisely defined markets.

DOE estimated that the top four noncaptivesuppliers will provide about 47 percent of newnoncaptive, electric utility supply now undercontract in 1985.20 The top eight noncaptiveproducers will supply about 71 percent of thistonnage. Production from the new key coalStates, Wyoming and Montana, will be moreconcentrated: 70 percent for the top four and92 percent for the top eight.21

The long-term contracts discussed abovealso bear on competition. 1 n effect, these con-tracts reduce both the real amount of coalavailable in the marketplace and the number(and needs) of customers. The Federal TradeCommission noted:

In m a n u f a c t u r i n g i n d u s t r i e s , p r o d u c t i o nconcentration is also an indicator of the pres-ent supply alternatives open to potential buy-ers, If a firm produces 10,000 units of outputper year, it can be assumed that up to 10,000units are available to any qualified buyer. Thisis not the case in the coal industry, Due to theprevalence of long-term contracts, the annualproduction of a coal company may not be avalid measure of the quantity of coal availableto potential buyers from that producer. 22

These contracts account for about 86-per-cent of coal’s utility sales. With some excep-tions, once a contract of this sort is concluded

Ch. IV—Factors Affecting Coal Product/on and Use ● 119

coal producers, like much of American bus-iness, use “outside” boards of directors toguide corporate policy. Directors are oftenchosen because their expertise or primary affil-iation will help a company do business prof-itably. Many mining companies and manufac-turers include representatives of major finan-cial institutions on their boards Major stock-holders—which may include families, f inan-cial institutions, and other corporations — arealso represented. Direct interlocks — where oneindividual serves as a director of at least twocorporations — are common between a coalproducer and a capital supplier. One coal pro-ducer may be indi rect ly inter locked withothers when a director of each sits on theboard of a third corporation. Indi rect in-terlocks among coal producers, coal con-sumers (util it ies and industrials, especially),and capital suppliers are common. It is alsocommon to find representatives of major fi-nancial institutions sitting on the boards ofcompeting coal producers.

Distribution of voting rights differs from cor-poration to corporation. I n those cases where asingle family does not dominate a company,bank trust departments, insurance companies,and mutual funds often own the biggest blocksof stock.2 G Where stockownership is dispersed,holdings below 5 percent can constitute cor-porate control in some intances. If a singlecompany — a bank, for example— owns sub-stantial voting rights in several coal producers,some analysts argue that the potential for anti-competitive behavior is present.

Consolidation Coal –the Nation’s secondlargest coal producer– is fairly typical of theownership patterns among energy-owned coalproducers Consol is a subsidiary of Continen-tal Oil. Continental’s board was tied to 12 coal-reserve holders or coal producers, 9 coal con-sumers, and 20 capital suppliers through atleast one indirect director interlock as of1 9 7 6 .28 Continental shared a di rector withBankers Trust of New York, Continental I l-I inois, and Equitable Life Assurance, (Equi-table is a major stockholder in Peabody Coal,

the Nation’s biggest coal producer and fourthlargest reserve holder. ) Seven of the 20 capitalsuppliers were among the company’s top 20stock holders .29 Continental’s biggest stock-holder, Newmont Mining Company (3.29 per-cent) i s also the pr incipal stockholder inPeabody Coal (27.5 percent). Capital supplierswith whom Continental shares a director aremajor stockholders in other leading coal pro-ducers and reserve holders.30

It is fair to ask a simple question at thispoint: What do these inter locks mean? Thefairest answer is equally simple: We are notcertain. The research needed to confirm ordeny the significance of this ownership net-work has not been done. Although the poten-tial for antitrust abuse exists where corpora-tions with common interests are interlocked,no coal industry case study has been done todetermine whether this potential for abuse hasbeen used. Similarly, the implications of coal’sstock holding distribution have not beenstudied.

— — .


resources necessary to meet production goals. dented level of profitability in the mid-197C)’sHowever, if the realized rate of return does not was due less to rising production than to themeet investor expectations, capital is likely to’ price increases that followed the OPEC em-flow into noncoal investments. Energy com-panies and conglomerates can choose betweenalternative investments whereas a nondiversi-fied coal company cannot. It is possible thatleading coal producers might attempt to en-courage price increases and maximize theirrates of return by regulating supply. Deregula-tion of—and higher prices for—oil and gasshould lead to higher coal prices, although theincreases may not be identically proportional.Higher prices should encourage coal invest-ment and enable operators to spend more onhealth and safety, environmental protection,and community improvement.

The interaction among price, productioncosts, profit, and capital investment is centralto expanding coal supply. The relationshipamong these factors changed dramatically inthe 1970’s. All rose substantially over pre1970levels, but production did not rise propor-tionately and productivity fell. The price perton quadrupled between 1968 and 1975 whilelabor costs doubled in that period. ” The unitlabor cost share dropped from 58.5 percent in1950 to 20,3 percent of per ton value in 1974. Itprobably amounts to 25 to 30 percent of valuetoday due to increases in wages and benefitsand the leveling off of the coal price rise. Ris-ing prices helped boost industry profits. Coal’sreturn on net worth exceeded 11 percent onlyonce in the 1950-73 period, but it approached30 percent in 1974 following the OPEC embar-go. ” From 1971 through 1974, net coal incomeof 24 leading coal producers rose 298 percentfrom $128.4 million to $639.5 million, most ofwhich came in 1973-74. Coal’s unprece-

bargo and to a temporary surge in worldwidedemand for met coal.

A precise picture of the financial status ofthe industry is difficult to develop becausemuch of the necessary data has not been avail-able to the public. Parent companies have notbeen required to separate financial data fortheir coal subsidiaries in their reports to theSecurities and Exchange Commission, A checkof the financial data for the Pittston Corp.(primarily a West Virginia-based metallurgicalcoal producer) and North American Coal (aneastern producer of met and steam coals) addscase-study data to the gross statistics notedabove (see table 17). Despite declining produc-tivity and slipping production, both companiesrecorded increased net income after 1973. Netincome per employee increased in both cases,suggesting that income productivity and laborproductivity do not necessarily coincide. Be-tween 1970 and 1977, Pittston’s net income peremployee rose 252 percent and North Amer-ican’s gained 73 percent (current dollars). Con-solidation Coal, the second biggest coal pro-ducer and a subsidiary of Continental Oil,showed coal revenues being five times greaterin 1977 than in 1970, although revenues for1 9 7 5 t h r o u g h 1 9 7 7 w e r e r e l a t i v e ly u n -changed. 35

Return on investment and profits slacked in1978 because of the coal strike and demandsoftness for certain coals. For most companies,this should prove to be a temporary phenome-non.

Ch. 1 V— Factors Affecting Coal Production and Use “ 121

Table 17.—North American Coai and Pittston Corporations Profitability and Productivity

1970 1971 1972 1973 1974 1975 1976

LABOR PROFILE

122 The Direct Use of Coa l

never do. Many are highly skil led; others underground mines. The perspective of allaren’t. Their work environments range from UMWA presidents has been that of the deepair-conditioned, bucket-seated dragline cabs miner. This experience has shaped coal’s col-to 20-inch coal seams where the machine oper- Iective bargaining from the beginning.ator lies nearly on his back most of the day.Most coal labor– about 160,000 persons— be-long to the United Mine Workers of America(UMWA), which sets many of the wage andbenefit standards for the entire industry. Sev-eral thousand belong to the Progressive MineWorkers (PMW), Southern Labor Union (SLU),Operating Engineers, and other unions. Morethan 40,000 probably belong to no union at all,either from choice or lack of opportunity.

Important differences are found betweenthe two groups. Accident frequency, for exam-ple, is significantly lower for surface miners,although some kinds of surface mines are lesssafe than some deep mines. Surface miners aregenerally older, work more days annually,strike less, and are paid more than their under-ground counterparts. The average age of mostUMWA deep miners was 35 in 1976 comparedwith 41 for most UMWA surface miners. 37 I n

Photo credit: Douglas YarrowLast shift comes out at Eccles #5 before the 1977 contract strike

Ch /V—Factors Affecting Coal ProductIon and Use ● 123

“Jean M Brett and S t e p h e n B G o l d b e r g , WildcatStrikes In the Bituminous Coal Mining /ndustry A Pre/im-inarv Report (Northwestern U nlverslty, 1978), p 23

“Data suppl led by BCOA40 Don R Richardson Associates, A Survey of W’est

V{rginla Coal Miners, 1977, p 26“OTA made these estimates based on data supplied by

BCOA and MSHA

124 The Direct Use of Coal

Figure 14.— Distribution of Employees by Annual Earnings at Deep and Surface Mines

Number ofemployees

35,000

30,000

25,000

20,000

15,000

10,000

Deep Mines

1976

1975

Surface Mines

● ● ● ● ● ● 1976

— 1 9 7 5

SOURCE Income data supplled by the Bltumlnous Coal Operators’ Assoclatlon, 1978

Earnings

Ch. I V— Factors Affecting Coal ProductIon and Use 125

Figure 15. —Distribution of UMWA Employees by Age—All Mines’ 1974-76

Number ofemployees

25,000

20.000

15,000

10,000

5,000

0 Age

few cases of moving eastern miners and minemanagement to the West have not been verysuccessfuI.

The fourth and perhaps most significant dis-tinction is unionization Those who have notspent time in the UMWA coal fields have ahard time understanding the intensity of theminers’ feeling for UMWA. Whether they aredisgusted or delighted with its performance,they tee] it is theirs, built by them to serve theirinterests As harsh as its internal critics are,most believe that unionization is the onlything standing between them and the coalcompany. ”

Non-UMWA miners are located principallyin southern Appalachia (southwest Virginia,east Kentucky, and east Tennessee) and westof the Mississippi Few demographic or attitu-dinal data exist about them. Often they makeas much money as — or more than — UMWAminers. This relatively recent phenomenon wasmade possible by the higher profitability ofmining after the OPEC embargo. Most non-UMWA mines are relatively new, They do notcarry pension obligations to older miners andret i rees that UMWA-organized companiescarry Few of their workers have even retired,and many of the smalIer, non-organized com-panies have small pension obligations, if any.

126 The Direct Use of Coa/

In big, non-UMWA mines health insuranceplans and other benefits are comparable toUMWA standards. In a few western surfacemines, the benefits are more comprehensive,What many nonunion miners lack contractual-ly are job protections, a grievance procedure,and some safety rights (including the right toelect a safety committee and the right of theindividual to withdraw from danger). Non-

UMWA miners also lack a national voice. TheUMWA, whatever its tailings, speaks for the

Nation’s coal miners in Washington, D. C., Non-UMWA miners are not represented, althoughthey benefit from legislation or regulatory in-itiatives UMWA is able to push through.

The extent of unionization varies in theWest. The majority of mines in the Carbon andEmery Counties area of Utah is organized byUMWA. On the other hand, only the captiveWyodak Mine associated with the WyodakPower Plant in Campbell County, Wyo., isorganized (International Brotherhood of Elec-trical Workers (1BEW)). North Dakota minesare organized by several unions. ConsolidationCoal and North American Coal have UMWAcontracts. Mines of the Knife River Coal Min-ing Company are organized by the PMW. TheOperating Engineers, the predominant union inColorado, does not represent mines in NorthDakota. The captive Baukol-Noonan Mine isorganized by the IBEW. The UMWA is a majorforce in parts of the West. It is the dominantunion i n Utah underground mines. I t repre-sents mines on the Navajo Reservation. It haslost some of its power to other unions. Only2,000 to 3,000 surface miners are UMWA-organized in the West. Most Western Stateshave right-to-work laws that limit unionization.

These demographic and social indicators re-flect major structural changes that occurred in

the coal industry over the last decade. In theseyears, surface production moved ahead of un-derground production. The locus of nationalcoal output moved westward, Oil companiestook over major coal producers, and most oftheir effort centered on developing westernsurface mines. The proportion of coal workerswho are UMWA members dropped from be-tween 75 to 80 percent in the late 1960’s toaround 65 to 70 percent today .44 UMWA ton-nage, however, has fallen to about 50 percentof the total production owing to the increasein nonunion, surface-mined coal.

Still, the heart of the coal industry is in theEast. And it is there that one must go to explainlabor-management instabil ity and the atti-tudes that cause it. The 1960’s allowed man-agement to become complacent about itslabor needs. Mechanization and layoffs meanta large pool of experienced miners. Wildcatstrikes were infrequent because of the laborsurplus and organizational policy. Coal pro-ducers had few incentives to provide betterworking conditions. Their ranks were not hos-pitable to policy innovators. An illusion set inthat all was well. It deprived management andlabor of a vital spirit that both need for con-tinued health. Industry found that its lowermanagement consisted of men too old, tootimid, or simply too set in their ways to be-come good leaders. But as long as coal de-mand stagnated and prices were more or lessconstant, the industry’s stabiIity was not upset.

Ch. III--Facfors Affecting Coa/ Production and Use . 127

COLLECTIVE BARGAINING: A STORMY HISTORY

Labor relations in the U.S coal industry havebeen characterized by suspicion, acrimony,violence, and, occasional I y, cooperation.Throughout this century the unwillingness ofminers to accept the conditions of their workhas led to chronic unauthorized work stop-pages, turmoil, and prolonged contract strikes.The number, duration, and cost of wildcatstrikes have increased since 1970.45 The ab-sence of equitable and stable labor-manage-ment relationships has hampered coal produc-tion and supply reliabillty. Coal miners’ in-come, benefits, and health care systems, havebeen cut back. On the other hand, many min-ers say wiIdcat strikes are often the only way toforce an employer to deal quickly– and pre-sumably favorably— with one of the miners’concerns. The roots of today’s conflict Iie deepin the past. But it is simplistic to believe thatcurrent practices do not contribute. Many ofthe sources of discontent are deeply em-bedded in coal economics and managementpolicies These may not change easily. Finally,even though U.S. energy policy counts heavilyon coal, the advisabiIity of Federal interven-tion in the industry’s labor-management rela-tions is not clear

Collective bargaining and labor relationsgenerally have been shaped by the economicsand structure of the industry. How miners weretreated by operators was often determined byhow operators treated each other and howcoal was treated in the marketplace. Free en-terprise has never produced stable labor re-lat ions in coal . Competi t ion, rather thanst rengthening industry stabi l i ty , tended todestroy it. Chronic labor unrest has been re-

Iated to the cost-cutting pressures of competi-tion amid demand stagnation. Periodically,coal st r ikes erupted and dragged on formonths or even years. Strikes of national con-sequence occurred in 1902, the early 1920’s,the late-l 940’s, and the mid-1 970’s. Often theyoccurred when demand was strong. When de-mand surged and high prices encouragedmarginal operators to begin mining, the mar-ket was quickly oversupplied and a slump soonfollowed Miners felt it opportune to presstheir demands during these booms, and whendemand slacked, they struck to maintain theirgains. Understanding the boom-bust cycle asthey did, operators resisted labor’s demandsduring both the short booms and the longbusts.

Apart from market factors, a second sourceof labor-management strife originates from theattitudes and conditions resulting from thenature of the mine workplace and the workprocess, The work envi ronment of under-ground coal mining is unique. Danger is inher-ent, although control I able. Work has beenmade easier by mechanization, but the work-place has not been made more pleasant.Modern coal miners end their shifts wet, dirty,often chilled, with mine dust embedded inevery pore. Often they work on their knees;standing or kneeling in cold, oily water forhours at a time; listening to the “working” ofthe mountain above them. A roof that lookssafe may double-cross them in a second. Wari-ness and caution are essential.

Unlike assembly-line work, mining requiresworkers — as individuals and as part of an in-terdependent team — to control much of theirown work. Miners must constantly adapt theirwork to ever-changing environmental condi-tions. The mining process requires a good dealof individual judgment and peer-coordination.The pace of work is determined to a great ex-tent by the miner’s minute-by-minute evacua-tion of physical conditions and machinery. Be-cause so much of mining is a matter of judg-ment, miners and section supervisors often dis-agree. Disputes stem from the pace of work;who is to do what; what needs — or doesn’t


need —to be done; what precautions must betaken; and what kind of work miners can legit-imately be asked to do. Miners and foremendevelop routines of interaction that are bothadversarial and cooperative. Both take pride in“running” a lot of coal during their shifts. Butthis shared goal is often subverted when man-agement asserts authority in ways that minersperceive to be arbitrary or as violating their jobrights. UMWA miners have developed elabo-rate work rules and codifications of their rightsto protect themselves from perceived manage-ment transgressions. If one of the commonlyunderstood rules is breached, miners closeranks and resist.

Workplace-generated attitudes lend them-selves to constant confrontations. First, minersare proud of doing useful and dangerous work.Pride is Iinked to self-confidence; both arecombined with a certain trucuIence against be-ing told how to do their work. Second, thedanger of the workplace readies miners for tur-bulent conflict outside of it. Third, the workprocess trains miners to work collectively. Thisinterdependence carries over to conflicts withmanagement. A wrong done to one miner is in-terpreted as a threat to all. Shared dangers andinterdependent work produce group cohesionwhen the group is faced with a common threat.It creates a “them and us” attitude. It enablesminers to stick together through prolongedstrikes.

The social environment of the coalfields is athird factor contributing to the volatility oflabor-management relations. The basic form ofsocial organization in coal’s early years wasthe company town. In these communities,mine operators owned or controlled every-thing— housing, medical care, schools, thelaw, churches, and commerce. Until the 1930’sand 1940’s, miners were often forced as a con-dition of their employment to accept wages inscrip instead of U.S. currency and to buy onlyat the company store. The miner’s perceptionof work victimization was compounded by thissame perception in a company-controlledcommunity. The work routine regulated coal-camp existence. Mine operators establishedthe quality of community life. Social equalityamong mining families reflected the equality

of the workplace. When work conflict arose, itquickly enveloped the camp’s entire social sys-tem. Mining was not only a job, it was a way oflife for workers and their families. Althoughthe coal-camp system was dismantled a gen-eration ago (when mechanization cut employ-ment and spendable income to the bone, thusmaking the closed system unprofitable), manyof the faci l i t ies are used today, and thepsychology of the system remains.

Finally, industr ia l conf l ict plagues coalbecause of the past. Coal camps were ex-periential hothouses; each perceived wrong,each dispute became part of the community’shistory. The bitterness could never dissipate.Children of miners absorbed — and continue toabsorb — the attitudes of their parents. There isno quick remedy for this historical sensitivity;it must be accepted.

The history that follows is necessary to un-derstand present day labor-management rela-tionships and how they will or will not be af-fected by Federal policy.

The Early History

Unlike other basic industrial activities, coalproduction did not grow steadily over the first70 years of this century. The industry’s capaci-ty to produce did not change significantlyafter 1918. As recently as 1974, the operatorsproduced only slightly more than they had in1918 and less than in 1947. Demand stagnationforced the industry to be acutely cost-con-scious. This often translated into protractedopposition to unionization and continuedpressure to reduce labor costs. Both policiesoccasioned many strikes and much bitternessin the 1920’s and 1930’s. A high level of marketcompetition among hundreds of suppliers in-tensified the cost-cutting pressures within theindustry. Because demand fluctuated but didnot grow, operators were less concerned aboutmining more coal and more concerned aboutcontinued lowering of their labor costs tomaintain competitiveness. The implicationsfor harmonious labor relations are apparent.

Coal’s industrial relations changed in the1930’s and 1%0’s, unt i l that per iod, the major i - ,

Ch. /V—Factors Affecting Coa/ ProductIon and Use 129

Operators’ Association

established unquestionedby this time. His politicalexpelled or neutralized inand file had lost its right

to ratify contracts. The union’s internal organ-ization was under Lewis’ persona I direction.Lewis and Love recognized that the demand-

limited situation in 1949-50 threatened bothsides with a devastating circle of oversupply,wage cuts, and layoffs — the very pattern thathad brought them close to ruin 20 yearsbefore. The self-interest of each led to con-sidering ways of saving the other,

Cooperation: 1950-72


other, he hoped that BCOA members couldsew up the blossoming utility market, the keyto coal’s future. Both objectives depended onthe ability of BCOA companies to increaseproductivity and cut labor costs to maintaintheir competitiveness with oil and gas andeliminate low-priced coal suppliers.

Love and Lewis saw mechanization as theway to increase productivity and reduce laborcosts. I n underground mining, mechanizationmeant eliminating hand loading. Machinescould produce three times as much coal with10 workers as 86 workers in a hand loading sec-tion. Mechanization also meant more surfacemining, which was more efficient than evenunderground centinuous miners. Surface-mined production increased from 24 percentof total output in 1950 to about 60 percent in1977. Industrywide productivity almost tripledbetween 1950 and 1969. However, coal-mineemployment fell 70 percent between 1950 and1969, from 415,482 to 124,532.

The crucial factor in mechanizing coal wasJohn L. Lewis. If he had chosen to delay it, theindustry would have suffered. But Lewis cham-pioned mechanization, and had done so atleast since the 1925 publication of his onlybook, where he wrote:

The policy of the United Mine Workers ofAmerica will inevitably bring about the utmostemployment of machinery of which coalmining is physically capable.

Fair wages and American standards of Iivingare inextricably bound up with the progressivesubstitutions of mechanical for human power.It is no accident that fair wages and machinerywill walk hand in hand.47

inLewis reiterated his views on mechanizationthe early 1950’s:

We decided that question [the UMWA’Sposition on mechanization] long years ago. . in return for encouraging modernization,

the utilization of machinery and power in themines and modern techniques, the union. . . insists on a clear participation in the ad-

“John Lewis, The Miners’ Fight for American Standards,(Indianapolis, Ind,. Bell Publishing Co., 1925) pp 108-109,

vantages of the machine and the improvedtechniques.48

Mechanization was so I inked in Lewis’ thinkingto higher wages and benefits that he simplyshrugged off unemployment and other socialcosts as the price of industrial rationalization.With the UMWA supporting mechanization,big BCOA operators were able to cut their la-bor costs, secure long-term contracts, andmaintain their profitability. Much of the newmachinery was financed by using the contractsthemselves as collateral, UMWA also loanedmoney directly to a number of companies tofinance capital investment.

UMWA itsel f began reevaluat ing Lewis’policy on mechanization in 1973:

A question which has persisted throughoutUMWA history is how closely related are thewelfare of the miner and of the coal industry.The coal operators have always argued thatwhat’s good for Consolidation Coal Co. is goodfor every mine worker, and that miners shouldtherefore refrain from asking for too big ashare of the profits, During most of his career,John L. Lewis knew better. When he argued forcreation of the Welfare Fund, when he arguedfor better safety laws, when he argued forprice controls during wartime wage controls,he repeated his confidence that the coal in-dustry had the wealth to meet the humanneeds of those who supported it,

But in the 1950’s he went against that long-time judgment. Faced with mechanization ofthe mines, Lewis, in his own words, ‘decidedit’s better to have a half a million men workingin the industry at good wages, high standardsof Iiving, than it is to have a mill ion men work-ing in the industry in poverty and degradation, ’

It was a firm decision, and mechanizationwith its drastic reduction of the work forcewas carried out. Unfortunately, no provisionwas made for the hundreds of thousands ofmen who were put out of work. There were nobenefits, no retraining programs, no new indus-try brought in. A great many miners wereforced to take their families to northern cities

“Justin McCarthy, A Brief History of the United MineWorkers of America (Washington, DC. United MineWorkers of America, 1952), pp. 7-8.

Ch. IV—Factors Affecting Coal Production and Use • 131

like Detroit and Chicago, where most did notfit in and did not want to.49

Lewis exacted a price from BCOA for sup-porting mechanization. Hourly wages wereincreased — a I be it m o d e s t l y – f o r w o r k i n gminers in each round of bargaining after 1950,The major concession Lewis received was theestablishment of the UMWA Welfare and Re-tirement Fund, which provided pensions andnear-comprehensive, first-dolIar medical cov-erage for UMWA members and their families.The Fund was started in 1946, when Lewis per-suaded Interior Secretary JuIius Krug (who wasadministering the Nation’s mines after theyhad been seized) of its merit. A modest ton-nage royalty was levied, But the operatorsfought the plan and its funding formula for thenext 5 years. Love committed the big operatorsto support the Fund in 1950, A tonnage royaltywas fixed, and it did not rise between 1952 and1971. Although the Fund was supposed to bedistinct from UMWA, Love gave Lewis de factocontrol of the three-person board of trusteeswhen he accepted Josephine Roche, a long-time Lewis confidante, to serve as the neutraltrustee. The Fund did much good work in coal-field health care in the 1950’s and 1960’s.Clinics were organized. A chain of hospitalswas bu i l t . P revent ive se rv ices were en-couraged. Controls over cost and quality ofhealth services were established. But the finan-cial resources of the Fund were always depend-ent on the level of production of the BCOAcompanies that paid the royalties. When de-mand fell in the late 1950’s and early 1960’s,the Fund — living on an unchanged tonnageroyalty —was caught short. It had to sell itshospitals and withdraw medical benefits fromthousands of miners who had been “mech -anized ” out of their jobs. When the Fund’srecords began to show startling increases inrespiratory disease among its beneficiaries inthe 1960’s, Roche and Boyle refused to de-mand dust controls or an industrywide duststandard. Lewis and Boyle might have nego-tiated a higher tonnage payment to cover Fund

49 The Year of the Rank and File: Officers’ Report to theUnited Mine Workers of America 46th ConstitutionalConvention, United Mine Workers of America, 1973, p,68

needs, but that risked increasing the pressureon BCOA members who were being batteredby low prices and demand stagnation

UMWA finally raised such criticisms of theFund in 1973:

The history of the [bituminous] Funds sincetheir early days is a mixed one. Many per-sons have been paid, but many men were cutout by arbitrary and unfair rules while the hardcoal [anthracite] pension dropped to $30 permonth. Medical services were provided forminers and their families, but were taken awayfrom disabled miners and widows. For almost20 years the royalty stayed at 40 cents, whileup to $90 million of the soft coal Fund’smoney was kept in non-interest-bearing check-ing accounts at the union-owned NationalBank of Washington .’”

The scope of the Fund’s work grew increasinglyconstricted over the years. Under the 1978 con-tract, medical insurance for working minerswas switched to private carriers, leaving theFund to administer health benefits and pen-sions only for retired miners.

As labor costs were lowered in the 1950’sand 1960’s, the industry also externalized pro-duction costs. Social costs and externalizedcosts were rarely assessed in these years. Rec-lamation standards for surface mines, for ex-ample, were not enacted until the late-1960’s.Dust controls were not required in under-ground mines until 1970, when coal workers’pneumonconiosis (CWP) was recognized as adisabling occupational disease by Federallegislation. Federal safety standards wereminimal. Industry was not expected to bear thepublic costs of the unemployment producedby mechanization. Systematic air pollutioncontrols had yet to be enacted; coal supplierssold relatively “dirty” coal to utilities. Finally,coal field communities generally imposedsmall tax burdens on local mine operators andcoal-reserve owners, fearing that even theslightest additional economic pressure wouldmake local employers uncompetitive. Whendemand picked up in the late 1960’s and early1970’s, the industry was coincidentally ex-pected to begin paying many of these socialcosts through compliance with environmental

50 The Year of the Rank and File, p. 67.

132 • The Direct Use of Coal

regulations and health and safety standards.The deficit of community services that had ac-cumulated during the depressed 1950’s and1960’s handicapped fast growth in the 1970’s,when coal towns struggled to meet the needsof hundreds of new miners.

The Love-Lewis contract of 1950 sought notonly to stabilize labor but to impose order oncoal suppliers. Surplus miners increased costsof production while surplus operators drovedown prices. Both were seen as problems to besolved. Lewis shared the BCOA’S attitudetoward the marginal independent suppliers, ofwhom he said in 1950:

The smaller coal operators are just a drag onthe industry The constant tendency in thiscountry is going to be for the concentration ofproduct ion in to fewer and f e w e r u n i t smore obsolete units will fall by the board andgo out of production. 5

I

Lewis used UMWA resources to further thecompetition-l imiting ends of his partnershipwith BCOA. His organizing drives in the 1950’sfocused on the small companies exclusively. Itappears that the real purpose of the union’scampaign of dynamite and sabotage was lessto organize these companies than to eliminatethem. While battling the non-BCOA operators,Lewis signed “sweetheart” contracts with anumber of BCOA members. These secretagreements allowed the favored operator topay less than union-scale wages or suspendroyalty payments to the UMWA’s Welfare andRetirement Fund. Coal companies often haddifficulty finding money to finance mech-anization. Lewis solved this problem for cer-tain BCOA companies by lending them $17million from the UMWA-owned National Bankof Washington and the Fund.

The small operators fought back against theUMWA-BCOA squeeze. The 1950 contract es-tablished a single industrywide wage scale(thus advantaging the most efficient com-panies), which was an economic handicap tosmall suppliers. Other contractual provisionsdevised over the years had the same intent andeffect. Small operators brought a number of

“ Lewis quoted In Thomas Bethell, Conspiracy in Coal,(Huntington, W Va Appalachian Press, 1971), p. 17

antitrust suits against UMWA and BCOA in the1960’s. Two succeeded in winning conspiracyverdicts. I n Tennessee Consolidated Coal Com-pany, the Supreme Court said the “union andlarge coal operators, through their NationalWage Agreement and its Protective WageClause, conspired in violation of the ShermanAntitrust Act to drive small operators out ofbusiness.” 52 Two months later, the Court af-firmed a $7.2 million triple damages judgmentawarded to South-East Coal Company againstUMWA and Consol. The Court agreed withSouth-East Coal that the two had engaged in a“conspiracy . . designed to force South-Eastand other small coal producers in eastern Ken-tucky out of the bituminous coal business.” 53

South-East’s brief charged that the BCOA “wasfo rmed spec i f ica l l y to e l im inate sma l le roperators.” 54

The partnership did l itt le to benefit theunion’s rank and fi le. Mechanization threwseveral hundred thousand miners out of workand cut many off from medical and pensionbenefits. The annual income of those minerswho continued working in the 1950’s and1960’s did not keep pace with workers in com-parable industries such as steel and motorvehicles. Increasing productivity did not lowerthe frequency of mine fatalities among under-ground and surface miners. Injury frequencydid not improve between 1950 and 1970. Un-derground mechanization greatly increasednoise and dust levels. Unregulated dust condi-tions produced black lung disease in thou-sands of miners by the end of the 1960’s. Final-ly, the partnership seems to have required thepolitical disenfranchisement of UMWA’s rankand file. The terms and consequences of thepartnership probably could not have borne thescrutiny of democratic unionism. The UMWAunder Arnold Miller reviewed this touchy sub-ject in this manner:

Under W. A.’’ Tony” Boyle, who followedJohn L. Lewis and Thomas Kennedy, the

“Tennessee Consolidated Coal Company, 72 L R R M.2312,1970

5 JSOU th.Eas t Coa / Company v Conso/ida tion Coal COm-

pany, 75 L.R R.M 2336, 1970.“’’UMW and Coal Company Sued, ” Coal Age, J u n e

1966, 1) 52.

Ch. IV—Factors Affecting Coal Production and Use ● 133

UMWA leadership grew more and more out-of-touch. Boyle maintained the clamp on dissentand the close coIlaboration with industry ofthe late Lewis years, but in the three contractshe negotiated he simply could not deliver asLewis had done. 5%

B u t t h e o r d i n a r y c o a l m i n e r h a d n o w a y o f

k n o w i n g a b o u t u n i o n l o a n s t o o p e r a t o r s ,

s w e e t h e a r t c o n t r a c t s , a n d o t h e r s l e i g h t s - o f -

hand. He could see that Lewis ran the unionautocratically, but so great was his trust inJohn L. that demands for rank-and-file contractratification or local election of district officersnever elicited much support.

The 1950-70 period is often recalled as anera of “labor peace” and “labor stability “True, there were no contract strikes against theBCOA between 19.50 and 1971 (and compara-tively few wildcat strikes), but the peace ap-pears to have benefited BCOA and UMWA atthe expense of small operators and many coalminers. For non- BCOA companies, market un-certainties and cost pressures —which elim-inated 4,779 mines between 1950 and 1973 —and UMWA organizing campaigns, can hardlybe remembered as a golden age. For manym i ners, “ labor stabi l i ty” meant unemploy-ment, dust, disease, and fear.

But the UMWA-BCOA partnership did ac-complish what it set out to do. Mechanizationand “labor peace” boosted productivity andhelped BCOA companies to ride out the hardtimes. Competition was stabil ized by elim-inating marginal suppliers and through long-term contracts. It was also regulated by adeliberate, coordinated merger movement thatbegan in 1954 among the major companies.When the dust settled, each of the biggestcompanies had combined with another majorproducer. With both labor and operators sta-bilized, big producers were able to increaseprofits despite a 20-year price freeze and stag-nant demand. In 1955, for example, Consolida-tion Coal and Eastern Associated reported netprofits of $12 million and $2 million, respec-t ively. Prof i ts rose to $20 mi l l ion and $4m i I I ion, respective y, in 1960, and to $33million and $8 mill ion in 1965, The alliance did

55 The Year of the Rank and F//e, p 70

one other thing. It created forces within theworkplace and labor force that led eventuallyto the dismantling of the alliance itself. The in-stability that has characterized the coal indus-try in the 1970’s is part of the process of endingthe Lewis-Love partnership.

The Rebellion: 1969-77

The rebell ion of UMWA miners over theterms of the alliance was front-page news in1969. Beginning with health and safety, therevolt soon expanded to union reform, Fundpo l ic ies and co l lect ive barga in ing . T w o

events — the West Virginia black lung strike(1969) and the 78-victim Farmington minedisaster–propel led coal health nd safetyp rob lems d i rect l y i n to the pub l ic con-sciousness. I n the process, the structure oflabor-management relations began to beu nvei led.

Coal workers’ pneumonoconiosis is a pro-gressive, incurable and, in its last stages, fataldisease caused by prolonged exposure to coal-mine dust. (See chapter Vi. ) Although medicalauthorities in England had recognized CWP asoccupationally related in 1942, most Americandoctors refused to agree. The UMWA did notdemand or fund extensive research into thedisease in the 1950’s, even though the new con-tinuous miners were increasing dust. The Fund

did, however, try— unsuccessfully — to per-suade the American medical establishmentthat CWP was a distinctive disease of thetrade. Expensive dust-control programs andcompany-paid compensation for respiratorydisability would have undercut efforts to lowerproduction costs. By the late 1960’s , res-piratory disease among working and retiredminers was widespread, Slowly, miners beganto I ink their disabiIity to the dust they “ate” onthe job. For years, coalfield doctors had toldthem that coal dust was not harmful, and someeven said it prevented tuberculosis. West Vir-ginia was especial ly r ipe for a black l u n g p r o -test as 80 percent of its production came fromunderground mines and almost one-third ofthe Nation’s miners worked there.

Compensation legislation was passed therein February 1969 after a month-long wildcat


strike that idled 42,000 miners, some of whommarched on the West Virginia Capitol carrying

coffins. The final version did not incorporatemany of the innovative provisions of the ori-ginal bill, which the Black Lung Association(BLA), an ad hoc group of miners and theirallies, had supported.

The Wes t V i rg in ia p ro tes t po in ted upUMWA’s apparent lack of concern for occupa-tional health. The BLA became one base in thepolitical movement by rank-and-fi le minersover health and safety conditions, To the BLAwere added hundreds of disabled and retiredworkers and their widows who objected to re-strictive Fund policies that denied them healthand pension benefits.

Mine safety was thrust into the nationalarena when a Consolidation Coal Co. mine atFarmington, W. Va., blew up in November1968, killing 78. UMWA president Tony Boyleappeared at the mine and said: “As long as wemine coal, there is always this inherent dan-ger but Cononsolidation Coal was one ofthe best companies to work with as far ascooperation and safety are concerned. ” JohnRoberts, Consol’s public relations director,agreed: “This i s somethin g we have to l ivewith. ”

Others did not share their fatalism. Thedisaster prompted Joseph Yablonski, a UMWAofficial, to challenge Boyle for the presidency.Strong mine-safety legislation was introducedin Congress that addressed the safety andhealth problems dramatized by Farmingtonand the black lung uprising. The UMWA’s com-placency toward the disaster had discreditedBoyle and mobilized the reformers.

The Yablonski campaign merged the re-bellion over health and safety with growingdissatisfaction over the absence of uniondemocracy. Yablonski urged improved healthand safety, democratization, a merit system,mandatory age-65 retirement for officers, abetter grievance procedure, a higher Fundroyalty, and an end to nepotism, The demandfor union democracy was a reaction to Lewisand Boyle’s authoritarianism, which had be-come a prerequisite for maintainin g the alli-ance, Yablonski lost the election, 80,577 to46,073, on December 9, 1969, Three weeks

la te r , he , h i s w i fe , and daughte r w e r eassassinated by gunmen hired by Boyle andpaid from union funds. Because of “flagrantand gross” violations of Federal law, the 1969election was overturned by a Federal judgeand a rerun scheduled for 1972.

During the 1969 Campaign, Federal healthand safety legislation was being hammered outin Congress. A reasonably strong bill emergedfrom the year-long debate. It toughened safetystandards, gave the Interior Department broadregulatory and enforcement powers, set duststandards, and provided compensation forblack lung victims. The UMWA opposed thestrongest legis lat ive measures, as did theoperators.

UMWA safety activists and union reformerswere bolstered by rank-a rid-fiIe disenchant-ment over the contracts Boyle signed in 1968and 1971. Boyle touted the 1971 agreement asthe $50-a-day package. But the $50 came onlyin the last year of the 3-year agreement and ap-plied only to a small number of miners, Boylehad finally broken the 20-year freeze on the$0.40-tonnage royalty (raised to $0.80), butmost of the new revenue went to cover thecost of the pension increase he had contrivedduring the 1969 campaign. Other benefitschanged little.

As the dissidents escalated their campaignagainst Boyle, some came to understand theprerequisites of labor peace that Lewis hadworked out with Love. Some began to seeBoyle’s “corruption” more as an exaggeratedconsequence of the union-industry partnershipthan as a character flaw. This perspective isreflected in the writings of UMWA officialsand staff following Boyle’s ouster.

The reformers organized themselves into theMiners for Democracy (MFD) in 1972 and nom-inated Arnold Miller for president. Miller, adisabled miner from Cabin Creek, W. Va,, hadworked with the BLA and other reform ele-ments since 1969. He leaned heavily on the ad-vice and skills of a dozen or so young, Iiberalnonminers to organize the MFD campaign. TheMFD slate defeated the Boyle-led incumbentshandily in December 1972. The reform move-ment effected many changes in Miller’s first 5-year term of office. Union programs in safety,


political action, internal communications, lob-bying, and research were begun or strength-ened. New leadership was placed in the Fund.District elections were democratized. The rankand fiIe obtained the right to approve or disap-prove negotiated contracts. Organizing—thelifeblood of any union–was stepped up. Ma-jor wage and benefit gains were secured in the1974 contract. Yet the 1973-77 period was alsoone of tremendous rank-and-file unrest. Strikesand absenteeism increased, As the old part-nership between UMWA and BCOA dissolved,“labor peace” was replaced by “labor instabili-ty. ” Miners began demanding the right tostrike (which they had in the late-l940’s andwhich Lewis conceded in 1950), Some of thediscontent was focused on Miller’s handling ofU M W A . It came f rom UMWA l iberals whothought he was not moving fast enough inmany areas and from conservatives or Boylestalwarts who disliked the changes he wasmaking. S t r i kes and in t ra -UMWA tu rmo i lescalated after the 1974 contact,

1974-78: An Overview ofLabor-Management Relations

The factors discussed above explain thepredisposition of miners and mine manage-ment to lock in what Lewis once called “adeadly embrace. ” But the political and work-place struggles that came to the Appalachiancoal fields in the mid-1 970’s were qualitativelyand quantitatively different from the Lewis-ledcontract strikes of the 1930’s and 1940’s. Thegrowing rebelliousness of UMWA miners cul-minated in the 3½-month-long contract strikein the winter of 1977-78. The roots of this con-frontation went back to the MFD victory inDecember 1972. Freed from what the MFD re-formers called “the tragedy and corruption ofthe Boyle years,”56 miners found the change inunion leadership stirred their long suppressedyearnings for more say not only over UMWAaffairs but also over their working conditionsand communities. Democratizing the UMWAalso politicized hundreds of miners and ledthem to believe that they could make othersocial changes.

But neither UMWA nor the workplace livedup to these new expectations. Many miners

56 ~~e ~ear of the /?Eink and F//e, P 71

were frustrated by what they saw as failures ofthe UMWA leaderhip to fulfill its early prom-ises despite the gains of the 1974 contract.Operators and miners clashed over control ofthe workplace when companies failed to ad-just to the new demands of their employees.The confl ict over mine health and safetyshifted from the hearing rooms of Washingtonto the individual mine face as UMWA andlocal mine safety committees pushed forgreater protection.

Management’s struggle with its employeeshas been fought over many issues during theseyears. Absenteeism and disputes over thegrievance procedure, compulsory overtime,and job rights repeatedIy disrupted coal pro-duction. Miners saw management as trying totake away job protections that they had wonthrough the 1974 contract, Federal law, andlocal custom. Management saw UMWA jobrights as an impediment to steady output,Operators believe Federal health and safetyregulations and UMWA work rules enabledminers to encroach on traditional managementprerogatives. This, coupled with what theyperceive to be increasing Federal regulatory“harassment,” impedes profitable mining, theindustry says.

The expectations raised by union democracywere applied by miners to their communitiesas well. High hourly wages were hard to recon-ciIe with the frequently dismal quality of com-munity l ife in the coal fields. Why, minersasked, did the roads have to be so bad? Whywasn’t there decent housing? Why no waterand sewer hookups? Why the poor schools?Why were the politicians unable or unwillingto change this situation? The sense of depriva-tion miners felt in their communities was car-ried into the pits, where it emerged as hair-triggered combativeness over working condi-tions.

Wildcat strike activity was relatively con-stant between 1969 and 1974, accounting formore than 550,000 worker-days-idle annually.But, unauthorized work stoppages and losttime jumped dramatically in 1975-77. Part ofthe increase is attributable simply to the factthat the work force increased 84 percent be-tween 1969 and 1977. A second explanation is


that miners were less afraid to assert them-selves now that demand seemed to be expand-ing, labor was in demand, and wages were ris-ing. A third explanation looks to the broadrange of unmet rising expectations miners de-veloped in the course of union reform, safetylegislation, and political and social changes inthe coal fields. Finally, when other channels ofcommunication with mine management andpoliticians seem to miners to be unproductive,strikes are used as a way for one, often-un-represented group to get its message across.

A recent study” of wildcat strikes in Ap-palachian coal mines found–among otherthings — the following:

1.

2.

3.

4

5..

6.

Some companies had no strikes in 1976;others had as many as 17 strikes per mine.Even within the same company, somemines have many more st r ikes thanothers.In a sample of four underground mines, itwas found that miners at low-strike minesconsistently reported better relations withtheir section foreman than did miners athigh-strike operations.Miners at high-strike mines believed it wasnecessary for them to strike to get man-agement to talk with them. Many minersbel ieved str ik ing would help resolvedisputes in their favor. Miners at high-strike mines reported that managementwas generally uncooperative with theunion and unwilling to settle a disputewhen the union had a good case.Ninety percent of the miners believed thatone reason for wildcat strikes was the ex-cessive delay in the grievance procedure.Arbitrators were distrusted.Local union officials do not lead strikes.They are led by rank-and-f i le miners .District presidents do not appear to havethe political strength to take any meas-ures against wiIdcat strikes.The findings suggest that wildcat strikesare relateddealing with

to management practices inemployee matters.

“Jeanne M Brett and Stephen B. Goldberg, p 23 ff.

7. Many of the problems of the grievanceprocedure, wh ich may cont r ibu te tostrikes, can be reduced if managementand the union resolve more of thei rdisputes at the mines i te, rather thanthrough recourse to arbitration.

Wildcat strike activity dropped in 1978. Butit is premature to conclude that coalfieldpeace will reign. The effects of the 4-monthcontract st r ike that ended in March leftUMWA miners in debt and anxious to work.Thousands have been working on-again, off-again because of poor market conditions and a10-week strike by railroad workers on the N&Wline. Absenteeism declines when the mines areworking short weeks, and rises when 6-dayweeks and lots of overtime are the rule. Fur-ther, miners can’t strike if they are not work-ing. A truer indication of the mood of the workforce should develop in 1979 and beyond. Itwould be an error to believe that steadygrowth in demand for coal wil l necessarilylead ro good labor-management relations.Growth may, in fact, lead to more militantdemands and less concern for cooperatingwith management.

1974 UMWA Contract

The 1974 BCOA-UMWA negotiationsplace in new historical circumstances.reform UMWA rejected partnersh ip

tookThe

withBCOA. Demand was growing. Profits had risenfor 4 straight years as a result of price in-creases and the 1973 OPEC embargo. Net coalincome rose from $128.4 mill ion to $639.5million — a 398-percent increase — for 24 majorcompanies, the Bureau of Mines reported.Many major coal companies had been ab-sorbed by energy companies or conglomerates,whose greater resources raised UMWA nego-tiating goals. The union came to the 1974bargaining table with two basic purposes: 1) tomake up ground lost over the previous 20years, and 2) to work out new terms for futurelabor-management relations.

BCOA conceded an unprecedented wageand benefit package in 1974. Wages were in-

Ch. IV— Factors Affectlng Coal Production and Use ● 137

creased more than ever before, A cost-of-1ivingescalator and paid sick leave were granted forthe first time. Miners were given the right towithdraw individuaIIy from conditions any oneof them judged to be an “imminent danger. ”Paid vacation days were increased significant-ly, but a two-track pension plan was intro-duced. Current retirees received a $75 to $100monthly raise to $225 to $250, depending onwhether they received Fed era I black Iung com-pensation. But the pensions of miners who re-tired after 1975 were calculated according to asIiding-scale formula based on age at retire-ment and years of employment Their averagepension was $425 a month UMWA negotiatorsbelieved this was the first step in phasing in abenefits-accord ing-to-service principle theythought fairer than the flat payment. Newlyretired miners Iiked their higher benefit levels,but much bitterness arose among the 80,000pensioners locked into the lower, flat rate.

BCOA agreed to continue providing first-dollar medical coverage for working andretired miners and their dependents. Healthcare and pensions had been administered by asingle UMWA Welfare and Retirement Fundunt i l 1974, when i t was div ided into fourseparately funded but jointly administeredtrusts. The two “1950” plans provided healthcare and pensions to miners who had retiredbefore 1976 and were financed by a tonnage-based royalty. The 1974 plans were funded ona tonnage and hours-worked basis. They pro-vided benefits to working miners and newretirees, Inasmuch as benefits were “tied intoproduction-related financing formulas, nobenefits were guaranteed. In the event thatfuture production did not meet the incomeestimates used by the 1974 contract nego-tiators, the Funds would be unable to meettheir obligations.

This happened in the spring of 1977. Al-though the 1974 contract had increased Funds’income 62 percent in 2 years, revenues werestill not adequate to continue services to themore than 800,000 beneficiaries. 5“ Overly opti-

5H’’Report of the Hedlth and Retirement Committee, ”Proceedings of the 47tfI Consecutive Constitutlona/ Con-vention of the United ~Mine Workers of America, Sept 23-Oct 2, 1976, (United Mine Workers of America) pp 348ff

mist i c production projections, inflatlon, lackof adequate cost controls, the inability of theUMWA to organize new mines, wildcat strikes,and unexpectedly high growth in the benefici-ary population — al I forced the Funds to re-trench. Either benefits to miners or paymentsto health providers had to be cut The Fundschose to cut benefits by instituting deduc-tibles, which ended the tradition of first-dollarcoverage established in 1950. Miners had topay up to $500 per famiIy for medical services.The Funds also ended negotiated retainerswith about 50 coalfield clinics i n favor of fee-for-service reimbursement This had the effectof forcing the clinics to cut services Minersthroughout the East stopped work for 10 weeksto protest these cutbacks. BCOA refused torefinance the Funds because it felt that wildcat strikes had caused the cash crisis.59

BCOA also came to 1974 collective bargain-ing with a new strategy. The old union-manage-ment partnership that had glued the big oper-ators together since 1950 was discarded. TheLewis-Love alliance might be dead, but the op-erators hoped major wage and benefit conces-sions wouId buy labor stabiIity.

The BCOA s t ra tegy d id not work . TheUMWA leadership was not strengthened by theBCOA’S concessions in the 1974 contract. Infact, the plan backfired. If anything, the im-provements secured by the union raised the ex-pectations of the membership more than ever.The contract was ratified by 44,754 to 34,741.The two-tier pension plan created animosityand bitterness. The new grievance proceduredid not settle workplace disputes expeditious-ly. Thousands of cases were appealed to ar-bitrators. Many cases were not decided formore than a year. Unauthorized work stop-pages continued to increase in 1975 and 1976despite contract gains. The number of dayslost in wildcat strikes in 1975 and 1976 morethan doubled the 1972-73 experience. Manyminers felt the 1974 contract should havegiven them the right to strike over unsettled

“Although wildcat strikes contributed to the cash short-age, a story in the Wall Street journal (Dec. 3, 1977) cor-rectly pointed out that production lost to such strikesamounted to only 3 percent of projected Income, andwas not the prlnclpal cause ot the Funds’ f inancialtroubles


grievances, a right that Federal court decisionshad eliminated in the early 1970’s. Rather thansolidify Miller’s standing with the UMWA, the1974 contract divided him from part of his con-stituency. Miller’s efforts to discipline wildcatstrikers further alienated some of his member-ship. Some observers see the 1977-78 coalstrike as an extension of the rank-and-fi ledissatisfaction that had been building withinthe UMWA and against the operators since1974. UMWA spokesmen, on the other hand,interpret the turbulence of the 1974-78 periodmore as an acting out of newly discoveredstrength unleashed by the reform victory thanas a refIection on MilIer’s leadership.

1977-78 Negotiations

BCOA was most concerned in the 1977 nego-tiations over reasserting management author-ity over labor at the minesite and curbing wild-cat strikes, absenteeism, and certain workrules. Related to this was the matter of produc-tivity, which had fallen steadily since 1969.BCOA negotiators abandoned their 1974 hopethat Miller could be transformed into an instru-ment of labor pacification akin to John L.Lewis. From that reluctant conclusion, theoperators were

., grasping for something in 1977-78negotiations. We realized the UMWA interna-tional had lost control of their people. Wewere grasping for ways to put stabilizationinto a contract.60

BCOA hoped to effect “labor stabil ity”— a phrase the industry coined — by winningthese specific demands in 1977:

1. the unarbitrable right of the employer todischarge an employee for alleged strik-i ng;

2. cash penalties against employees forunexcused absences and striking;

3. the employer’s unarbitrable right to ter-minate a new employee during his first 30days of employment;

4. the employer’s right to set up productionincentives;

‘“Allen Pack, “President of Cannelton Discusses CoalIssues, ” Charleston Gazette, Apr 12,1978, p 1 C

5. the employer’s right to schedule produc-t ion or process ing work on Sundays;

6. the employer’s right to change shift start-ing times at his discretion;

7. reduction to 45 days of the 90-day protec-

8

tion period for new employees (w-ho arenot allowed to operate face machines orwork beyond sight and sound of an ex-perienced employee), andincreased restrictions on the mine safetycommittee. 61

B C O A a l s o i n s i s t e d o n r e s t r u c t u r i n gUMWA’s health and pension system. BCOA de-manded that the 1974 health trust (for workingminers) be replaced by private medical insur-ance arranged through individual operators.UMWA was to lose its influence over coalfieldmedical care by this change. BCOA also in-sisted that coinsurance be made permanent.Coinsurance would save BCOA members $70million to $75 million annually. Fund expend-itures would go down as well. BCOA would notconsider equalizing pension levels or signifi-cantly increasing benefits. The union did notdemand pension equalization even though the1976 UMWA Convention resolved that theunion’s “Bargaining Council . . give highpriority in the next national contract negotia-tions to equalizing pensions.”62

Finally, the operators did not like the ideathat miners felt UMWA was providing theirpensions and medical services. Employeeloyalty was not created by carrying a “UMWAhealth card” or receiving a “UMWA pension”each month. Operators saw no advantage tothem in the Funds’ subsidizing several dozenclinics that everyone casually referred to as“the miners’ clinics.” By switching to a strictfee-for-service system based on operator-ar-ranged insurance, BCOA hoped to save moneyand build employee identification.

I t i s not easy to d i scern M i l le r ’ s 1977negotiating goals and strategy. Certainly,UMWA negotiators believed they were in a

‘]’’ Memorandum of Summary of Major Improvementsand Changes Contained in the Settlement Between theUnited Mine Workers of American and the BituminousCoal Operator’s Association, ” Feb 6, 1978.

‘2 Proceedings of the UMWA 47th Constitutional Con-vention, pp 357-358.


weaker position than in 1974. Miller enteredbargaining after narrowly winning re-electionin June 1977 with 40 percent of those voting ina three-way race. UMWA lacked a research de-partment and was not well prepared for bar-gain ing. Perhaps the union’s biggest dis -advantage was coal’s market situation.Utilities had doubled their normal stockpiles.Demand for Appalachian metallurgical coalwas weak. Prices for both steam and met coalswere generally static and, in some cases, fall-ing. BCOA operators and customers could ab-sorb a long strike, particuIarly as the long-termeffects were appraised as outweighing theshort-term losses.

According to newspaper accounts at thetime, Miller had two principal goals: winningthe right to strike at the local level and restor-ing first-dollar-coverage health benefits. TheUMWA won ne i the r , ult imately. Wi ldcatstrikes had bedeviled Miller for 3 years, soskeptics and others surmised that he plannedto trade the right-to-strike for softening of theBCOA’S “labor stability” package. The right-to-strike was not included in any of the three ne-gotiated agreements. Miller sought the restora-tion of health benefits to precutback levelsand their full guarantee over the course of thecontract. Apparently, high priority was notgiven to opposing deductibles, private insur-ance plans, and clinic cutbacks.

By contrast, the bargaining priorities out-lined by the more than 2,000 delegates to theUMWA convention in 1976 were clear and ag-gressive. Most of all, they did not want to loseany of the ground gained in 1974. That meantno “labor stability” package, no deductibles,and no reduction in benefits. The right to strikehad mixed support among the membership.The convention strongly endorsed it for use in“local issues threatening the safety, health,working conditions, job security, and otherfundamental contract rights. ” Convention del-egates also endorsed:

1.

2.3.4.

rank-and-file participation in the nego-tiating process;across-the-board wage increases;abolition of compuIsory overtime;more personal and sick leave days;

5. a 1-cent-per-hour increase for every 0.2 in-crease in the Consumer Price Index;

6. no maximum (cap) to the Cost of Living

7Adjustment;seniority based on length of service alone(rather than on the company-determinedability to perform the work and seniority);and

8. modifications of the gr ievance pro-cedure. 63

Health and safety was another priority. Thedelegates called for:

1.

2.

3.4.

5.

6.

7.

8.

a full-time, company-paid health and safe-ty committeeman at each mine;a minimum of one UMWA miner trainedas an emergency medical technician onevery operating section on every shift ateach mine;automatic, continuous dust sampling;a UMWA miner employed as a full-timedust weighman “with the authority to en-force dust standards;strengthened language concerning theshutdown powers of the mine safety com-mittee;no arbitration of safety committee deci-s ions;tougher language protecting the right ofthe individual miner to withdraw fromhazardous conditions;a 90-day training period for new miners,and a 30-day time Iimit on arbitrators’decisions on safety and health disputes.

None of these was included in any of the ten-tative agreements. Obviously, the union’s ne-gotiators were not expected to win this entireshopping Iist of convention-endorsed objec-tives. But the scope and quality of the changesenvisaged by the rank-and-file delegates sug-gested they expected a feisty, offensive pos-ture from their negotiators in the 1977 talks.Perhaps the UMWA team lived up to this senti-ment in private discussions with the BCOA, butminers found the contracts presented to themin February and early March 1978, did notmeasure up.

“See “Collective Bargaining Committee Report, ” Pro-ceedings of the 47th Consecutive Convention.


UMWA miners were off the job for 109 daysin the winter of 1977-78. Two months aftertheir contract expired on December 6, 1977,the union’s 39-member bargaining council re-jected the first tentative agreement Miller andBCOA had worked out. A month later, minersrejected a second draft, 2-1. As this occurred,newspapers were fi l led with administrationpredictions of impending power shortages andstrike-caused unempIoyment of up to 3½million workers. No power shortages occurred,and only one State— Indiana — seriously en-forced mandatory power cutbacks. The Bu-reau of Labor Statistics in the Labor Depart-ment was reporting to the White House only25,500 strike-related layoffs at the height ofthe strike. ” Sti l l , the administration soughtand received a temporary back-to-work orderunder Taft-Hartley procedures invoked onMarch 6. The prospect of increased Federal in-tervention in their affairs brought the two sidestogether, and they hammered together a thirdagreement. By that time, the Federal judgewho had issued the temporary Taft-Hartleyorder refused to extend it on the grounds thatthe administration had never proved the ex-istence of a national emergency. On March 24,56 percent of those miners voting accepted thecontract. The third contract softened some ofthe BCOA’S demands embodied in the earlierdrafts. But it fell short of rank-and-file objec-tives in many areas. Why did miners accept it?

First, many were beginning to suffer eco-nomic hardship. The union had no nationalstrike fund, and the lengthy wildcat strikes of1977 had cut into miners’ savings just monthsbefore expiration of the 1974 contract. By mid-March there was an inverse relationship be-tween a miner’s militance and the number ofmouths he or she had to feed. The contractrepresented income.

Second, there was widespread distress abouthealth and pension benefits. As the strike woreon, fears increased that the entire pension pro-

“The administration’s spurious estimates of unemploy-ment and power shortages were examined by the GeneralAccounting Office in a report to Cong John Dingell, en-titled, “improved Energy Contingency Planning isNeeded to Manage Future Energy Shortages More Effec-tively, ” Oct 10, 1978

gram might collapse. (Benefits had been sus-pended at the outset of the strike. )

Third, miners were increasingly vocal in ex-pressing their lack of confidence in their ownnegotiators. Summarized, thei r argumentseemed to be: “We can stop the operatorsfrom taking away what we won before, but wecan’t make our negotiators get what we want. ”This belief led to a sense of fatalism aboutwhat could be accomplished by continuedstriking.

Fourth, the rat i f icat ion process itselfweighed in favor of getting a settlement soonerrather than later. Miners understood that ratifi-cation involved at least 10 days. Rejection ofthe third contract would mean more delaybefore negotiations resumed, and then furtherdelay before new terms were agreed on.

All of these factors affected the ratificationvote. It is important to understand that incasting his ballot a miner was not necessarilytaking the final step in a rational process ofassessing the objective advantages and disad-vantages of the contract he had been asked toconsider.

What explains the protracted inability of thenegotiators to agree to a contract that theminers would accept? One answer lies in theability of each side to endure a long shutdownand the expectation that by doing so the finaloffer could be a net improvement over anyearlier terms. A second is BCOA’S demand forunprecedented changes in the status quo. Themagnitude of these changes, together with thebarely disguised threat to resort to company-by-company bargaining, was perceived byminers as an all-out attack on their way of life,i ts culture, and i ts protect ions, Thi rd, theperceived cleavage between Miller and hismembership encouraged BCOA to demanddrastic contract revisions. Had the union sidebeen united, the operators might have compro-mised sooner. Fourth, had BCOA not insistedon “labor stability” penalties, it is arguablethat miners might have accepted BCOA’s otherdemands more quickly as part of a package.However, miners fel t the BCOA’s stabi l i tydemands were a reassertion of the operator’swish to do as they pleased with their employ-ees, The stalemate came to focus on the


Photo credit: Douglas Yarrow

UMWA coal miners protesting changes in medical benefits in Washington, D. C., during a month-long wildcat strike thatshutdown most Appalachian production, 1977

shared perception that “rights” were at stake:the employee’s right to job protection, safety,and security; and the operator’s right to man-age his business according to his best judg-ment. When each side perceives that its rightsare challenged, wars of attrition are common.Fifth, it appears that because of poor marketconditions, metallurgical coal producers andsome other eastern operators were not terriblyhurt by a long strike. Had there been no strike,hundreds of mines would have shut down orlaid off workers because of excessive utilitystockpiles, static prices, and soft markets.

BCOA was not pleased with the final ver-sion, although it had won major changes in the1974 contract. Miners saw the final product asless punitive than earlier drafts but not as good

as the 1974 agreement in many respects, par-ticuIarly with respect to heaIth benefits.

The 1978 Contract Terms

Discipline

The harsh language of the first two draftsconcerning management’s right to fine and dis-cipline wildcat strikers was deleted. I n itsplace, however, is a memorandum of under-standing that continues decisions made by theArbitration Review Board (AR B). The ARB de-cision decided in October 1977, gives em-ployers the right to discharge or selectivelydiscipline employees who advocate, promote,or participate in a wildcat strike. ARB 108 is

142 • The Direct Use Of Coal

less punitive than the proposed “labor stabili-ty” provis ions as employees can appealgrievances through arbitration.

No significant work stoppages have oc-curred since the 1978 contract went into ef-fect. Some mines report less absenteeism. Arethese short-term phenomena, or are theytrends that are likely to continue and if so, towhat extent are they traceable to the provi-sions of the new contract?

The second question is the easier. The recentdecrease in work stoppages and absenteeismprobably cannot be credited solely to the newcontract because, with one exception, no newterms bear directly on this issue. The sole ex-ception occurs in the article governing settle-ment of disputes — the grievance procedure. Asmall but significant change was written intothe first step. A section foremen now has theauthority to settle a complaint at the minesitewithin 24 hours. His decision no longer sets anyprecedents in the handling of other grievances.Formerly, mine management delayed con-ceding a point in one matter for fear that itwould be binding for the duration of the con-tract. Although individual miners seem to begetting grievances settled faster than before,redundant disputes over the same points maybe occurring. A spot check of di f ferentdistricts in June 1978 produced no definitiveinformation about dispute frequency but didconfirm that foremen had more latitude ongrievance handling. The officers of the union’slargest and most strike-prone district (District17 in southern West Virginia) reported then avery sharp drop in the number of grievancesbeing referred to union representatives. Thelayoffs and short weeks that idled thousandsof miners in Appalachia in the past year prob-ably discourage grievances being filed andwildcat strikes from happening. If demandperks up in these areas, grievances may riseproportionately.

Whether the reduction in wildcat strikes is ashort-term phenomenon is a much more diffi-cult question. Miners are still recovering froma strike that lasted much longer than expected.They have been concerned with retiring largedebts and replacing whatever savings they hadbuilt up. Like other Americans, they have alsobeen troubled by continuing inflation. Perhaps

the best explanation, again, is simply thatminers can’t strike if they don’t work. Almost20,000 Appalachian miners were laid off in thesummer of 1978 because of soft metallurgical-coal markets, productivity-boosting plans, andthe strike against the N&W railroad. About halfthat number were working irregularly in thewinter of 1978-79. On the other side, many ofBCOA’s larger members appear to have madea special effort to resolve gr ievances aspromptly as possible. Some claim that becauseof the new clause, more grievances are beingresolved in the miner’s favor. I n any case, ex-perience with the 1978 contract is insufficientto permit drawing many meaningful conclu-sions about whether it will lead to a sustainedreduction in the number and frequency ofwildcat strikes and absenteeism.

In the long run, wildcat strikes and ab-senteeism are unlikely to be brought underlasting control until the union’s internal situa-tion stabilizes and the industry adopts a moregenerally enlightened attitude toward laborrelations. It is too soon to know whether eitherwilI occur.

Productivity Incentive Plans

The UMWA had traditionally opposed plansto inc rease p roduct ion by o f fe r ing c a s hbonuses for tonnage over a stated quota. Theunion argued against bonus plans on twogrounds. First, if bonus plans succeeded insignificantly increasing a worker’s real spend-able income, the union would find negotiationincreasingly difficult for substantial across-the-board wage gains. The union feared thatwages would be shifted from an hourly basis topiece rates, which is considered regressive.Second, UMWA argued that bonus systems en-courage risky short-cuts, lack of proper equip-ment maintenance, and speed up— all leading

to more accidents and disease. BCOA made in-cent ive systems a central demand in i t snegotiating. The post-1 969 decline in produc-tivity might be turned around, the operatorsthought, if cash bonus plans were adopted.UMWA agreed to this change.

The new contract language provides for amajority vote (among those miners voting)before an operator can adopt a bonus plan.


Once accepted, it cannot be rescinded by theemployees. Each plan would provide monetaryincentives for production or productivity in-creases. (The contract language does not spec-ify what the cash bonus is pegged to). One ofthe conditions of the plan is that it “does notlessen safety standards as established by ap-plicable law and regulations. ” Some operatorsand some miners may not interpret safety“standards” as being the same as safety per-formance (that is, fatality and injury rates andnumbers). I t is possible that accident frequen-cy could rise, but so long as managements tandards o r number o f in ju r ie s d id notchange, the bonus system would not bevoided. Nothing is included about healthstandards or exper ience. The cash bonussystem will be popular with many miners, butits adverse impact on workplace health andsafety may be significant.

Operators have adopted two different ap-proaches to increasing productivity in recentmonths. Consolidation Coal has won accept-ance at four mines of plans that tie the level ofthe cash bonus to increased tonnage and num-ber of injuries. It is too early to tell if this ap-proach will raise output without compromising

safety. Some union officials are worried thatboth miners and operators will fail to report in-juries in order to preserve the cash bonuses. Asecond approach taken by another operatorseeks to raise productivity by eliminating near-ly 2,100 jobs, representing about one-sixth ofits work force in West Virginia. A companyspokesman sa id that reduct ion was notprompted by poor market conditions; rather“ it’s strictly to improve productivity. ” Thiscompany hopes to maintain the same level ofoutput after the layoffs, thus increasing pro-ductility. ”

Aggregate productivity statistics over thenext 2 to 3 years will tell relatively little aboutthe effects, if any, of the new incentive clause.Meaningful evaluation will require close mon-itorin g of indiv idual mines where incent iveplans are put into effect to determine relation-ships between these plans and changes in pro-ductivity, accident frequency, and dust levels,

‘5Coa/ /ndustry News, Sept 18, 1978

Health Care

The most dramatic change in the 1974 con-tract involved the refinancing and control ofUMWA’s health plan. Under the 1978 agree-ment, all working miners and recent retireesshifted to company-specific, private insuranceplans. A Funds medical plan will exist forpre-1976 retirees only. Coinsurance— up to$200 per year per family–was instituted. Allservices, including those provided by the clin-ics, wiII be reimbursed on a fee-for-servicebasis. Health benefits are supposedly guaran-teed, but uncertainty remains in some areasabout what these guarantees mean in practice.The imposition of deductibles for workingminers and retirees ends first-dollar coverage,which had been the rule since 1950. Becausethey apply only to physician care and medica-tion, some health analysts believe miners willbe discouraged from buying preventive physi-cian care. The experience of other medical sys-tems—the Stanford University Group Healthplan and the Saskatchewan plan — suggeststhat the introduction of coinsurance reducesdemand for physician services. ” The entirehealth-benefits package is now seen by manyminers as having been seriously compromised.They were widely dissatisfied with the ad-ministration of the Funds, and the current sit-uation is commonly perceived as substantiallyworse. Strikes over the insurance reimburse-ment issue have been narrowly averted severaltimes over the last year. The dismantling of theFunds is also an emotional issue that is unlike-ly to dissipate during the term of the 1978agreement. For management and union leader-ship alike, it will remain a difficult problem.Strikes over coalfield health care are likely.

Occupational Health and Safety

None of UMWA’s occupational health andsafety demands survived the bargaining. The1974 language continues in force, At eachUMWA mine, a health and safety committee iselected (generally three miners), Committeemembers are entitled to special training. Theyhave the right to close sections of the mine

“Anne A Scltovsky and Nelda McCall, “CoInsuranceand Demand for Physician Services. Four Years Later, ”Socla/ Secur~ty f?u//efln, May 1977


when they find conditions of “imminent dan-ger,” If their employer challenges their judg-ment, Federal or State inspectors may becalled in to settle the question, or the issuemay be taken through arbitration. The commit-tee’s action can be reversed only after the fact.This provision, stronger than most labor agree-ments, dates back to 1946, when John L. Lewiswon it when the mines were under Federal con-trol. If an arbitrator upholds an employer’s ac-cusation that a committee member acted “ar-bitrarily and capriciously, ” the miner may beremoved from the committee but cannot befired or otherwise disciplined for his officialactions.

These provisions contrast starkly with thosegeneralIy in effect at non-UMWA mines, wherethe safety committee, if one exists at all, isoften reluctant to enforce standards for fear ofjeopardizing its members’ jobs.

Workplace Relations

The basic issues that created friction underprevious agreements were not resolved andcan be expected to cause difficulties in thefuture.

For example, management retains the rightto operate mines 6 days a week (a BCOA pro-posal to permit operation 7 days a weekfailed). The compulsory sixth shift is a primarysource of discontent among miners at opera-tions where the 6-day week is scheduled. Com-pulsory shift rotation is another source ofwidespread discontent. Wildcat strikes haveerupted over it. Some miners believe manage-ment routinely awards preferred jobs on thebasis of favoritism, and that the contractlanguage does not protect a miner’s right to beawarded a job on the basis of seniority andability to perform the work. Some of these con-flicts might be resolved if each side were will-ing to meet and work out a compromise. It isstill too early to telI whether this will happenu rider the 1978 agreement.

Education and Training

Education and training have been foreignconcepts in the coal industry through much ofits history. Both are inextricably tied to im-

proving workplace relations. The significanceof the changes that have taken place in the in-dustry’s work force over the past decade aredifficult to exaggerate. The industry Iaid off 70percent of its work force between 1950 and1970, then turned around and began hiring

again in record numbers when demand pickedup Today, most miners are in their 20’s and30’s The supervisory work force is also over-whelmingly young. In some mines, informalalliances between young foremen and youngminers have reportedly occurred in response toperceived intransigence by upper manage-ment. Low-level supervisory skills are no longersufficient, Most industry spokesmen acknowl-edge the shortage of exper ienced mineforemen who are able to maintain good rap-port with hourly employees. Some companiesare trying to upgrade supervisory skills; othershope to get by with what they have. The likelysa fe ty and p roduct ion payof f s o f morecapable foremen cannot be understated.

The 1978 contract provides for employer-de-veloped orientation programs of not less than4 days for inexperienced miners and not lessthan 1 day for experienced workers. The con-tract specifies that each program should em-phasize health and safety. The trainee pe-riod — during which a new miner cannot op-erate mobile equipment or work beyond sightand sound of another miner — was cut from 90to 45 days.

Education and training for miners can takemany forms. A sample list of priority objec-tives might include:

●

●

●

●

Machine-specific training beyond basicrequirements of State and Federal law.Training in dispute settlement directed atboth supervisors and members of theUMWA Mine Committee.Training for the Health and Safety Com-mittee to familiarize them with occupa-tional health and safety hazards andGovernment regulations.Interchangeable sk i l l s for work crewswithin the mine. The benefits from suchtraining are obvious. Safe working habitsare encouraged. The impact of absentee-ism is blunted when a miner can step into


the job of an absent worker without ex-posing himself and other crew members tohazards arising from unfamiliarity with amachine or work procedure. Recent Fed-eral regulations on miner training are astep in this direction, but critics argue thatthey are inadequate in many respects.

Wages

Most miners approved the wage package.Unadjusted standard wage rates rose from1977’s $55.68 per day for the top-paid miner to$74.32 per day in the first year. The lowest paidunderground miner went from $50.38 to $64.78per day in the first year. The gap between low-est- and highest-paid miners is $8.64 per day, asit was in the previous contract.

The 1974 agreement initiated a capped cost-of-living escalator pegged to increases in theConsumer Price Index. In the final adjustmentperiod (November 1977), the maximum infla-tion adjustment was $0.98 per hour. The newcontract includes no inflation adjustmentmechanism in the first year, and a $0.30 max-imum per hour raise in the second and thirdyears. Although the 3-year, hourly wage in-crease amounts to about 30 percent, the in-crease in real income is likely to be closer to 3percent after inflation, deductibles, and highertax payments are taken into account.

Union-Industry Relations

In the last round of negotiations, some coaloperators were encouraged by the Carter ad-ministration to break from the BCOA bargain-ing structure and conclude contracts withUMWA miners on a company or geographicalbasis. Proponents of this innovation argue thatdecentralization would reduce the impact ofcontract strikes because no common contrac-tual expiration date would exist. Some also be-lieve that the more profitable companiescould buy “labor stability” through compara-tively “fat” packages, leaving less-profitablecompanies to settle as best they can. Manynewer companies — as welI as some miners —feel the pension obligations of older BCOAcompanies limit the size of wage gains thatcan be negotiated. The other side of thedebate argues that regional or company-spe-

cific bargaining wil l create more problemsthan it promises to solve. They point out thatthis kind of bargaining historically has de-stablized this industry. The signing of anumber of agreements (each of which em-bodies a different set of wages and benefits)would create strike conditions because of thedifferences. It is improbable that miners at onemine wiII work very long for less than miners atan adjacent mine. It is also likely that minerswho strike when their contract expires wil l“picket out” other mines in order to increaseeconomic pressure on their employer. Thischain reaction could go on indefinitely as stag-gered expiration dates are reached. It is debat-able whether decentralization would producea net reduction in time lost to strikes. Had the31A -month strike actually imperiled the coun-try, solid ground would have been establishedfor a radical restructuring of the UMWA-BCOAstructure. But as a national emergency neverexisted — and is even less l ikely to in thefuture– it does not appear to be imperative tochange the status quo.

Community Development

Community development problems are be-yond the scope of the collective bargainingprocess, but they must be addressed more ef-fectively over the term of the 1978 agreementor the basic unrest that has characterized coal-field life will not abate. The most significantdifference in strike activity in the 1970’s fromearlier periods was that the former sometimeswas triggered by nonworkplace social and eco-nomic conditions, such as a gasoline rationingplan in West Virginia, controversial schooltextbooks, unsafe coal-waste impoundments,Federal court decisions, pending Federal blacklung legislation, and cutbacks in health bene-f i ts . Before the 1970’s, st r ikes were rarelycaused by matters other than those arisingover working conditions or contract terms. Re-cent field studies suggest that inadequate,unstable living conditions contribute to ab-senteeism, wildcat strikes, and lower produc-tivity. The President’s Commission on Coal,which began its investigation in September1978, is exploring the relationship between liv-ing conditions and work relations, as well as


possible strategies for improving the quality ofcoal field life.

Non-UMWA Labor

Roughly 30 percent of 1977’s 230,000 coalworkers did not belong to UMWA. Some be-long to other unions, such as the InternationalOperating Engineers or PMU. The rest belongto company-approved associations or to nolabor organization at all. In the East, most non-UMWA labor is found in small, mostly non-union mines in eastern Kentucky, Virginia, andTennessee. PMU is based in I l l inois. In theWest, miners generally are either unorganizedor non-UMWA. With a few exceptions, UMWAmines there are underground operations.

Still, UMWA exerts a good deal of indirectinfluence over non-UMWA operations. In the1977-78 strike, much non-UMWA production inthe East was shut down, too. Wages and ben-efits in non-UMWA mines are often pegged toUMWA rates. Non-UMWA operators will oftenoffer higher wages than the UMWA scale inorder to keep UMWA from organiz ing i t sminers, Three UMWA contract provisions ap-pear most objectionable to non-UMWA op-erators: job security protections, safety and

health rights, and benefits for retired miners. If .UMWA succeeds in upgrading its western sur-face-mine agreements to prevai l ing non-UMWA standards, it will probably have betterorganizing success among western surfaceminers as nonwage issues take on increasingimportance.

Conclusion

The 1977-78 shutdown was one episode in along-running coalfield drama; it was not thefinal act. Labor peace is not unreasonable for acoal operator to expect, but it is unlikely to beachieved by the approach adopted by BCOAin the recent talks. Too much bitter history andtoo many contemporary confl icts exist toenable threats and penalt ies to promotestability, let alone peace. Any long-term ap-proach requires recognition that many of theproblems have become embedded in theAmerican system of coal mining— its produc-tion process, work relations, work environ-ment, communities, and culture. Changing theconsequences of this system — absenteeism,strikes, distrust, arbitrariness — means chang-ing the components of the system that produceconfIict.

REGULATORY RESTRICTIONS ON MINING

Federally mandated permits and operatingmethods have become significant factors forthe mining industry. The principal require-ments arise under the Surface Mining Controland Reclamation Act (SMCRA), the Mine Safe-ty and Health Act, and the Clean Water Act.These are discussed in detail in chapter VII.This section addresses the ways these regula-tions affect mine operators as well as theirpotential to affect the supply of coal. The ma-jor areas of concern are the increased Ieadtimerequired to open a new mine, increased capitaland operating expenses, the designation of cer-tain areas as unsuitable for mining, and a senseof “harassment” within the industry.

A longer Ieadtime for opening new minescould result from the need for additional plan-ning, design work, and permits to comply with

Federal regulations. Permits are required underSMCRA, the Clean Water Act, and the Re-source Conservation and Recovery Act (RCRA).SMCRA mandates State permit systems in ac-cordance with Federal guidelines that includecomprehensive performance standards for sur-face mining operations and for the surface ef-fects of underground mining. These standardsare intended to prevent adverse environmentalimpacts such as ground and surface water con-tamination, degradation of land quality, andsubsidence. Mine operators must demonstrate,as a prerequisite to obtaining a mining permit,that the land can be restored to a postminingland use equal to or greater than the premininguse. The Clean Water Act and RCRA also man-date State permit systems in accordance withFederal guidelines. Under the Clean Water Act,

Ch. /V—Factors Affectlng Coal Production and Use ● 147

Federal eff luent l imitat ions designed toachieve national water quality goals apply toall active mining areas (surface and deep) in-cluding secondary recovery facilities and prep-aration plants. Solid waste disposal standardsunder RCRA are designed to control opendumping; substantial constraints could be im-posed on the disposal of mine wastes if theywere declared to be hazardous. Additionaldesign restrictions may be imposed by the re-quirements of the Mine Safety and Health Act.In addition, the planning stage for leases in-volving federalIy owned coal or for mines onFederal lands may include the preparation ofan environmental impact statement under theNational Environmental Policy Act (NE PA) orthe Federal leasing program.

Before the implementation of these en-vironmental and health and safety regulations,a mine could be opened in Iittle more timethan that required to conduct geologic sur-veys, assemble the tract, order equipment, andprepare the site, This process typically mighthave required 5 years. However, permittingand review and other mandated planning haveadded significantly to this Ieadtime. Coaloperators now estimate that the opening ofsome new mines couId require 8 to 16 yearsfrom initial exploration to full production,depending on the characteristics of the minesite and the resources of the mining company(see figure 16). However, if many of the re-quired activities proceed simultaneously, andif full compliance with applicable legislation isachieved at the outset, the Ieadtime shouId notbe increased substantially.

However, if greatly increased Ieadtimesbecome the norm, they could constrain coalsupplies for the high-growth scenario by thelate 1980’s, when a rapidly expanding coal in-dustry would need new mines not yet in theplanning stage. Supplies should be more thanadequate for all scenarios until then. In addi-tion, substantial delays in the opening of newmines could alter the structure of the industry.Because utilities will not contract for coal notneeded for many years, coal mine planningwould have to begin without an identifiedmarket. Larger mining companies can maintainfully permitted nonoperating mines for poten-

tial customers, but smaller companies couldlose their historic ease of access into themarket because the planning and permittingcosts would be incurred so far in advance of areturn. The flexibil ity of coal supplies alsocould be reduced greatly because only thosemines that are welI into the planning stagecouId be considered viable suppliers.

Increased capital and operating expensesfor surface mines would result primarily fromreclamation and other environmental protec-tion requirements For underground minesboth environmental and occupational healthand safety requirements increase productioncosts. Before passage of SMCRA, surface minereclamation costs averaged $3,000 to $5,000per acre. Depending on seam thickness, thiscost translates to a range of about $0.20 to$1.00 per ton. Industry estimates of the in-creased costs attributable to SMCRA varywidely, depending on the characteristics of thesite.

Any cost increases probably will not limitthe industry’s ability to supply coal, but theywill make coal more expensive and could forcesmall, capital-short companies out of business.In addition, coal operators could have difficul-ty obtaining reclamation bonds for areas thatare difficult to reclaim because of the strin-gent, detailed SMCRA requirements for thesesites. Federal programs are available to helpsmall companies meet these increased costs,but it is unclear whether they will be adequate.

A third concern raised by regulatory restric-tions is the designation of areas as unsuitablefor mining. Except for valid existing rights,SMCRA prohibits surface mining on Federallands valuable for recreation or other purposes(such as national parks, wildlife refuges, wil-derness areas, wild and scenic rivers) and onmuch of the national forest lands. I n addition,SMCRA requires the States to institute plan-ning processes for designating areas unsuitablefor all or certain types of surface mining. Theseinclude areas where reclamation wouId not betechnological ly or economical ly feas ible;where mining wouId be incompatible with ex-isting land use plans; where it would adverselyaffect important historic, cuItural, scientific,and aesthetic values; where it would result in

Figure 16. —Permitting Network for Surface Mines+

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Ch. IV—Factors Affecting Coal Product/on and Use • 149

substantial loss or reduction in long-range pro-ductivity of water supplies or food or fiberproducts; or where it would endanger Iife orproperty in areas subject to flooding or un-stable geology. Until these State planningprocesses have been established, it is not clearto what extent they could Iimit coal supplies.

The final factor related to Government regu-lations is the sense of “ h a r a s s m e n t ” e n -gendered within the industry by Federal reg-ulation of what historically had been the in-dustry’s prerogatives. This hostility can resultfrom the concerns discussed above (delays inmine openings, increased costs) or from inter-ference in mining practices by Federal inspec-tors, and it can occur among mine operators aswelI as between operators and miners or thepublic. Mine operators may perceive frequentinspections as harassment, especially if theoperators feel that they are making a rea-sonable effort to comply with the regulationsor that the reguIations are counterproductive.For example, mine health and safety inspectorsmay be seen by management as allied withlabor or by labor as cohorts of management,resulting in increased tension between these

groups. Similarly, SMCRA inspectors may beperceived by mine operators as allied with the“environmentalists ” and vice versa. On theother hand, all three groups — mine operators,miners, and environmentalists — may feel thatthe inspectors are incompetent and do not pro-tect any interests adequately.

An additional source of hostility within theindustry is the automatic citation provision ofthe Mine Safety and Health Act, which re-quires an inspector to cite every violation re-gardless of its severity or its potential for im-mediate correction. Automatic citations andcivil penalties are intended to deter noncom-pliance. However, as with frequent inspec-tions, they may be perceived as harassment byoperators who feel they are making a good-faith effort to comply with regulations. On theother hand, miners claim, that Federal inspec-tors do not always issue the automatic cita-tions because their experience tells them thatthe specific circumstances do not warrant it.Probably most inspectors use judgment in issu-ing citations; some are too lenient, others aretoo literal.

PRODUCTIVITY

Productivity is a measure of the efficiencyof an industrial process. It expresses a relation-ship between a unit of output and the effortthat goes into it. In coal mining, productivity isexpressed as tonnage mined per worker pershift.

Production is not the same as productivity.Production refers to total output or tonnage; itsays nothing about the efficiency of a coalmine or industry. The two concepts are related.Coal production can rise through increasingproductivity; that is, by more efficiently usinglabor, capital, management, technology, andraw resources. But output will also increasewithout any improvement in product iv i tywhen more units of production are employed.Increasingly productive companies usually re-flect an ever more efficient use of economicresources. When a company is able to raise its

productivity, it should be able to lower its pro-duction costs, better compensate its labor, sellmore cheaply, and show a better return on in-vestment. Although it is often imperative foran individual company to raise its productivityeach year, that imperative may be much lessstrong for the industry as a whole. Where sup-ply (and capacity to produce) exceeds demandas it does in the coal industry, higher produc-tivity leading to more output may hurt coalsuppliers who already have more coal thanthey can sell.

M in ing p roduct iv i t y–output pe r worke rshift—expresses efficiency in terms of laborproductivity. Coal (labor) productivity is cal-culated by dividing total tonnage mined by thenumber of employees. This formula can bemisleading. Actually, productivity reflects theefficiency of how many factors work together

— -.. .


to produce a ton of coal. When coal miningwas a labor-intensive industry and labor costsaccounted for as much as 70 percent of totalproduction costs, this way of measuring effi-ciency made sense. Then, each miner was paidon a piecework basis — so many cents per tonmined — and mining systems required manyworkers, Iittle capital, and simple tools. Today,coal mining— both surface and undergroundsystems— is capital intensive, and productivityrises or falls according to how many variablesinteract, labor being only one. A more usefulindicator of mining productivity today mightbe derived by measuring capital efficiency (inconstant dollars), mining system efficiency, in-dividual machine efficiency, or total-factor ef -ficiency.

The decline in coal productivity since 1969has received much attention. That decline hasbeen dramatized because it reversed a steeplyrising productivity curve that had character-ized the industry since 1950. I n that year, pro-ductivity was calculated at 6.77 tons perworker shift compared with 19.9 tons in 1969.Productivity almost tripled over that 20-yearperiod. But annual production never matchedthe 1950-51 level until the late-l 960’s. Risingproductivity did not result in increased pro-duction. (In fact, more bituminous and anthra-cite coal was mined in 1920— 655.5 milliontons—at a product iv i ty level of 4 tons perworker shift than was mined in 1975 —654.6miIIion tons — at 13‘A tons per worker shift. )Productivity improvement in the 1950’s and1960’s did, however, allow the biggest coalcompanies to survive a protracted demandslump. The spectacular rise of coal productivi-ty in these years was the result of mechaniza-tion of underground mining, increased surfacemining, the absence of environmental controlson surface mining, and inadequate mine safetystandards. Productivity improved statisticallybecause 70 percent fewer miners were workingin 1969 as were in 1950 while production in-creased slightly. As the numerator (tonnage) re-mained re lat ively constant in these twodecades, the denominator (workers) dropped”steadily, resulting in ever higher productivity.

In the 1970’s, production went up, but e m -ployment rose at an even faster rate. Conse-

quently, productivity declined. Undergroundproductivity fell from 15.6 tons per workershift in 1969 to 8.7 tons in 1977. Surface miningproductivity dropped from 35.7 tons to about26 tons. Product ion rose f rom about 560miIion tons in 1969 to about 688 milIion tonsin 1977, a 23-percent gain. But employment in-creased 84 percent from 125,000 in 1969 toalmost 230,000 in 1977.

Industrywide productiv i ty data must beused with caution because of numerous incon-sistencies and uncertainties in the numerator(tonnage) and denominator (workers) of theproductivity formula.

Tonnage, for example, is reported different-ly by different companies—and even withinthe same company. Productivity is affected bywhether operators report tonnage “as sold” or“as mined. ” The latter represents raw coal as itcomes directly from the mine face. The formerrepresents both raw coal (sold as is) andcleaned coal. Productivity falls in proportionto the amount of cleaned coal reported be-cause wastage (which has been increasing—see chapter 11) is subtracted from “as mined”output. Because tonnage data include dif-ferent def in i t ions of output, product iv i tystatistics may not be measuring efficiency inthe same way.

The data also do not distinguish betweensteam and metallurgical coals. Met coal andsteam coal prices were about the same in the1960’s, but met prices have been roughly dou-ble steam prices in the 1970’s. High pricesenabled inefficient met coal mines to operateprofitably. The effect of high met prices hasbeen to lower industrywide productivity.

Another data weakness involves the conceptof tonnage itself. Coals differ in quality, andtonnage simply measures weight. If, for exam-ple, the numerator in the productivity formulawere Btu instead of tonnage, underground andeastern productivity would rise relative to sur-face mine and western productivity.

The raw data may also be misleading be-cause coal companies count their workers dif-ferently. Some count only hourly employees;others include office workers. Obviously, thelarger the denominator (workers), the lower the


productivity rate. Another weakness involvesthe definition of a working shift. Actual shifttimes range from 7‘A hours to as much as 12hours, Generally, surface miners work moreovertime than underground miners. The typ-ical surface shift may be longer than theaverage underground shift. in this fashion,long-shift mines would show higher productivi-ty than short-shift operations, other things be-ing equal. This wouId tend to show surface-mine productivity higher and underground pro-ductivity lower on an aggregate basis,

perhaps the single most serious flaw in thedata is that they often grossly combine the per-formance of vastly different mining systems.Coal mines range from huge investments pro-ducing 10 to 15 million tons annually to tiny“dogholes” punched into a hillside, producing1,000 tons or less. Shovel size runs from 130yd’ down to a No. 4 hand shovel. Coal ismoved by 650 hp jumbo trucks as well as onepony-power railcars. The industry is made upof very different parts, and in analyzing pro-ductivity the differences may be more relevantthan the simiIarities.

The most obvious distinction is between sur-face and underground mining. Surface minesare roughly three times as productive as deepmines. The productivity advantage of surfacemining is inherent in its extraction technologyand geologic conditions, As more and moresurface-mined production comes from the tre-mendously efficient open-pit mines in theWest, surface mining productivity should riseand to a lesser extent, industrywide productiv-ity as well. Although OTA estimates that the60/40 ratio of strip to deep production is notlikely to change over the next 20 years, indus-trywide productivity would rise considerably ifthis ratio does increase (as it has since 1950).

Even within similar mining systems, varia-tions in productivity occur according to seamthickness and accessibility, mining techniques,and equipment size, among other factors. Un-derground productivity rates range from 31Atons from a thin-seam in southern West Vir-ginia to 30 tons or more in a thick-seam. Sim-ilarly, surface productivity ranges from about20 tons in east Kentucky to 100 tons or more inWyoming,

A second crucial distinction needs to bedrawn between new mines and old mines. Theproductivity of new underground mines aver-aged about 18 tons per shift compared with 11tons for existing deep mines in 1974.67 Similar-ly, new strip mines averaged about 70 tons perworker shift — and in some Western operationsapproached 150 tons— compared with about36 tons for existing surface mines. 68 l n d u s -t rywide productiv i ty wi l l increase as newmines replace old mines.

To be analytically useful, productivity datamust compare Iike things — mining systems,machines, geologic conditions, etc. Mine-by-mine data that include all the variables in-volved in productivity are needed. The ab-sence of such data impedes sound policy mak-ing.

The productivity decline since 1969 must beseen in Iight of these data problems; theunique factors causing the productivity in-crease between 1950 and 1970, and the equallyunique factors causing the uneven gains in ton-nage and employment since 1970.

The rise in productivity in the 1950-69 periodwas the result of a combination of conditionsthat are unlikely to be repeated. Significant ad-vances in underground and surface miningtechnology maintained output levels whilesharply reducing labor needs, (Indeed, thelabor cost per ton of coal dropped from 58.5percent of value in 1950 to 38.3 percent in1969. ’9 Further, the environmental and safetycosts of mining were not well regulated byState or Federal law, Productivity rose but at asocial cost. The combination of shrinking de-mand for labor and the cooperative arrange-ments between UMWA and BCOA kept strikeactivity to a minimum. Finally, poor marketconditions in the 1950’s and 1960’s weeded outseveral thousand small, inefficient mines, thusboosting industrywide productivity, Unem-ployment, black lung, environmental damage,and accidents were the hidden costs of risingproduct ivity.

“Coa/ TasL Force Report for Project /ndependence(U SDepartment of the Interior, November 1974), p 29

’“1 bld“Joe Baker, “Coal Mine Labor Productivity, ” p 8


What happened after 1969 to reduce pro-ductivity? The explanation for the decline can-not be pinned to a single cause. A number ofdemographic, economic, and regulatory devel-opments contributed.

First, innovations in mining technologytopped out both in reducing labor and inexpanding output. Continuous-miner technol-ogy has not changed significantly since 1969and, by that year, almost 96 percent of under-ground output was mechanically loaded. TheonIy productivity enhancing change inunderground mining has been the introductionof Iongwall systems, 70 which mined about 4percent of all underground coal in 1977.Although surface mining expanded its share ofnational production, its technology has notchanged significantly in scale or concept.

Second, as coal prices rose to unprec-edented levels, hundreds of small, inefficientmines opened, adding many employees but rel-atively l itt le tonnage to the industry’s ag-gregate. 71 Inflated coal prices enabled thesemines to operate profitably despite their rel-ative inefficiency. Conditions and policies thatencourage marginal mining wilI lower aggre-gate productivity. As long as coal prices re-mained constant in the 1950’s and 1960’s, pro-ductivity rose steadily, But when prices rosesharply in the 1970’s, productivity fell.

Third, clean air legislation and relativelysteady metallurgical demand in the 1970’smeant coal had to be cleaned, sometimescleaner than before 1969. More than 100mill ion tons of waste (the equivalent of 15 per-cent of 1977’s total output) was cleaned fromrun-of-the-mine output. Although this material

70 Longwalls can mine more coal with fewer miners, butthey are expensive and workable only in certain geologicconditions. About two-thirds of the 77 units operating i n1977 were In metallurgical mines, where high productprice justified high capital investment.

“The biggest single employment category In 1975 wasminers [n underground and surface mines producing few-er than 25,000 tons annual Iy 46,695 miners in thesemines (about 24 percent of all miners) produced only141 million tons (about 2 percent of all output) Calcu-lated from, /njury Experience in Coa/ Mining, 1975, in-formational Report, 1077 (Department of Labor, MiningSafety and Health Administration, 1978), p 77.

is taken from the ground, much of it is notcounted in productivity calcuIations. For anumber of reasons, deep-mined coal is moreoften and more thoroughly cleaned than sur-face-mined coal, which further lowers deep-mine productivity. Productivity at individualmines may be substantially affected by thisfactor. For example, one underground mineOTA visited was routinely discarding 56 per-cent of material taken from the mine in orderto fulfill coal-quality specifications in its sup-ply contract. Productivity at this mine wasabout 3 1/2 tons per worker shift. I f its produc-tion had not had to be cleaned, productivitywould have doubled. Throughout the 1970’s,the percentage of refuse-to-raw coal hasinched upward. This reflects either dirtier rawcoal or stricter customer specifications, andpossibly both. Assuming that the Environmen-tal Protection Agency (E PA) finally promul-gates a 0.2-lb/85-percent sulfur removal limita-tion, the amount of coal cleaned is likely to in-crease as the utility market expands. Also, asthe more marginal seams are mined, theamount of waste extracted in mining may in-crease. Both factors retard productivity gains,

Fourth, the labor force has changed dramat-ically since 1969. Both miners and supervisorsare young, often inexperienced and inefficient.Almost half of the experienced 1969 workforce retired in the 1970’s and 65 percent of to-day’s work force has been hired in the 1970’s.The industry has had trouble transferring thepractical wisdom of its older miners to thisnew generation. Absenteeism has also reducedproductivity. Few hard data exist on the actualextent of absenteeism or its root causes. Oneway of offsett ing absenteeism is to t rainminers to have interchangeable skills so thateach can do every job on the crew. But fewcoal companies do this. Nor do many com-panies employ “utility” workers as the auto-makers do, whose job it is to substitute forabsentee workers. The industry may be able toimprove p roduct iv i t y by adopt ing suchchanges if permitted by union work rules.Finally, an estimated 5,000 miners were hiredafter 1974, when the new UMWA contract re-quired helpers on underground face equip-ment. Helpers safen the operation of mobileequipment by moving high-voltage trail ing

Ch. I V—Factors Affecting Coal Production and Use ● 153

cables out of the way, watching roof and ribconditions, helping the machine operatormaneuver, and being around in case of trou-ble. Helpers also receive training in machineoperation from experienced miners duringtheir apprenticeship, which allows them —after 120 training days — to operate equipmentwhen the regular operator is not present. Theaddition of 5,000 helper jobs lowered produc-tivity statistics. But the industry may recoupthese statistical losses in the future by having apool of trained machine operators ready tostep in at a moment’s notice. Although the pro-ductivity decline has its qualitative side (suchas inexperience or anti-company attitude), thesimple quantitative aspect— more miners— isits real cause.

Fifth, disabling injuries lower productivity tothe extent they disrupt production teams andrequire extra personnel. Disabling injuries haverisen since 1969. I n that year, 8,358 under-ground injuries and 967 surface injuries wererecorded. I n 1977, underground disabling in-juries had risen 40 percent to 11,724 and sur-face injuries had gone up 132 percent to 2,246(see Workplace Safety, table 35). The amountof lost time from disabling injuries is substan-tial. Average severity of an injury refers to theaverage number of calendar days lost by an in-jured worker. I n 1977, underground miners ex-perienced 146 permanent partial injuries cost-ing an average of 297 lost days and 11,575 tem-porary total injuries with an average cost of 73work days. 72 Surface miners experienced 66permanent partial injuries with an average lossof 529 days each and 2,211 temporary total in-juries with an average loss of 58 days each.Together, underground and surface injuriesresulted in the loss of 1,051,489 calendar daysin 1977, which meant 751,079 lost productiondays. That represents 3,391 lost worker years. ”In one form or another, an equivalent amountof labor had to be hired to substitute for theseinjured workers to maintain production. Thisrepresented extra personnel and extra dolIarcosts to mine operators, as well as reducedproductivity. To put 3,391 lost worker years ina comparative perspective, it represents more

‘iData supplled by MS HA’S Data Analys[s C e n t e r ,January 1979 Excludes permanent total injuries

than 30 percent of time lost from wildcatstrikes in 1977.

Sixth, the 1970’s saw extensive legislativeand administrative regulation of the coal in-dus t ry . S ta tes began to requ i re su r faceoperators to reclaim land and control land-slides and water runoff. This forced the in-dustry to hire more workers and buy newequipment. This added effort was “social [yproductive” from a national and public per-spective but lowered the economic productivi-ty of the individual operator and the industry.Neither the Federal Office of Surface Miningnor industry associations could supply data onthe percentage of the Nation’s 64,000 surfaceminers that were engaged in reclamation work,

A major regulatory initiative that affectedunderground mining was the 1969 Coal MineHealth and Safety Act. Federal health andsafety standards forced operators to devotemore personnel and equipment time to ventila-tion, rockdusting, methane and dust monitor-ing, roof control, maintenance, and retrofittingmachinery with safety features. Safer oper-ating procedures require equipment to bemoved in and out of the working place morefrequently than before. Had these practicesnot been adopted, it is reasonable to supposethat coal’s safety record would have been sub-stantially worse. Some new personnel wereneeded to handle the employee-training andadministrative aspects of the Act. Other gov-ernmental regulations required new safety andenvironmental personnel. Office workers —professional and clerical –were needed to ob-

73 Calculated In the fol Iowlng manner Multlply numberof lnjur[es by the average number of days lost to get tota Inumber of lost days To f Ind the number of lost workdays, subtract two-sevenths of the total number of lostdays (representing weekend time) from the total numberof lost days Divide this sum by the average number otworking days each year– 22o (underground), 230(surf ace)–to get the number of work-year equivalentslost to dlsabllng injuries. For underground mlnlng, thisformula finds 888,337 lost calendar days reduces to634,539 lost work days, or 2,884 lost worker vears Forsurface mlnlng, there were 163, 152 lo\t calendar days or116,.539 lost work d~ys, the equ Iva lent of 507 lost workeryears Adding underground and surface lo~t worker yearsgives a total of 3,391 lost worker yedrs from m Ine Inju rlesI n 1977 Data for worker$ I n m I ne construct Ion, prepa ra-tion plants, etc are not Included


tain permits, develop plans and administerthem at the minesite. In 1969, for example,operators reported 2,640 office workers of allkinds at minesites; that figure rose to 7,037 in1977, an increase of 167 percent. Presumably,all of these management employees do nec-essary work. But they lower a mine’s produc-tivity when they are included as workers in theproductivity equation. It has not been possibleto determine how many officeworkers are rou-tinely counted in productivity calculations,but anecdotal evidence suggests the number issubstantial.

Other factors may contribute to decliningproductivity. Operators may have trouble get-ting capital. Delays in replacing mining equip-ment may reduce output. Underground haul-age technology has not kept pace with cuttingtechnology. These systems often break down.In older mines haulage and ground-controlproblems tend to be more troublesome. Trans-portation problems from mine to market slowdown production when logjams develop. Prim-itive coal field social conditions and public ser-vice deficiencies have been cited in several re-cent s t u d i e s a s contributing t o h i g habsenteeism and hostile labor-managementrelations, which lower productivity.

What of the Future?

The decline in coal mine productivity hasprobably bottomed out. Gradual improvementover the next decade should occur if many oftoday’s trends continue. Some of these trendsare mentioned here. Western surface miningwill account for an increasing share of totalproduction. Its productivity ranges from 50 to150 tons per worker shift. Many of the person-nel needed to handle the requirements ofFederal environmental and safety regulationsare already hired. Major legislative initiativesin both areas requiring many more salaried orhourly employees are not likely. The big hiringsurge of young workers has already takenplace. They are likely to spend the next 20years or so in mining as highly skil led, ex-perienced employees. Marginal, inefficientmines w i l l p robab ly c lose i f coa l p r icesstabilize and big companies expand. New bigmines with high productivity rates will open;

old, smaller mines will close. Finally, it is likelythat many operators will try to improve theirtraining programs and labor relations, whichshould help raise productivity.

However, increasing productivity may be amixed blessing. Strategies to enhance produc-tivity directly affect the health and safety ofcoal workers and the quality of community Iifein the coalfields. Production can be boostedthrough one of four productivity-enhancingstrategies, each of which carries a different setof workplace and social consequences.

These strategies are:

1. Use fewer workers to mine more coal.2. Speed the pace of work so that each

miner produces more tonnage.3. Invest capital in more efficient equipment

to enable each worker to produce more.4. Make the work process more efficient by

redesigning jobs, improving morale andmotivation or improving coordination inthe production cycle.

The first two approaches can have substan-tial health, safety, and social costs, dependingon how the work force is expected to maintainproduction levels. If labor-saving equipment ispurchased, health and safety may be improvedbecause fewer workers will be exposed to dan-gerous conditions. However, if the remainingemployees are simply expected to work fasteror spend less time taking safety precautions,accident frequency or health conditions mayworsen. One major West Virginia operator re-cently announced the layoff of 2,100 workersto improve productivity. This operator whohopes to maintain output with fewer workersconsistently shows extremely high disabling-injury rates, and the safety and heaIth conse-quences of this change may be substantial. In-efficient sections of these mines may closedown entirely, or “nonproductive” jobs relatedto mine housekeeping, rock dusting, and ven-tilation work may be eliminated.

Speedup strategies (#2) may involve heavysafety and health costs. Recently, a number ofmines have adopted cash bonus systemswhereby a miner can receive extra income if atonnage quota is exceeded. One union officialin the United Kingdom, where a similar plan

Ch. /V—Factors Affecting Coal Production and Use • 155

was begun in 1977, reported a 50-percent in-crease in fatalities at mines that switched tothe incentive plans. The American experiencewith these plans is too recent to assess. SomeU.S. plans tie the cash bonus to both safety(defined as disabling injuries) and productivity.Clearly, this is a commendable approach. Butthe plans may encourage miners and manage-ment to undercount i n juries i n order to pre-serve the bonus payoff Even plans that tie pro-duction to safety ignore possible health costs.If miners work faster at producing coal, theymay take less time to maintain workplace con-ditions that protect their health. As there is noway to measure a worker’s immediate responeto increased dust or noise, bonus plans may beencouraging workers to buy short-term extradollars in return for their long-term health.

Investing capital for greater productivity (#3) can take two forms. First, a mine operatormay upgrade his mining system by replacingexisting machines with newer, more efficientmodels. The costs and benefits of this invest-ment — in productivity, health and safety— aregenerally well-known. A second form of pro-ductivity investment is the purchasing of a newproduct that has recently been commercial-ized. The productivity advantages of new tech-nology are usually more easily estimated thanany possible health and safety costs. Congressstated clearly that one of the purposes of the1969 Act was “ . . to prevent newly createdhazards resulting from new technology in coalmining. ” The industry is aware that new tech-nology sometimes may increase productivityat the expense of safety. Joseph Brennan, presi-dent of BCOA, noted that “any new miningtechnology developed to aid in boosting pro-ductivity should also incorporate safety as oneof its key features.”74 It is likely that the safestproductivity strategy would be one that re-moved the most workers from the workplace,but the unemployment implications of this ap-proach would be immense.

Although rising product iv i ty br ings eco-nomic benefits to management and labor,greater production is the primary goal of a na-

74’’Productivlty and the BCOA, ” Coal Age, july 1975, p97

tional energy policy. Increasing coal produc-tion is related to— but is not necessarily thesame as — raising productivity, Each objectiveentails a different set of economic and socialimplications. Price, for example, affects pro-ductivity and production differently. High coalprices lower industrywide productivity butraise production; low prices do the reverse.Federal policy has yet to specify the desiredblend of production and productivity. Privatepolicy, if the 1978 UMWA-BCOA contract isany indication, appears to have shifted towardproductivity enhancement as a way of increas-ing production. Before decisions are made thatcommit Federal policy to either direction, ma-jor research is needed into the relationshipsamong productivity, safety and market condi-tions on a mine-by-mine basis, together with are-evaluation of productivity measurementsthemselves. Most Federal research personneldo not feel that a radical technological break-through— something like in-situ combustionfor power generation or a surface-controlled,automated underground mining system — arein the offing. If it were, Federal and local of-ficials would face the social dislocation ofthousands of unemployed miners and possiblythe economic devastation of hundreds of coalmining communities akin to that of the 1950’sand 1960’s. The state of coal mining technol-ogy is such that production can double or tri-ple without any major technological innova-tions. Specific aspects of the mining cycle canbenefit from technological innovation, butviewed as a whole, no compelling or urgentneed exists to commercialize new technologiesto meet anticipated production goals,

Restructuring the production process andbetter training and education (#4) may offerthe most promise for productivity improve-ment over the next decade. Little research andexperimentation has been done on better waysof organizing work and managing productioncrews. Similarly, little attention has been givento determining the most effective safety andjob training and education programs. Both effi-ciency and safety are Iikely to increase in rela-tion to the relevance of their training and theinvolvement miners feel they have in its prac-tical application.


WATER AVAILABILITY

Water is an essential resource for almost allphases of energy development. The avail-abil ity of sufficient water to meet energyneeds is more than a function of the presenceof large quantities of water; it depends on thepolitical acceptability of using the physicallyavailable supply, the economic competitionfrom other users, the legal system controllingwater rights, environmental factors, and otheri nfIuences.

Irrigated agriculture is the major consump-tive water use in the United States. Most agri-cultural water is consumed west of the Missis-sippi. Improved irrigation efficiency can re-duce consumptive use of water, with a portionof this savings made available to the energysector in the West. The SoiI Conservation Serv-ice (SCS) estimates that in a dry year 195 mil-lion acre-feet of water is diverted for irrigation,of which 103 m i II ion acre-feet of depletion ischarged to irrigated agriculture. Of this, 78million acre-feet (76 percent) is consumptivelyused by the growing crop and the remaining 24miIIion acre-feet is lost to “incidental” causes.

SCS estimates that, by the year 2000, 8-mil-lion acre-feet of the water that is presently“lost” each year can be salvaged by improvingirrigation efficiency. (A bonus of improved ef-ficiency would be a 48-million acre-feet reduc-tion in withdrawals and a similar reduction inreturn flows, yielding a substantial improve-ment in water quality. ) Depending on its loca-tion, part of this water could become availableto energy developers. However, agriculturepays such a low price for water ($I5 to $40/-acre-foot) that little incentive exists for its effi-cient use.

Besides improving irr igation efficiency, anumber of other agriculture water conserva-tion alternatives exist, including:

● crops witching (from water-intensivecrops, such as alfalfa, to less intensivecrops such as wheat, oats, and barley);

● improvement of cuIt ivat ion procedures;● removing marginal lands from produc-

tion; and

● removal of water-using natural vegeta-tion. 75

None of these alternatives is applied univer-sally; some have potentially undesirable sideeffects. Crop switching depends on availablemarkets and proper farming conditions. Re-moving marginal lands from production canlead to unemployment and other social prob-lems. Natural vegetation (“phreatophyte”)removal can harm wildlife habitat and erodeaffected lands.

A major policy problem is that incentives toconserve agricultural water have been so lowthat minimal research and analysis have beendone to illuminate the tradeoffs among alter-native water use policies. This lack of knowl-edge, coupled with extreme resistance to anychange in water policy, has hampered intel-ligent reform of water management practicesfor agriculture.

Meanwhile, without management reform tomake water more readily available, the energyindustry can afford to pay far more for waterthan a farmer can. In the Western States, someowners are selling their agricultural land andits associated water rights for coal mining andenergy development. If this process of convert-ing agricultural land and water resources tothe energy sector continues and accelerates, itmay become an important political issue in theWest. It seems improbable that State govern-ments wil l allow wholesale replacement ofagriculture by energy. It is clear, however, thatthe heavy subsidies paid to marginal farmersby selling them water at a small fraction of ac-tual costs is a very expensive policy.

One possible compromise would be to es-tablish a partnership between farmers and theenergy sector with the cooperation of the Stategovernments. The energy sector could financewater conservation measures and use thewater that is saved. Although cost estimatesare unavailable, the cost seems likely to beconsiderably less than other alternatives being

‘5S Plotkin, et al., “Water and Energy In the WesternCoal Lands, ” Water Resources 13u//etin, February 1979

Ch. IV—Factors Affecting Coal ProductIon and Use . 157

considered, such as the diversion of waterfrom the Oahe reservoir in South Dakota toGillette, Wyo., at an estimated cost of $700 to$900/per acre-foot, or the changing of technol-ogy in electric power from wet-cooling to dry-cooling systems at an estimated minimumequivalent cost of $900 per acre foot.76

Inter-basin transfers are often hampered bylegal and institutional complaints that haveemotional overtones. Congress has the powereither to prohibit or require an interstate inter-basin water transfer. As part of the ColoradoRiver Basin Project Act (Public Law 90-537,also known as the Central Arizona Project Act),Congress in 1968 declared a 10-year morato-rium on studies on the importation of waterinto the Colorado River Basin. Many questionsremain unsettled on this issue. Water rights re-main unadjudicated for many river basins inthe West—particularly in the Northwest; thetotal allocation of water within many basinsremains unknown, and conflicts have not beensettled for many multiple uses. Questions re-main unresolved on the amount of water re-quired for instream purposes; regional goalshave not yet been backed by local goals andpolicies on land use, economic growth, andpopulation growth, making uncertain the pre-diction of water requirements.

Indian tribes are increasingly exercising theirwater rights in the West. The present confusionover Indian water rights may be detrimental tothe planning of water and related land re-sources in general, and to energy developmentin the West in particular. The key to Indianwater rights is a 1908 U.S. Supreme Court casethat produced what is widely known as the“Winters Doctrine. ” The case involved a dis-pute between Indians of the Fort Belknap Res-ervation and non-Indian appropriators overwaters of the MiIk River, a nonnavigable Mon-tana waterway. The Court held that, althoughit was not explicitly mentioned in the 1888documents creating the Fort Belknap Reserva-tion, there existed an implied reservation ofrights to the use of waters that originate on,traverse, or border on the Indian land, with apriority dating from the time the treaty createdthe reservation. The Court’s language has led

“1 bld

to two interpretations of the source of theright. One line of reasoning argues that, withregard to Indian reservations created by treaty(or executive orders), water rights were re-tained by the Indians at the time of the treaty.Moreover, the document is silent on the ques-tion because the Indians did not intend totransfer the water rights. The alternative viewholds that the water rights were in fact trans-ferred, but that the Federal Government, underits own powers, “reserved” an amount of waterfrom proximate streams to support an agricul-tural existence for the Indians. In Arizona v.California, the U.S. Supreme Court approvedwater allocations to various Colorado RiverBasin Indian reservations. Water quantitiesdemanded and ultimately adjudicated for ln-dian reservations remain to be determined,Whatever the amounts, the water will come offthe top of the available water in the ColoradoRiver Basin, reducing the amounts remainingto the States for allocation to agricultural,energy development, municipal, recreational,and other uses.

Ground water currently supplies about 20percent of all freshwater used in the UnitedStates. The estimated storage capacity of aqui-fers (underground reservoirs) is nearly 20 timesthe combined volume of all of the Nation’srivers, ponds, and other surface water. Groundwater serves about 80 percent of municipalwater systems and supplies 95 percent of ruralneeds; in all, it serves 50 percent of the Na-tion’s population. Irrigation accounts for morethan half of ground water use. In many parts ofthe country ground water mining (pumpingwater from an aquifer faster than the water inthe aquifer is replenished) is occurring. Thetendency to use saline water for energy devel-opment may add to the overall problem of soilsubsidence, salt water intrusion, and the lower-ing of the water table in many aquifers. Inmany States, ground water law, Iike ripariansurface water law, is inadequate to allocatethe resource among competing users and isunresponsive to the problem of excessive use.The first defect results from vagueness of therule of allocation (“reasonable use”) and thesecond from failure of the legal system to per-ceive that the ground water is often a com-mon-pool resource for which there is Iittle in-


centive to save an exhaustible supply for usetomorrow. Any user who seeks to save it is sub-ject to having his savings captured by anotherpumper from the same aquifer.

In virgin or undepleted conditions it is es-timated that the average annual surface runoffor yield of the stream systems of the 11 West-ern States totaled 427 mill ion acre-feet, in-cluding 50 miIl ion acre-feet of inflow fromCanada. Today, owing to the cumulative activ-ities of man, this virgin water supply has beendepleted by 83 million acre-feet of consump-tive water use annually, leaving 344 millionacre-feet or about 81 percent of the virginyield sti l l unconsumed. Within this westernregion are large areas such as the Upper RioGrande and the Gila River Basins, where thetotal annual surface water supply, for all prac-tical purposes, is completely consumed. In theColorado River Basin this condition will bereached when the Central Arizona project iscompleted. The Missouri River and its tribu-taries in Montana and northern Wyoming ap-pear to have sufficient unused water suppliesto meet needs for the foreseeable future. ThePlatte River tributaries in Wyoming, and par-ticularly in Colorado, are approaching thesaturation point in water use.

Present and projected water demands for1985 and 2000 indicate, on one hand, severeregional water shortages and problems, and onthe other hand adequate water availability tomeet energy needs on a nationwide basis. Ac-cording to the 1975 National Assessment of theU.S. Water Resources Council, the Nation’sfreshwater withdrawals in 1975 from groundand surface water sources for all purposesaverage about 404 mi I I ion acre-feet/year(mafy). Of this amount, 125 mafy were con-sumed through evaporation or incorporationinto products, and the remainder was returnedto surface water sources for possible reuse indownstream locations. By 2000, total with-drawals are projected to be about 348 mafy,with about 151 mafy being consumed — a 14-

percent reduction in withdrawal, but a 20-percent increase in the amount consumed.

The production of energy and the extractionof fuels from which energy is produced con-stituted 27 percent of the total U.S. waterwithdrawals and 3 percent of total consump-tion in 1975. By 2000, mining and energy pro-duction (excluding synthetic fuels) will con-stitute 27 percent of the U.S. withdrawals and10 percent of total consumption.

The geographic and temporal distribution ofthe Nation’s surface waters is so variable as topose substantial problems for energy develop-ment where billion dollar localities depend ona continuous supply of water. Rainfall varieswidely from region to region, from season toseason, and from year to year. Similar varia-tions occur in runoff and streamflows. For ex-ample, within a normal year, the ratio of max-imum flow to minimum flow may be 500 to 1or greater. Year to year variations in the aver-age flow also are substantial. Even in areas ofhigh precipitation and runoff, a series of dryyears may occur, resulting in serious droughtproblems such as those in the Northwest from1961 to 1966 and in the Pacific Northwest in1976 and 1977.

The United States appears to have enoughwater available to supply its most urgentneeds, but there are numerous legal, institu-tional, and political constraints on its use, andmany areas may have severe water shortagesunless concrete physical measures — restraintson development, water conservation require-ments, construction of additional storage,etc. — are taken. Some critical elements oflegal/institutional change include:

●

●

●

resolving the problems of Indian w a t e rrights;making the price of water commensuratewith its cost whiIe recognizing the non-price value to a locale of alternative typesof development; anddeveloping a cooperative, instead of com-petitive, relationship between energy andagricuIture.


CAPITAL AVAILABILITY

The costs of coal production and conversionfacilities have increased rapidly because of hy-perinflation in the equipment market and theaddition-of environmental protection controls.Coupled with the rapid growth expected, muchmore capital wilI be needed. The constraintsand uncertainties discussed in other sectionswilI make financing more difficult by increas-ing overalI production costs. Nevertheless, ifdemand for coal actually develops, financingthe new mines probably will not raise insur-mountable problems. As discussed previouslyin the Industry Profile section, changes legis-

lated in the industry structure will have an un-predictable effect in this area. Utilities mayhave more difficulty raising capital for a varie-ty of reasons, which this report has not studiedin detail, but most analysts feel the problemswill not be insurmountable. If necessary, anumber of different incentives could be con-sidered to make all the necessary financingavailable. These could include tax incentives,loan guarantees, guaranteed purchase pricesfor products, investment tax credits, and amore uniform application of regulatory policy.

EQUIPMENT

Most studies of the potential availability ofmining equipment to meet expanded coal de-mands have concluded that equipment can besupplied as needed. The one exception is thelong Ieadtime for delivery on large draglinesused to strip mine Western coal. However,these conclusions were based on the expecta-tion that much of the expansion of productionwould come from Western coals. If there is ashift toward more production from Eastern un-derground mines, the dragline delays may notbe ser ious but del iver ies of undergroundequipment could be delayed.

Little information is available on the condi-tion of existing mining capacity and how muchupgrading will be required to meet new under-ground production targets. There are fewmining equipment suppliers and most aresmall; a sudden increase in demand for newequipment would strain their ability to supplythe industry’s needs and they may have dif-ficulty raising the capital to expand their pro-duction to meet the new demand.

TRANSPORTATION

On a national scale, coal development prob-ably will not be constrained by the availabilityof transportation for the period under study.Minor capacity expansions will be required by1985, and more significant ones will be neededthereafter. However, transportation facilitiescan be planned and constructed within thesame amount of time as powerplants or largemines, so that with adequate investment andplanning, improvements wilI take place asneeded,

Rather than reduce the total level of na-tional coal production and use, transportation

bottlenecks that do develop will tend to alterthe pattern of mining, shipment, and consump-tion. Routes and mode choices will be adjustedto alleviate capacity limitations, for example,and mining and power generation will tend tobe expanded only where transportation serviceis adequate.

At the local level, however, availability ofthe means of transporting coal, or the electricpower derived from it, will be significant. Thefollowing limiting factors may serve to inhibitcoal growth in specific regions.


Rail

Some northeastern and Midwestern rail-roads are characterized by poor financial per-formance and deteriorated track conditions.Without either public or private investment inright-of-way improvements, particularly in Ap-palachia, growth in mining in this region maybe inhibited, truck use increased, and m lne-

. .

mouth power generation expanded.

Western coal-producing areas are served byrailroads in somewhat better financial condi-tion, but there rail lines must be extended toserve new mines.

Highway

Investment in Appalachian coal roads hasalso not kept up with increases in truck traffic.Deteriorated roads, like deteriorated rail lines,may eventually inhibit coal production in af-fected localities.

Waterway

Barge transportation is ultimately limited bythe capacity of channels and locks, which areconstructed and maintained by the ArmyCorps of Engineers. Major extensions and im-provements to the waterway system are au-thorized by Congress; failure to undertakeprojects as capacity limitations are reached

also will affect regional productionket patterns and will tend to divertraiIroads.

Slurry Pipelines

and mar-traffic to

Slurry pipelines become an alternative torailroads only where rights-of-way and waterrights can be acquired. Slurry pipeline enter-prises do not enjoy the power of eminent do-main in many States, and opposition by rail-roads and other landowners can impede devel-opment of this type of facility. Also westerncoal-producing States are characterized byscarcity of water, which may not be madeavai lable by local author i t ies f o r s l u r r ypipelines.

High-Voltage Transmission

Installation of long-distance transmissionl ines general ly requires Federal approval ,which provides an opportunity for opponentsto intervene, particularly on environmentalgrounds. Siting powerplants to take strategicadvantage of this means of transporting powermay also be difficult, particularly in westerncoal-producing areas. Regulations to preventsignificant deterioration of pristine air qualityunder the Clean Air Act and local oppositionto water use and other environmental impactsserve to inhibit mine-mouth power generation,for which long-distance transmission generallyis suited.

REGULATORY RESTRICTIONS ON COMBUSTION

Federal agencies indirectly regulate thesiting of large new coal combustion facilitesand directly regulate the construction andoperation of these facil it ies as well as thedisposal of combustion wastes. The principalconstraints are imposed by the Clean Air Act;additional considerations include the CleanWater Act, the National Environmental PolicyAct (N EPA), the Resource Conservation andRecovery Act (RCRA), the Endangered SpeciesAct, and regulations governing the use ofFederal lands and of navigable waters. Thelegal framework of most of these provisions is

discussed in chapter VI l . Th is sect ion ad-dresses the constraints imposed by theseregulations on coal users; the next sectiondiscusses the options available for operatingwithin those constraints.

Facility Siting

Facility siting is affected primarily by theClean Air Act; other considerations may ariseunder the Clean Water Act, NE PA, the En-dangered Species Act, and regulations relatedto the use of Federal lands.


The Clean Air Act is structured around Na-tional Ambient Air Quality Standards (NAAQS)(see table 18), which are implemented througha variety of regulatory programs designed toIimit emissions of airborne polIutants from sta-tionary and mobile sources. Programs ap-plicable to stationary sources primarily usecontrol technology requirements and numer-ical emission limitations to regulate polIutionfrom new and existing facilities, from facilitieslocated in clean and dirty air areas, and fromfacilities located near scenic areas such as na-tional parks.Table 18.—National Ambient Air Quality Standards

AveragingPollutant time

ParticuIatematter Annual (geo-

metric mean)24-hour

Sulfur 3-hourdioxide . . . Annual (arith-

metic mean) “24-hour

Primarystandard

75 ug/m3

260 ug/m3

—80 ug/m3

365 ug/m3

3-hourNitrogen

dioxide . . Annual (arith-metic mean)

24-hour3-hour -.

A s o f 1 9 7 7 , 1 1 6 o f 2 4 7

regions (AQCRS) reportedprimary annual particulatereported violations of the

Secondarystandard

60 uglm3

150 ug/mJ——

—— 1,300 ug/m3

100 ug/m3 100 ~g/m3

— —— —

air quality controlviolations of the

standard while 10824-hour standard.

Similarly, 12 AQCRs reported violations of theprimary annual SO2 standard while 37 reportedviolat ions of the 24-hour standard. Theseregions are designated nonattainment areasfor these pollutants, as shown in figures 17 and18. Many of the AQCRS that are shown asnonattainment areas may only have localizedviolations with the remainder of the AQCR incompliance. The States are responsible fordeveloping control strategies for areas show-ing violations that wilI provide for the attain-ment of the primary NAAQS as expeditiouslyas practicable, but not later than December31, 1982, The State strategy must require signif-icant annual incremental emission reductionsfrom existing stationary sources in areas thatshow violations, as welI as permits for the con-struction and operation of new or modifiedsources that would exacerbate existing NAAQSviolations.

Nonattainment programs will impose severeconstraints not only on increased coal use buton all growth in these areas. As mentionedabove, most of the AQCRS have not attainedthe primary particulate standards, while 15percent have not met the S02 standards. Wher-ever a new source would exacerbate an exist-ing NAAQS violation, the permit applicantmust apply the lowest achievable emissionrate (LAER) and must secure from existingsources in the area emission reductions thatmore than offset the emissions from the pro-posed facility. The cost of meeting these tworequirements is high, and securing the offset-ting emission reductions is difficult. Conse-quently, new sources are more likely to belocated in rural areas where the NAAQS havebeen achieved. In addition, major modifica-tions to existing sources in nonattainmentareas probably would be rejected in favor ofnew sources in clean air areas.

However, the Clean Air Act also includescomprehensive provisions to prevent the sig-nificant deterioration (P SD) of air quality inareas where the air is cleaner than the NAAQSrequire, The PSD increments for Class I areas(usually parks or monuments, or wildernessareas) allow the lowest increase in ambientconcentrations over the baseline, and thus thefewest new stationary sources, while the ClassI I I increments allow the greatest increase (seetable 19). In no event may a new source lo-cated in a clean air area cause the concentra-tion of any pollutant to exceed either the na-tional primary or secondary ambient air quali-ty standard, whichever concentration is lower.At present the PSD regulations apply only toemiss ions of part iculate matter and SO2.Regulations for NO 2, hydrocarbons, photo-chemical oxidants, and carbon monoxide areto be promulgated by August 1979.

To obtain a permit to locate a new source inan area subject to the PSD regulations, the ap-plicant must demonstrate that the source willmeet all applicable emission limitations underthe State implementation plan (SIP) as well asperformance standards for new sources andemission standards for hazardous pollutants,and that the source wi l l apply the bestavailable control technology (BACT). BACT is

Figure 17.—AQCRs Status of Compliance With Ambient Air Quality Standards for Suspended Particulate

. .**.

SOURCE U S Enwronmental ProtectIon Agency 1976a

determined on a case-by-case basis, taking intoaccount energy, environmental, and economicimpacts and other costs. In addition, the appli-cant must demonstrate, based on air qualitymonitoring data and modeling techniques,that allowable emissions from the source willnot cause or contribute to air pollution inviolation of the NAAQS or PSD increments.The permit applicant also must provide ananalysis of the source’s air-quality-related im-pacts on visibility, soils, vegetation, and an-ticipated induced industrial, commercial, andresidential growth.

Under the 1977 Clean Air Act amendments,PSD provisions apply to a source in any of 28categories (including fossil-fuel-fired steam

❑ Areas with violations

v

Areas with inadequate data.

Status unknown

electric generating units of more than 250million Btu/hr heat input and coal-cleaningplants with thermal dryers) with uncontrolledemissions of 100 tons per year, or to any sourcewith uncontrolled emissions of 250 tons peryear. Previous regulations applied only tosources in 19 specified categories. However,under the new regulations, only those sourceswith controlled emissions of 50 tons/yr orgreater or that would affect a Class I area or anarea where the increment is known to be vio-lated, wi l l be subject to fu l l PSD review.Sources with controlled emissions of less than50 tons per year need only demonstrate thatthey will meet all applicable emission limita-tions. Each SIP must include a program toassess periodically whether emissions from


Figure 18.—AQCRS Status of Compliance With Ambient Air Quality Standards for Sulfur Dioxide

%

,.9

. ,*

..- . +-

0

n)

SOURCE U S Enwronmental ProtectIon Agency. 1976a

‘a’ ❑ Areas (n compliance

these small, exempt sources, and from anyother sources that may be unreviewed becauseof their date of construction, are endangeringPSD increments.

Because the 1977 PSD provisions apply to awider range of sources, they are expected to in-crease the costs of facility siting significantly.EPA estimates that 1,600 sources of all typeswil l be subject to the permit requirementseach year (as compared to 164 per year underthe previous regulations). In addition, there aretwo situations in which facility siting probablywill be constrained, First, PSD permits will notbe available for large new sources in areaswhere the difference between the baselineconcentration and the NAAQS already is less

Areas with violations

❑ Areas with Inadequate dataStatus unknown

than the allowable increment. Second, wherethere are several sources that are exempt fromthe PSD requirements because of their size ordate of construction, these exempt and unre-viewed sources may capture the available in-crements and foreclose siting for larger newfacilities, as mentioned above, States are re-quired to assess periodically the emissionsfrom these exempt and unreviewed sources.

Finally, provisions in the Clean Air Act de-signed to protect visibility in areas primarilyimportant for scenic values, such as nationalparks, are expected to affect the siting of coal-fired facilities. EPA’s regulations, to be pro-muIgated not later than August 1979, are to re-quire SIP revisions in order to achieve visibility


Table 19.—Ambient Air Increments

Maximumallowableincrease

Pollutant (~9mY

Class IParticulate matter .

Annual geometric mean . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24-hr maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sulfur dioxideAnnual arithmetic mean . . . . . . . . . . . . . ..24-hr maximum .........=. . . . . . . . . . . .

3-hr maximum .~.-.-~.-..-..-ti.

Classll

Particulate matterAnnual geometric mean . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24-hr maximum ~~.fi.fi.fi.fiti.ti.~ti-=ti..

Sulfur dioxideAnnual Arithmetic mean . . . . . . . . . . . . . . ..24-hr maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-hr maximum titi.-.--ti.-~ti--.tifiti..ti..

Class Ill

Particulate matterAnnual geometric mean . . . . . . . . . . . . . . ..24-hr maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sulfur dioxideAnnual arithmetic mean . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24-hr maximum ~.~.~.-.f~.---~-.-titi-.~-3-hr maximum ..fi..ti..-~.~tititifitifi

510

25

25

1937

2091

512

3775

40182700

improvement by retrofitting plants in existencefor less than 15 years as well as by adopting along-term strategy for progress toward a na-tional visibility goal. Proposed fossil-fuel-firedpowerplants with a design capacity of morethan 750 MW must demonstrate that they willnot cause or contribute to the significant im-pairment of visibility in any of the specifiedareas. However, until the visibility regulationshave been promulgated, it is not possible todetermine their impact on the costs of, or siteselection for, coal-fired facilities.

Additional, less significant constraints onsiting are imposed by the permit requirementsof the Clean Water Act, the Army Corps of En-gineers, and agencies having jurisdiction overFederal Iands, as well as by the general require-ments of NEPA, the National Historic Preserva-tion Act(NHPA) the Fish and Wildlife Coordi-nation Act (FWCA), and the Endangered Spe-cies Act. The Clean Water Act is structured

around the quality of water necessary for avariety of uses, including public water sup-plies, propagation of fish and wildlife, recrea-tional, agricultural, industrial and other pur-poses, and navigation. New facilities must ob-tain a permit under the National Pollution Dis-charge Elimination System (NPDES). The per-mit incorporates all applicable effluent limita-tions and water quality standards promulgatedunder the Clean Water Act, and an applicantmust demonstrate that these limitations andstandards will be met. In addition, if the plansfor a combustion facility require any structureto be built in navigable waters (such as a cool-ing-water intake structure or barge unloadingfacility), a permit must be obtained from theArmy Corps of Engineers. Corps regulationsstipulate that no such permit may be issued un-til the applicant demonstrates that all othernecessary Federal, State, and local permits,certif ications, or other authorizations havebeen obtained. Finally, if the coal combustionunit or any of its support facilities (such astransmission lines) are to be located on Federalland, a permit must be obtained from the agen-cy having jurisdiction over that land.

Most federally issued permits for coal com-bustion facilities will trigger the environmentalimpact statement (E IS) requirements of NE PA.Although the E IS is prepared by the agency is-suing the permit, it is based on analyses sub-mitted by the applicant, and the length of timerequired to prepare the E IS depends on thequality and completeness of those analyses. Inaddition, before issuing a permit an agencymust obtain a certification from the Secretaryof the Interior that the faciIity wilI not jeopard-ize the continued existence of an endangeredspecies. Under the FWCA, when a federallypermitted project would result in the modifica-tion of any water body (for example, reductionof water flow through consumption by coolingtowers), the permitting agency must consultwith the Fish and Wildlife Service and with theState agency having supervisory authority overfish and wildlife prior to issuing the permit. Is-suance of the permit may be enjoined untilconsultation and coordination has occurred,and serious consideration must be given torecommendations for mitigation of impacts to


fish and wildlife. Finally, regulations promul-gated under the NHPA require all permittingagencies to determine whether there are his-toric, archeological, architectural, or culturalresources affected by the proposed action thatare listed in the National Register of HistoricPlaces or are eligible for listing. If any of theseresources may be affected, the permittingagency must obtain comments from the Advis-ory Council on Historic Preservation. I n mostcases, however, historic and other sites mustonly be studied, not necessarily preserved.

Of all these requirements, the Clean Air ActwiII have the most far-reaching consequencesin terms of the number of sites foreclosed tocoal combustion facilities. However, the cu-mulative effect of all provisions, each with ex-tensive interagency and public participationrequirements, will be to lengthen significantlythe time necessary for site approval. When nu-merous State and local permits and other re-quirements are added in, this Ieadtime can be-come costly.

Combustion

As with siting, the Clean Air Act imposes themost significant constraints on increased coalcombust ion. other l imitat ions include theClean Water Act and the RCRA. The Clean AirAct affects coal combustion through standardsof performance for new sources and throughthe provisions related to nonattainment areasand the prevention of significant deterioration.

Standards of performance for new or sub-stantially modified facilities establish al low-able emission l imitations for those facil it iesand require the achievement of a percentagereduction in emissions from those that wouldhave resulted from the use of untreated fuels.Under the 1977 amendments to the Clean AirAct, these standards must reflect the degree ofemission limitation and the percentage reduc-tion achievable through application of the besttechnological system of continuous emissionreduction that has been demonstrated ade-quately (taking into consideration the cost ofachieving the reduction and any health and en-vironmental impacts and energy requirements

not related to air quality). That is, New SourcePerformance Standards (NSPS) must be metthrough the use of a technological method ofcontrol, such as a scrubber or precombustiontreatment of the fuel, rather than through al-ternative fuels such as oil or Iow-suIfur coal.

The principal coal combustion facilities forwhich NSPS have been promulgated includesteam electric-generating plants of more than250 million Btu/hr heat input, large industrialboilers, and coal preparation pIants (includingany facility that prepares coal by breaking,crushing, screening, wet or dry cleaning, and/orthermal dry ing). The standards for thesesources are shown in table 20. EPA plans to an-nounce new standards for large industrialboilers in 1980.

Each S IP must include a procedure forpreconstruction review of new sources to en-sure that NSPS wi l l be met. In addit ion,sources that undergo a modification that willincrease the kind or amount of polIutants emit-ted must undergo a similar NSPS review. How-ever, the provisions relating to source mod-ifications do not apply to facilities subject to acoal conversion order under the NationalEnergy Act.

Although NSPS restrictions wil l eventuallyapply to most boilers that could emit at least100 tons of a pollutant per year, it will beseveral years before these regulations are pro-mulgated. Meanwhile, smalI boilers are reg-ulated only by State and local authorities anddo not require a Federal permit. A utility couldbe concerned that a number of small unitscould start up between the time of a power-plant’s permit application and the time of per-mit award and make it impossible for the plantto operate without violating air quality restric-tions. For example, s ix 250-mi l l ion Btu/hrboilers, each burning 50,000 tons of 3 percentsulfur coal (without control) can release thesame amount of S0 2 as a large powerplantburning 2 million tons of the same coal with85-percent control. Because small coal plantscan be ordered as package units with shortdel ivery schedules, th is scenar io may beplausible. The Clean Air Act requires the Statesto monitor small sources to prevent them from


Table 20.—New Source Performance Standards

Pollutant

Particulate matter Sulfur dioxide Nitrogen dioxide

Emission Emission Emission Emission Emission EmissionSource limitation reduction limitation reduction limitation reduction

Coal-fired steamgenerator

Coal Preparation:

Thermal dryer gases

Pneumatic coal-cleaning equipmentgases

Other

0.03 lb/106 Btu 99 percent 1.2 lb /106 Btu 85 percent 0.60 lb /106 Btu 65 percentand 20-percentopacity

0.031 gr/dscfand 20-percentopacity

0.018 gr/dscfand 10-percentopacity

20-percentopacity

“using up” available air quality increments,but State enforcement programs may, in somecases, have difficulty complying with these re-quirements.

EPA’s proposed regulations under the 1977NSPS provisions have become controversial.The principal issue is whether a plant burninglow-sulfur coal should be required to achievethe same percentage reduction in potentialSO, emissions as one burning higher sulfurcoal. E PA’s proposed regulations for steamelectric-generating units set forth a full oruniform control requirement regardless of thesulfur content of the fuel, but with a 3-day-per-month exemption from the percentage reduc-tion to accommodate high-sulfur Midwesterncoals. Alternative proposals considered byEPA include a sliding-scale standard underwhich the required percentage reduction de-cIines proportional to the sulfur content of thecoal, and monthly, rather than daily, averagingof the percentage reduction requirement. Inaddition, the General Account ing Off ice(GAO) has recommended that EPA continue toallow supplementary controls until mandatedstudies of SO2, sulfates, and fine particulatesare completed in Iate 1980.77

A variety of considerations will affect the

“Sixteen Air and Water Pollution Issues Facing the Na-tion (Washington, DC.: General Accounting Office, U.SComptroller General, October 1978),

final NSPS regulations. Under most circum-stances, the proposed full-control requirementwould achieve the greatest reduction in SO2

emissions, but would increase the amount ofscrubber sludge from approximately 12 miIIionmetric tons dry basis under the previous NSPSto around 55 mi l l ion tons in 1985. A fu l l -control requirement would promote the use oflocally available, higher sulfur coals, especial-ly in the Midwest, and discourage the use ofmore expensive low-sulfur coals. Partial scrub-bing would reduce flue-gas desulfurization(FGD) costs and permit the bypassing of a por-tion of the flue gas and thus alleviate the needfor plume reheat and associated energy costs.Full scrubbing would delay the construction ofnew plants causing existing coal- and oil-firedplants to be utilized more than they wouldhave been without the proposed standards,thus causing an increase in emissions from ex-isting plants in the short-term future thatwould partially offset reductions achieved bynew plants.

The provisions of the Clean Air Act relatedto nonattainment areas and the prevention ofsignificant deterioration (as described above)also affect emissions from existing facilities.The offset policy included in the requirementsfor nonattainment areas and the availability ofPSD increments will put pressure on existingsources to install costly polIution control tech-

Ch. /V—Factors Affecting Coal Production and Use ● 167

nology. I n addition, each SIP must include acontrol strategy for existing sources in order toachieve and maintain the national standards.

The Clean Water Act imposes effluent lim-itations on quantities, rates, and concentra-tions of chemical, physical, biological, andother constituents that are discharged fromcoal combustion facil it ies. Limitations havebeen established for total suspended solids, oiland grease, copper, iron, hydrogen-ion concen-tration (p H), free available chlorine, andmater ials used for corros ion inhibi t ion in-cluding zinc, chromium, and phosphorus.These l imitations are implemented primarilythrough NPDES. As mentioned above, a facil-ity may be issued an NPDES permit for a dis-charge on the condition that it will meet al I ap-plicable water quality requirements. However,these Iimitations are not as difficuIt to achieveas the air quality standard, and the necessarycontrols do not add significantly to the cost ofa coal combustion facility.

Finally, the Federal Government regulatesdisposal of combustion byproducts–ash andscrubber sludge— under RCRA. The Act estab-lishes guidelines for the identification, trans-portation, and disposal of hazardous and non-hazardous solid wastes. The extent to whichRCRA will constrain increased coal combus-tion is unclear until all final regulations havebeen promulgated. However, a preliminary in-dustry analysis indicates that both ash andsludge meet at least one criterion for the“hazardous” designation. 78 I f e i the r werelisted as hazardous it would have to be dis-posed of in accordance with a State plan, andthe generator of the waste would be subject toextensive record keeping provisions. If both ashand sludge were listed as hazardous, RCRAcould prohibit the use of sludge ponds, in-crease the cost of waste disposal by as much as84 percent, and foreclose the sale and/or use ofthe wastes either directly or by making themnoncompetitive with raw materials.

COMPLYING WITH THE CLEAN AIR ACT

The three major strategies for complyingwith the provisions of the Clean A i r Act are ap-propriate siting, pollution controls, and newcombustion technologies. The range of pollu-tion controls and combustion technologiesavaiIable to minimize emissions from coal con-version are summarized in table 21.

Theoretically, complying with Federal emis-sion restrictions should not be a problem. EPAis supposed to set the restrictions for newplants on the basis of demonstrated BACT.BACT for control of part iculate and NO,emissions is relatively noncontroversial, al-though more stringent control measures couldbe enacted in the future. SOX emission control,however, is a matter of acrimonious dispute.The proposed NSPS for S0 x requires all newcoal-fired powerplants begun after September1978 to use continuous technological controls,For the immediate future, this is in essence arequirement for FGD. This technology is de-scribed in chapter I I 1. The controversy sur-rounding its technological adequacy is ana-lyzed here along with alternatives under devel-

opment. The environmental costs and benefitsof applying it are discussed in chapter V.

The F G D C o n t r o v e r s y

The recent history of FGD has been one ofsubstantial disagreement between EPA and theutility industry over reliability, secondary ef-fects, and costs and benefits of scrubbers.Most, though not all, of the operating FGD sys-tems have experienced rather severe operatingdifficulties such as scaling of calcium sulfateon scrubber surfaces, corrosion of operatingparts, erosion of stack liners, and acid falloutaround the powerplants. Lime/limestone sys-tems, the technologies that have been orderedby most powerplants, produce large quantitiesof calcium sulfite sludge that, unless speciallytreated, has poor structural strength (and thusdoes not provide a stable foundation) and rep-resents a potential water pollution problem.FinalIy, the forced installation of FGD wilI cost78 The Impact o! RCRA (Public Law 94-580) on Utility

Solid Wastes (E Iectrlc Power Research Institute, E PRIFP-878, TPS 78-779, August 1978)


Table 21 .—Applicability and Status of Pollution Control Technologies

PollutantApplicability

reduction ResidentialPollutants and efficiency and

control technology (%) Utility Industrial commercial cost

s o2

Mechanical beneficiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-40Low-sulfur coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VariesFlue-gas desulfurization (FGD) . . . . . . . . . . . . . . . . . . 85-95

CurrentCurrentCurrent

CurrentCurrentCurrent (largeinstallations)Very near term orcurrentPost-1 980

CurrentCurrentNot suitable forsmall boilers.Not evaluated

LowVariesa

High

Fluid bed combustion (FBC) . . . . . . . . . . . . . . . . . . . . . . . 80-90 1985’ Low tomoderateModerate tohighModerate tohigh

Chemical coal cleaning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40-60 Post-1 980 Post-1 980

Solvent-refined coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70-90 Post-1 980 Post-1 980 Post-1 980

Coal gasificationLow BTU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90–95 Post-1 980

(preferable fornew units)

Post-1 980 (largerunits) or industrialparks.

Probably notapplicableexcept incommercialcentersPost-1 980(highlyapplicable)Post-1 985Probably notapplicableNot applicable

Moderate tohigh

Post-1 980 (highlyapplicable)

High BTU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90-95 Post-1 980 High to veryhigh

Post-1 9851980

Post-1 9851980

HighLow

Coal liquefaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90-95Coal-oil slurry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . varies

Magnetohydrodynamics (MHD) . . . . . . . ..9 0FGD combined with mechanicalbeneficiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85–95

Post 1990 Nonapplicable

Current Current (largeinstallations)

Not suitable forsmall boilers

Moderate tohigh

NOX

Combustion modification . . . . . . . . . . . . ..2 0 - 8 0 Current forsome unitsPost-1985

Current

Post-1985

PartiallyapplicableNot suitable forsmall boilers

Low

Flue-gas denitrification . . . . . . . . . . . . . . . . . ..6 0 - 9 5 High

Particulate

inertial devices .-.~~=~-ti~-fi.-.-~~fi~fi.. 90Electrostatic precipitators . . . . . . . . . . . . . ..9 9

CurrentCurrent

CurrentCurrent

LowModerate tohighModerate tohigh

Current CurrentFabric filters (bag houses) . . . . . . . . . . . .. 9 9

Scrubbers -.-....=.=..~.-.fi.....fi . .. Current Current

a when western low-suff~r coal is used at thesource, the costlslowbTvA(spresenfly plann[ngfora FBC powerplantwhtch Is expected tocome Onlmeln 1985c Strictly speaking this IS not a sulfur oxide control technology, but rather a technology to utdue coal m boders designed foroti wfih mmlmal changes m boflerdeslgn If a hlghor

medium sulfur coal IS used, then the S02em@lons WIH be higher than Ifod alone were burned

billions of dollars over what would have been a serious ecological problem in the Northeast.required under the old NSPS, as well as several Finally, EPA claims that the issue of sludgepercentage points in lost electrical conversion disposal is more of an enforcement and costefficiency. Industry will acknowledge no sig- problem than a technological one; that tech-nificant benefits from such an investment. On niques for stabilizing the sludge have beenthe other hand, EPA can point to smoothly run- demonstrated; and that the volume, althoughning FGD units in Japan as well as a steady im- extremely large in absolute terms, is not dis-provement in scrubber reliability in this coun- proportional to the volume of fly ash that thetry as counterweights to the industry’s reliabili- industry has been handling for many years. En-ty arguments. In addition, EPA can point to the vironmentalists who either support EPA’s posi-role of S02 as a precursor of acid rain, which is tion or who want stricter standards, point to


the possibil ity, strongly disputed by the in-dustry and by many in the health community,that further controls on SO2 will lower mortali-ty rates (see Health Effects, chapter V).

The level of controversy over these issueshas become so intense that it was felt nec-essary to add a discussion of the technologicalarguments over the problems of FGD. Thehealth and ecological effects of SO x are dis-cussed in chapter V, as are the mechanics ofdisposal and the potential environmental prob-lems associated with the sludge. The variousFGD systems are described in chapter I I 1.

FGD Status

The first FGD instalIation was made inEngland in the 1930’s (the Battersea A power-plant, a 228-MW unit using alkaline ThamesRiver water as the scrubbing medium). In 1968the Union EIectric Meremac Unit became thefirst U.S. commercial installation, using drylimestone injection in the boiler followed bywet scrubbing Between 1968 and 1972, fiveutilities had installed this type of system, butal I encountered operating difficulties in theform of plugging of boiler tubes, low removalefficiency, and interference with particulatecolIection efficiency This technology is nolonger sold, and the five original systems areeither shut down or being converted to other

systems. This record, along with operationaldifficulties with newer scrubber systems, hascreated the basis for years of arguments andcontroversy between EPA and the utility in-dustry.

As of March 1978 there were 34 operatingFGD systems, totaling 11,508 MW, 42 systemsunder construction (17,741 MW), and plans forinstallation of 56 other units (27,230 MW), Ofthe systems installed since 1968, EPA counts 15(all “demonstration units”) as having been ter-minated. 79 With only a few exceptions, utilitieshave chosen direct scrubbing with lime orlimestone as the scrubbing medium, Most ofthe new systems have been retrofitted to ex-

7“’Summary of the Opera blllty of FGD Technology”(Washington, D C U S Fnvlronmental Protection Agen-cy, Office of Energy, Mlneral$, and Industry, Sept 14,1977)

isting boilers, although this situation shouldchange within the next few years with the con-struction of new plants, which must complywith the percentage removal requirementsstipulated by the 1977 Clean Air Act amend-ments.

Although EPA and the utility industry wouldagree that most of the ex is t ing scrubbersystems have encountered operational prob-lems, their viewpoints then diverge widely.What follows is a simplified, abbreviated sum-mary of the major EPA and industry argumentsabout scrubbers. Note, however, that the utili-ty industry is hardly a monolithic structure,and thus the summary “industry argument”shouId be interpreted accordingly. Some seg-ments of the industry have found scrubbers tobe the best alternative for their plants and aretrying to make them work well,

The Industry Viewpoint

As electric power demand grows, constraintson capacity growth will demand high levels ofreliabil ity for individual units. The industrycontends that scrubbers are unreliable andtheir use endangers the system reliability ofthe powerplants they serve. They take the viewthat virtually every scrubber that has been in-stalled on a major unit in the United States hashad severe operating difficulties and majorshutdowns. I n many cases, these shutdownswouId have forced reductions in boiIer capaci-ty except for the utility’s ability to bypass thescrubber, New EPA regulations, if approved,wilI eliminate these bypasses. EPA points to afew smoothly operating scrubber systems, butthe industry counters that in every case thesesystems have unique properties that avoidproblems that most plants have to face. Insome cases, this “smooth” operation is due toalmost continuous maintenance, such as night-ly cleaning of the unit, which the industry doesnot feel is practical or reasonable for theaverage plant.

Case studies of individual plants illuminatethese problems (for more detailed descriptionsof actual operating experience at a number ofplants from an industry perspective, see ap-pendix V of volume I l). For instance, the South-west plant (Springfield City UtiIities), with 200


MW of scrubber capacity, started up in April1977. Operation has been poor; only one of thetwo scrubbers has been kept in service. Theoperating scrubber is only 60-percent reliable,with problems such as: (1) mist eliminator plug-ging, (2) corrosion of dampers, (3) failure of thelining materials in the scrubber duct work andstack, and (4) damage to nozzles and pumpsfrom foreign material in the Iimestone.Another problem is that, due to a lack ofreheating for the cooled gas coming from thescrubber, acid fallout around the plant has oc-curred. Another plant, the 830-MW Mansfieldpowerplant (Penn Power), ran well for its firstyear of operation because of the ability to cutboilers back and thus maintain the scrubbers,but it was reduced to half capacity afterfailure of the stack liner, a problem that hasoccurred elsewhere. Operation of this planthas been said to be simplified because itsponded wastes are being discharged to theriver rather than recycled. This has been saidto reduce scaling problems because the con-centration of dissolved solids in the scrubbercircuit is kept low.

As noted above, some of the better exper-iences with scrubbers are felt by the industryto be unique and inapplicable to general ex-perience. For example, Paddy’s Run (LouisvilleGas & Electric) has received special attentionbecause it operates reliably and is quite effec-tive in SO2 removal. However, critics point to anumber of factors that raise questions aboutthe validity of extrapolating the Paddy’s Rundesign to larger installations (the units are only35 MW each). The operation is said to beatypical because the plant has a low load fac-tor. Moreover, unlike other installations, theunusually low-chloride content of the coal re-duces problems associated with chloride build-up in the scrubber. Finally, the lime employedby the system is a byproduct that is notgenerally available and appears to haveunique properties that provide better opera-tion than standard Iime.

Some of the major scrubber problems iden-tified by the industry are:

. Achievement of high SO 2 removal eff i -ciency: Although high SO 2 removal effi-

ciency can be achieved, the problem ofachieving high levels without incurring ex-cessive costs becomes very complicatedfor the high removal levels that may be re-quired by EPA. The major complicatingfactors include the wide variety of scrub-ber types and select ion of type andamount of absorbent.Wet-dry interface deposition: Drops orslugs of slurry become detached, splashback into the gas stream, and stick to sur-faces.Plugging and scaling of mist eliminators.Gas reheat: The requirement to reheat thescrubber gas to increase its buoyancy re-quires several percent of the total plantoutput.Corrosion/erosion: Especially due to thechloride concentrations in the scrubberliquids. Failure of the stack lining is acommon problem, as are plugging, ero-sion and corrosion of the reheater.

In short, industry feels that a commitment toFGD is premature because the technologycreates problems that are substantially moresevere than those utilities have historically hadto face, the units require maintenance andsystem debugging of a kind and intensity theindustry has heretofore been spared, and thereliability of the units is seen as unacceptablylow or unproven.

Beyond technological problems, however,the industry has severe economic problemswith scrubbers. They are the most capital-in-tensive controls it has ever been asked to in-stall — in an industry that is currently under-going capital shortages. The industry is beingasked to increase its power costs by as much as15 to 20 percent even when no ambient airquality standards or PSD increments are beingthreatened. Moreover, where control of exist-ing plants is required, the industry is almostforced by the nature of its regulatory system toprefer increases in fuel costs (i.e., switching tolow-sulfur coal) to installing capital-intensiveequipment. While general rate increases usual-ly involve a lengthy hearing procedure, fuel ad-justment clauses in many States allow the util-ities to recoup immediately the cost of a fuelswitch.


The EPA Viewpoint

EPA justifies its very strong support for FGDsystems despite the severe operating problemsby the following points:

● T h e industry, in i t s desc r ip t ion o f“problems,” is said to ignore the pro-gressive improvements both in debuggingexisting scrubbers and designing newones. EPA concludes that the perform-ance of utility FCD systems has consist-ently improved over the last 5 years, thatmany of the problems described in the lit-erature either are essentialIy solved or aremore in the nature of startup problems re-quiring differing degrees of “fine-tuning”at each instalIation. Features of the newersystems (improved mist eliminators andreheaters, a trend toward open scrubbertypes, high scrubber liquid to gas ratios,improved materials) and newer systems(double alkali, magnesium oxide) shouldprevent many of the operational problemsof the past. EPA asks that the viability ofits FGD requirements be judged on thebasis of what designers can achieve todayand in the future, rather than on the basisof units that were designed several yearsago and that were often improper lyoperated and maintained.

● The Japanese experience with FGD is fre-quently cited as an indication that FGD inthis country could achieve far higher reli-ability if more optimum designs and moreintensive maintenance programs wereutilized, Japan has five exemplary coal-fired facilities operating at greater than90-percent removal efficiencies and 95-percent operabilities. All are greater than150 MW in size, and four burn 2 to 2.5 per-cent sulfur coal. A recent interagency re-port on these scrubbers80 notes their ex-tremely high operability (degree to whichthe scrubber is used when the boiIer is op-erating) and performance, while also con-cluding that their operating conditions arenot at all dissimilar to those applicable in

‘OM A Maxwell, et al , Sulfur Oxides ControlTechno logy in )apan, report prepared for Henry Mjackson, Chairman, Senate Committee on Energy andNatural Resources, ) une 1978

●

●

the United States, In fact, some of the sys-tems were designed and installed by U.S.vendors. E PA can point to the Japaneseexperience as one where basically thesame physical problem existed, but wherea completely dissimilar industry attitude(one of commitment to scrubber success),recognit ion of the need fo r ca re fu lmaintenance and chemical expertise inoperation, and a conservative attitudetowards design, materials, and contractoraccountability led to an extremely suc-cessfuI scrubber-based control system.Util ity industry shortcomings (EPA con-tends) are a major cause of FGD prob-lems:– Utilities’ tendency to select the lowest

bid regardless of vendor experience orsystem design.

— Inexperience in dealing with complexchemical processes, and unwillingnessor inability to hire trained operatingand maintenance personnel.

EPA notes that FGD units can build in re-dundancy, al lowing a more intens ivemaintenance program and compensatingfor any unexpected failures. This trans-la tes a rel iabi l i ty problem in to aneconomic one.

Although EPA is concerned about the sub-stantial economic impact of scrubber require-ments, E PA’s viewpoint is different from thatof the industry. EPA is much more likely toconsider the public at large rather than utilityshareholders as its major “cons tituents,” andthus will not automatically prefer a strategythat wil l raise operating costs over capitalcosts as the industry does. Second, EPA mustrespond to the wording of the 1977 Clean AirAct amendments, which stipulates the use oftechnological controls for power production.

Interpretation

The substantial improvements in operatingexperience of scrubbers in the United States,the availability of new designs and new andimproved systems, and the excellent operabili-ty of the scrubbing systems on Japanese coal-fired powerplants represent substantial evi-dence that FGD is both a perfectible technol-


ogy and one that U.S. powerplants can installwith reasonable confidence that high levels ofreliability can be obtained.

The experience at the La Cygne (Kansas CityPower & Light) powerplant illustrates the im-provement that has occurred with experiencein scrubber systems. The scrubber, which isdesigned to remove 80 percent of the SO, andmost of the particulate matter from a very“dirty” coal (5 percent sulfur, 30 percent ash),was installed in June 1973 and initially ex-perienced a very low 31-percent reliability.This reliability has been gradually increasedover the past several years with experience inproper operation and the appropriate mate-rials to use in critical components. The currentreliability is 92 to 93 percent, and the managerof the plant sees no reason why this levelshould not be maintained or improved in thefuture. a’ This experience also is being appliedto scrubbers now being designed. The signif-icance of this experience is that many of theproblems described by the industry are impor-tant only in a historical context, or in the con-text of understanding the problems that candevelop if utmost care is not taken in equip-ment design and maintenance.

The Japanese experience, as EPA claims, ap-pears to indicate that the major FGD problemsare avoidable. Although many in the utility in-dustry continue to challenge the applicabilityof this experience to the U.S. situation, theevidence indicates that the two most visiblecriticisms — that the Japanese success has beenwith oil-fired plants, and that their scrubbersrun in an open loop mode that is inapplicableto U.S. utilities— are, respectively, no longertrue and incorrect. Although the highest sulfurcoal used in the Japanese facilities is only theequivalent of a 3 percent sulfur Midwest orEastern coal, the La Cygne experience indi-cates that the problems of scrubbing very high-suIfur coal are not insurmountable.

The EPA proposal for an NSPS for S0 x c o n -trol of uti l ity boilers asks for an 85-percentreduction in SO2 emissions determined on a 24-hour daily basis for most coals. A reduction in

‘ l Personal communication with Mr Cliff McDaniel,Dec 4,1978

control efficiency to 75-percent removal is al-lowed for a maximum of 3 days per month. Al-though all of the existing Japanese coal-firedplants meet these requirements, recently de-signed U.S plants have not been required tomeet them and have not met them. It would benaive to expect that the problems associatedwith scrubbers will evaporate even when (andif) U.S. powerplants are asked to satisfy theEPA standards. U.S. coal characteristics, utilityoperating practices, and plant conditions varyenough to ensure that each scrubber will re-quire carefully tuned design and operation toattain satisfactory performance. U.S. uti l ityoperators must emphasize conservative de-sign, extremely carefuI and constant mainte-nance, use of trained operating and mainte-nance personnel, and pressure on FGD ven-dors– just as the Japanese and the successfulU.S. operators have. To the extent that utilitiesdo not take these requirements seriously, theyinvite scrubber breakdowns and consequentloss of system reliability. At the same time,EPA should share the responsibility for ensur-ing scrubber success by acting in a watchdogcapacity over vendor design and installationand utility operations. EPA must take an ex-tremely vigorous position in disseminating itssubstant ial exper ience; at a minimum, i tshould sponsor a series of courses or seminarsfor utility personnel who are responsible forordering FGD systems, to assist them in select-ing systems appropriate to their needs.

In conclusion, existing evidence points toFGD as a viable technology, albeit one with re-maining problems. I n most situations, scrub-bers should be able to obtain sufficiently highlevels of both control efficiency and reliabilityto satisfy EPA and utility requirements. Somedoubt remains about satisfying EPA require-ments for very high-sulfur coals, and both DOEand the Utility Air Regulatory Group (UARG)have expressed concerns about the need forscrubber bypass capability for plants usingthese coals.

Given the technological viability of FGD,there remains the critical question of its costs.Present estimates range from $80 to $120/kWout of a total plant cost of about $800/kW.Some utilities report higher FGD capital costs


wilI be necessary to achieve adequate reliabili-ty, DOE and EPA estimate the cost of the EPANSPS proposal by 1990 to be on the order of$22 billion over and above the cost of theprevious standard. The accuracy of these andother estimates is very much in doubt, giventhe rapidly changing state of the art of scrub-ber design, the substantial degree of uncertain-ty as to the degree of scrubber module redun-dancy that will be needed to maintain the re-quired reliability, the uncertainty as to howrisk-averse the utilities wilI be in their scrubberpurchases and operating programs, and the ex-tent to which systems other than Iime/lime-stone are used Nevertheless, the order ofmagnitude of the estimate is certainly correct,and it demonstrates how much is at stake inthe current argument over NSPS. Both DOEand UARG have proposed alternative stand-ards that would reduce costs substantialIy withsmalI increases in emissions, However, none ofthe actors in the regulatory process appears tohave analyzed the probable air quality effectsof any of these alternat ives. The exist inganalyses are based on gross emissions, whichare an inadequate measure of benefit. E PA, inturn, has satisfied the requirements of sectionI I I of the Clean Air Act by analyzing the“nonair quality health and environmental im-pact” of the proposed standard, but it has notat tempted an ana ly s i s of the actual en-vironmental benefits of the SOX reductions itproposes to achieve. Thus, neither DOE norEPA has evaluated the relative costs andbenefits of the alternative NSPS options. Thisraises some interesting questions about theadequacy and policy orientation of the en-vironmental research programs sponsored bythese agencies, as well as their attitude towardthe need to attempt to balance costs andbenefits.

Other SOX Control Options

In the immediate future the only significantvariant to the use of FGD as the total S0x con-trol mechanism will be the use of physicaldesulfurization in conjunction with the scrub-ber. Any sulfur removed in cleaning countstoward the continuous removal required bythe Clean Air Act. Very few coals can undergo

sufficient sulfur removal to affect FGD designssignificantly. If 30 percent is removed in clean-ing, FGD stilI has to remove 80 percent to meetan 85-percent standard. However, despite itsfailure to reduce significantly FGD removal re-quirements, coal cleaning does allow a signifi-cant reduction in limestone and sludge han-dling requirements and an improved operatingenvironment for the scrubber. FGD units aresensitive to the variability of the sulfur in rawcoal and the presence of other contaminantsthat may be partially removed by cleaning. Forsome new plants, this combination of front-and tail-end cleaning can be economically ad-vantageous. EPA82 has shown that, under somelimited conditions, physically cleaning thecoal before scrubbing lowers the total cost ofS OX control.

Current FGD technology may be inappropri-ate for control of smalIer, intermittently op-erated industrial boilers. Unit capital costs risesharply with decreasing size, and if a boiler isused only 20 percent of the time, capital costsalone make FGD prohibitively expensive. Theemissions standards for industrial boilers havenot been promulgated yet. If they are similarto utility limitations, only the largest industrialunits will be able to comply; until new coalcombustion technologies are developed,smaller units simply will not burn coal. If thesefacil it ies and the even smaller residential/commercial-size equipment are to burn coalcleanly in the short term, it will be possibleonly by feeding them “clean” coal and accept-ing a higher level of pollution per ton thanfrom utilities.

The l ist of options should lengthen con-siderably in the future. Fluidized bed combus-tion (FBC) is an efficient method of burningcoal whi le s imultaneously control l ing SOx

emissions. FBC furnaces can be smaller thanconventional ones; this should lower capitalcosts. The residue of ash and sulfur compoundis dry, simplifying disposal. FBC currently isdeveloped to the stage that some industrial-size units are offered commercially. Uti l ity-size units stiII pose substantial design prob-

82Coal Cleaning With Scrubbing for Sulfur C o n t r o l(Washington, D C : U S Environmental Protection Agen-Cy, August 1977), E PA-600/9-77-017


Iems and may never offer any cost advantagesover FGD. Although the technology is ex-pected to be able to meet all new emission lim-itations, the performance has not been demon-strated on a large scale. If FGD is required asan add-on to FBC, as could theoretically hap-pen, there would be little incentive to under-take FBC. The initial (and possibly sole) ap-plication would appear to be in industrialunits. If the units now on order work out as ex-pected (and the British experience indicatesthey will) a very rapid expansion could follow.

Low-Btu gasification is an intriguing near-term development concept for utilities and in-dustry. A combined-cycle facility should provemore efficient than powerplants now in use,and the economics look attractive. Industryshould find gasification more convenient thandirect coal use.

Solvent-refined coal, chemical coal clean-ing, coal gasification (both low- and high-Btu),and coal liquefaction are processes to producecoal-related fuels that are clean enough tomeet emission limitations on combustion with-out the addition of FGD. “Clean” fuels assurethat emissions l imitations always are beingmet as long as the boiler is operating, regard-less of load level. Those utilities that are leastfavored in the capital market are relieved ofthe capital costs burden of limiting emissions.Instead, the capital burden would be on a coal-refining industry that, Iike the oil-refining in-dustry, can operate at constant load factorover the Iife of the equipment. Utilities areconstrained to follow the load demands oftheir customers, and therefore have less flex-ibility even when output is reduced, which in-creases unit cost for pollution control. “Clean-ing” of fuel, therefore, is in some ways more at-tractive than FGD — but the economics still arequestionable. “Clean” fuels also are appli-cable over a wider range of boiler sizes thanFGD. They provide greater flexibility in sitingcoal-fired units. Existing units are more likelyto be adaptable to “clean” fuels than to FGD.

All the processes are currently under devel-opment except the Fischer Tropsch coal liq-uefaction technology, which has been in con-tinuous operation in the Union of South Africa.

The costs for U.S. construction and operationof this process, as well as most of the other“clean” coal processes, are the major uncer-tainty. Thus, none of the processes is expectedto begin making much impact until the late-1980’s. Chemical cleaning of coal is the onlyone of the “clean” coal processes that wouldrequire other control technologies in tandemsince none of these methods removes suffi-cient sulfur to comply with new NSPS. Thisdeficiency could limit its use.

NOX Strategies

The control techniques now in use in theUnited States predominately involve combus-tion modifications. These techniques appearadequate to meet present standards withoutexcessive economic penalty. Development ofIO W- N OX burners i s underway, and i f suc-cessful, could reduce NO X emissions still fur-ther (to 85-percent control) at little cost.

The “clean” fuel technologies remove var-ious degrees of nitrogen along with the sulfur.Coal gasification and liquefaction achievealmost complete removal. Chemical cleaningand solvent-refined coal are less effective innitrogen removal as currently operated.

FBC produces lower NO x emiss ions thanpulverized coal combustion because of itslower operating temperature and larger coalsize. The first factor reduces atmosphericnitrogen reactions and the latter controls fuelbound nitrogen. This may prove to be a majorattraction of the technology.

Flue gas denitrif ication processes are invarious stages of development— mostly inJapan– and are designed for oil-fired units.Their commercial availability is not expectedfor coal-fired units in the United States untilafter 1985. These processes are considerablymore expensive than combustion modifica-tions.

Particulate

EIectrostatic precipitators (ESPS) are the ma-jor particulate control technology for large in-dustrial and utility boilers. They are likely to


remain the technology of choice for utilitiesburning high- and medium-sulfur coal unless astringent standard for fine particuIates is pro-mulgated. Such a standard is an eventual pos-sibility because fine particuIates are suspectedof playing a role in health and ecosystemdamage that i s d isproport ionate to thei rweight fraction of the aerosol complex.

Baghouses have recently been installed on afew utility units, They can be efficient collec-tors of fine particulate (ESPs are not) and theydo not suffer performance degradations whenlow-sulfur coal is used, as do ESPs. Industryhas extensive successful experience with bag-houses, but this experience is not fully appli-cable to utility requirements. Thus a testingperiod is necessary, but there is no reason tobelieve that baghouses cannot be applied suc-cessfuIIy to utiIity boiIers.

Control System/Fuel Compatibility

Coal-burning facilities must be designed asintegrated systems. Thus, change in one partcan affect others, and the switch of an existingplant to lower sulfur coal can cause a largeloss to the efficiency of ESP’s. This particularproblem can be alleviated by use of flue-gasconditioning, but other changes in control maycall for some extensive modifications. Existingfacilities might find a conversion to baghousesfrom ESPs virtually impossible because of theincreased space and pressure drop require-ment.

New plants must consider the effect of thetechnology selected for control of each pollut-ant on all the other controls. Thus the use oflow-sulfur coal may force the use of hot sideprecipitators at double the cost of a cold sideESP with high-sulfur coal.

PUBLIC CONCERN

Expressions of public concern about energydevelopment are relatively recent. Until themid-l 960’s, active and organized opposition toenergy projects arose primarily among proper-ty owners over mining or combustion methodsthat created nuisance-like conditions. In re-cent years, however, the increasing knowledgeabout the effects of energy development, aswelI as the growing distrust of large institu-tions of all kinds and the general concern forenvironmental quality and for future genera-tions, has led to increasing opposition toenergy-related projects, This opposition is notunique in American history; in many ways itechoes late-19th century popul i s t revoltsagainst the railroads and other large industries.I n general, individuals appear to be increasing-ly unwilling to suffer personal and environ-mental risks, especially when they feel thoserisks have been forced on them with few or nocounterbalancing benefits,

Initially, opposition to energy developmentfocused on nuclear power and surface mining,but in recent years the trend has been spread-ing to coal-fired powerplants, transmission

lines, and coal transportation systems. Opposi-t ion at f i r s t was l imited to envi ronmentalgroups, but recently such diverse groups asagriculture, labor, Indians, and local govern-ments are acting to protect their interests whenthey perceive them to be threatened. In thepast, this opposition has been constructivebecause it has focused national attention onthe problems and has resulted in remediallegislation. For example, mine workers’ pro-tests about occupational hazards resulted inmine health and safety legislation and blacklung benefits; public protests about the en-vironmental degradation from strip miningbrought the Surface Mining Control and Recla-mation Act (SMCRA). However, even whenconcerns have been addressed by legislation,opposition to coal development can continue.For example, many Appalachians continue tooppose increased st r ip mining as wel l asmining not covered by SMCRA.

I n order to devise more effective ways of ad-dressing public concerns about coal growth,better ways must be devised to involve af-fected parties in the decisionmaking process.Federal, State, and local agencies that regulate


energy development already have included intheir regulations extensive interagency consul-tation and public participation procedures toensure that all parties to development areident i f ied and thei r interests heard. Mostenergy, natural resource, and environmentallegislation provides for citizens’ suits to ensurethat the purposes of the legislation are at-tained. In many situations these mechanismshave adequately addressed public concernsabout coal development. I n others, however,the parties have found that they lack theresources to articulate or substantiate theirconcerns in publ ic hear ings or that thei rrecourse lies with the legislature rather thanthe courts. In these cases, delaying tactics andcivil disobedience have continued long afterthe conventional mechanisms for resolvingdisputes have been exhausted.

This section examines several cases in whichpublic concerns have not been addressed ade-quately and discusses some alternate ap-proaches to resolving energy development dis-putes. It should be noted that these cases werechosen because they do not fit the stereotypeof zealous environmentalists blocking devel-opment to protect scenic areas far from theirhomes. Rather, these examples reflect disputesthat emerged spontaneously among peopleconcerned about their day-to-day quality oflife and their long-term economic well-being.

One of the most dramatic examples of thefai lure of t radit ional ci t izen involvementmechanisms to resolve public concerns aboutcoal-related development is the confict over atransmiss ion l ine in Minnesota and NorthDakota. The 470-mile, 400-kV direct currenttransmission l ine being constructed by tworural e lectr ic cooperat ives (United PowerAssociation and Cooperative Power Associa-tion) will be the largest of its kind in the coun-try. Any high-voltage line on farmland wil lmodify field work and irrigation patterns, Iimitfuture land use, disrupt drainage patterns andsometimes reduce the value of the land. Theline’s extra-high, direct-current voltage may in-volve health and environmental problems notpreviously encountered. Uncertainties aboutthe potential health effects of the line’s elec-

trostatic field make the farmers feeI theirfamilies are being used as guinea pigs.

Much of the conflict surrounding the linestems from the planning process by which theroute was selected. The line was routed underthe 1973 Minnesota powerplant and powerlinesiting legislation, which authorizes the StateEnvironmental Quality Council (EQC) to deter-mine routes based on recommendations fromutiIities and citizens. The Iegislation precludedthe use of parks and wildlife areas or highwayand raiIroad rights-of-way, thus forcing the Iineonto farmland. Alternatives such as smallerdecentralized powerplants built near the loadcenter (rather than at the mine mouth) or un-derground transmission l ines were not con-sidered. The cooperatives misinformed EQCabout the line’s point of entry into Minnesota,limiting EQC’s obligation to consider alter-native corridors that might have crossed lessproductive, less populated lands.

Minnesota officials feel they have a sitingprocess that protects individual rights and theenvironment whiIe assuring timely and respon-sible energy development. The farmers wereincluded in extensive public hearings duringthe siting process, and their Iawsuits have beenheard throughout the State court system. TheGovernor and church officials tried (separate-ly) to negotiate settlements between the farm-ers and the cooperatives through mediation.The farmers received compensation for theireasements, and the siting legislation has beenamended to protect farmland in future routeselections. Yet the farmers continued to op-pose the line, often using civil disobediencetactics such as standing in front of surveyors’transits. Although they are pleased that farm-land will be protected in future routings, thatprotection will not prevent this Iine from cross-ing their land. In addition, they object to theuse of heavy-handed tactics and mis-informa-tion by the rural electric cooperatives to forceacceptance of plans for energy development.To the energy industry such continued re-sistance seems not only irrational but selfishand irresponsible, given the role of northernGreat P lains coal in the administ rat ion’senergy plan. Thus, where an extensive publicparticipation process was intended to produce

Ch. /V—Factors Affecting Coal Production and Use ● 777

consensus, instead the participants haveemerged from the process even more firmly en-trenched in their individual and opposing posi-tions.

A second example of public concerns thathave not been alleviated through the tradi-tional mechanisms is the conflict over thecommunity impacts of Western coal develop-ment. Concern about these impacts has risen inwestern towns such as Craig, Co I.; Rock Spring,Gillette, and Wheat land, Wyo.; Colstrip,Mont ; Farmington, N. Mex.; Moab, Utah; andPage, Ariz, The rapid development occurringin these areas creates confIicts among long-term residents, newcomers, coal operators,and utilities, primarily over changes in qualityof life as well as the nature of the growth andthe responsibility for its adverse impacts. Long-term residents feel that their sense of commu-nity and continuity has been lost; coal miners

# .: j , . ‘ “ ,. :

and plant construction workers often are notincluded in community activities because theyare perceived as transients. Those who willprofit are in favor of the rapid growth; lower-income groups that will not share significantlyin the community’s increased wealth are op-posed. Long-term residents and local govern-ment officials, who are aware of the historiccycle of booms and busts in the history of theWest, are skeptical of rapid temporary growthbut do not know how to control it. Coal devel-opers, who could contribute to planned, order-ly growth, tend to feel that the solution mustcome from government.

Although the impacts of rapid developmentof Western energy resources and the resultingpatterns of conflict have received widespreadpublicity, little has been done to resolve thembeyond conducting studies and holding publichearings. Rather, the early planning processes

,

Photo credit: EpA-LlocumerlcaJohn and Bud Redding with a chunk of the sub-bituminous coal that underlies their land and some

25,000 square miles of Montana and Wyoming

44- I(I2 [) - 7 I - ,?


in more recently developed areas continue torepeat patterns that already have proved in-adequate, such as minimal company support(sometimes in the form of company towns thatprovide housing but little more), ineffective ormisdirected government assistance, and a lackof local money. Little effort has been directedtoward determining the region’s long-termcomparative advantages (as opposed to rel-atively temporary, “boom and bust” growth) ortoward accumulating resource tax monies thatcould be used to promote long-term improve-ment. Unless means of adequately addressingthese concerns are found, active and orga-nized opposition could develop in smal lwestern towns slated for coal development.

Opposition to Western coal development al-ready has arisen among ranchers and farmers,who also are concerned about their quality oflife and sense of continuity. Many ranchers areworking land that has been in their families forthree and four generations. They are proud toknow that they were not pushed aside orbought out by a corporation. They also resentthe extra taxes that have been imposed ontheir land and their cattle to pay for coaldevelopment in neighboring boomtowns. Inaddition, ranchers are concerned about theuncertainties associated with reclaiming aridand semiarid western land, and especiallyabout potential disturbances to hydrologicsystems vital to agriculture. Yet the ranchersare unable to counter effectively the influenceexerted by large energy companies. Again, lit-tle has been done to resolve these conflictsbeyond energy companies offering more andmore money to buy out ranchers, ranchersexpending large amounts of time and money toeducate themselves about environmental andenergy issues and to prepare for court battles,and local government continuing to increasecattle and property taxes rather than coalseverance taxes.

In these and other instances of public op-position to coal and related energy develop-ment, the most common mechanisms for at-tempting to resolve disputes have been publicrelations campaigns, public meetings and hear-i rigs, studies, lawsu i t s , and leg i s la t ion .However, as is seen in the above examples,

none of these has been entirely successful.Public relations campaigns present only oneside of a conflict and do not contribute to itsresolution. Although public meetings and hear-ings are designed to present all sides of anissue, those opposing development generallylack the resources to debate energy companieseffectively. Studies can be designed to exploreal I facets of development, yet they cannot ana-lyze changes in quality of life adequately, andthey quickly become outdated. Lawsuits arecostly and time-consuming and often merelyserve to demonstrate to the parties that theirrelief actually rests with the legislature. Yetseeking new or amended legislation also canbe time consuming and usually only affords re-lief in future conflicts. And while lawsuits ornew legislation are being considered, uncer-tainties delay investments and increase eco-nomic risks.

Although each of these mechanisms may, tosome extent, reach a result that favors whatmay be termed a common good or the majori-ty view, present-day society increasingly seeksto protect the rights of minorities and increas-ingly questions the definition of “common”good. Yet an issue or conflict does not lenditself to a simple resolution that simultaneous-ly pleases both the majority and all minorities,and no other traditional mechanisms are ableto respond when the minority continues torebel. This is especially true when the conflictarises over ethical questions such as whether alarge corporation should be allowed to exploitenergy resources for profit without payinglocal costs, as well as over questions related tonational long-term priorities, such as energyversus agriculture.

However, some of the traditional mech-anisms are amenable to modifications thatcould eliminate or mitigate some future dis-putes. For example, in the case of the Min-nesota powerline, if farmers had been given anopportunity for public participation in theplanning stages of the development–ratherthan at the permitting stage, when the coope-ratives already had a vested interest in a par-ticular route— the conflict might have beenresolved. Similarly, in the case of the commu-nity impacts from Western coal development,


tax revenues could be used to ensure that theaffected States and localities receive an ade-quate share of the benefits of development topromote long-term economic improvement.

New methods for preventing or resolvingconflicts must be devised. Two recent casesthat show promise are greater local controlover the manner in which development occurs,as typified by the Navajo experience, andmediation, such as the compromises nego-tiated during the National Coal Policy project.

The Navajo Nation owns an estimated 20percent of U.S. strippable coal reserves. TheBlack Mesa coal mining complex, one of thelargest in the world, is located on Navajo-Hopilands, as are major existing and planned coal-fired powerplants. Yet Navajo per capita in-come remains at about one-third of the U.S.average, their unemployment rate is about 40percent, and they are becoming increasinglyconcerned about the air quality and other en-vironmental effects of coal use. The Navajoshave indicated that in the future they will de-mand more favorable leasing arrangements aswell as needed social and environmental ben-efits such as jobs, management training, andpollution controls as prerequisites to energydevelopment on tribal lands. They alreadyhave won the right to impose a possessor in-terest tax equivalent to a property tax onpowerplants and other energy development, aswelI as a business activities tax. They also areattempting to institute an emissions chargesystem in order to resolve their concerns aboutthe air quality effects of coal combustion. Ineffect, the Navajos are ensuring their par-ticipation early in the planning stages ofenergy development as well as ensuring thatrevenue wilI be available for needed social andeconomic benefits.

An even more promising mechanism is medi-ation of public concerns outside the courts,legislatures, and bureaucracies in which devel-opers and parties-at-interest negotiate a com-promise. For example, a group based at theUniversity of Washington has successfully me-diated a controversy over the route and size ofa major freeway. Recently a foundation-sup-ported nonprofit corporation called RESOLVE

was formed to help -settle environmental dis-putes at the national level. In the energy area,the National Coal Policy project was intendedto produce agreements on how coal can bemined and burned without unacceptable exter-nalities. In a series of meetings, leading conser-vationists and executives from coal-miningand coal-consuming industries agreed in prin-ciple but not necessarily in practice on a vari-ety of public concerns. For example, industryaccepted the principle that environmentallysensitive areas should be closed to mining; theenvironmentalists agreed to back off fromtheir insistence that surface miners alwaysmust level off high walls. The environmental-ists also agreed that their standard delayingtactics in powerplant siting and licensing pro-cedures are counterproductive and concurredin a recommendation for one-step licensing. In-dustry representatives agreed that the publicshould be notified in advance of license appli-cations and assented to the principle thatqualified public interest groups participatingin mine and powerplant hearings should re-ceive public financial support. The two sidesalso agreed in principle that powerplantsshould be sited near the area where the bulk ofthe power would be sold, rather than at themine mouth or in a remote rural area. Some ofthese and other agreements may require newor amended legislation, but many could be im-plemented privately.

The National Coal Policy project has beencriticized because it did not include some ofthe parties at interest and because the par-ticipants failed to agree on all the issues.However, its example of conciliatory behaviorprovides a model for speedier and wiseralleviation of public concerns about energydevelopment. This and other models for con-structive public participation in both short-and long-term energy planning must becomemore common. Yet it must be recognized thatsome public concerns about coal and relateddevelopment ref lect bas ic value conf l ictsrather than objections to specific projects.Where these value conflicts exist, some peoplewi I I continue to believe their rights are not pro-tected. Thus, in some instances, even whenenergy companies make every effort to an-


ticipate and address legitimate concerns and considered, opposition in the form of lawsuits

to demonstrate that all alternatives have been and civiI disobedience will continue.

CONCLUSIONS

Many of the factors affecting coal produc-tion discussed in this chapter may limit thepace of coal expansion in the future. Somemanifest themselves as temporary imped-iments to production — e.g., strikes and sitingdisputes–while others have become groundrules within which the industry must work. Anumber of these factors enable coal to be pro-duced, but become constraints in certain cir-cumstances. For example, coal cannot bemined without labor, but prolonged strikes byminers can disrupt coal supplies. Rail transportcarries the bulk of the Nation’s coal each year,but bottlenecks and car shortages slow downthe tonnage carried from mine to market.

The most important constraint on coal pro-duction has been lack of demand; it is likely tocontinue to be the most important for at leastthe next decade despite the rapid growth in de-mand projected in chapter II. The Clean AirAct has been said to be a major constraint onmeeting national goals for coal development,in part because of the requisite emission con-trol equipment. This report does not concur.The now mandatory SOX controls on new coal-fired powerplants obviously increase the costsof burning coal, but the evidence indicatesthat the new standards can be met. Thisevidence, it must be noted, is based on arelatively few plants operating for only a fewyears. Hence some utilities may experience dif-ficulties with their control equipment, espe-cially if they have not made the necessarycommitment of capital and manpower.

Despite the burden of regulations, labor-management unrest, transportation break-downs, and other constraints, most operatorsreport they can mine as much coal as they cansell. 83 If coal demand grows faster than the

scenarios outlined in chapter II suggest, supplyconstraints may become significant. If theseconstraints do materialize, they are likely to befound among the factors analyzed in thischapter.

No insurmountable supply constraints nowexist. However, Federal leasing will have toresume in the 1980’s for Western coal produc-tion to meet expected demand in the 1990’s.Coal transportation systems need upgradingand expansion, as is being planned. Existingdata are insufficient to determine whether in-dustry structure has been or will be a con-straint on production. I n recent years, poorlabor-management relations have cut into coalproduction. However, as more and more coalis mined in the West and from non-UMWA op-erations, this factor should become less impor-tant nationally. Even during the 3 IA-month

UMWA-BCOA strike in the winter of 1977-78,few power shortages occurred and only 25,500workers were laid off at the height of the shut-down. Further, wildcat strikes slacked off in1978. Labor-management relations may eitherbe improving or each side may be regrouping.

The highest growth scenario would requirealmost all supply and demand factors to workout well. No new complex environmental con-trol strategies could be accommodated in allprobability. All the major resources requiredfor production and use would have to be avail-able. This situation is plausible, but it probablywi l l not occur without addit ional Federalpolicy actions that promote the use of coal.

8JSee testimony of Stonie Barker, Jr., E B. Leisenring,Jr., and Robert H, Quenon (coal operators) before thePresident’s Commission on Coal, Oct 20,1978

factors affecting coal production and use

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