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Coal Exports Divide Northwest Lawmakers, Industry

Lost amid campaign rhetoric about a “war on coal” and a shift by utilities to natural gas has been a surge in coal exports — to levels that will break all records this year.

Coal exports are projected to triple to about 125 million tons this year from just fewer than 40 million tons in 2002. That tops the previous high of 113 million tons in 1981. The trend — and an industry push for a further big expansion of export capacity — has intensified debate about shipping America’s most plentiful fossil fuel abroad.

Already lawmakers from the Northwest are resisting coal industry proposals to build five export port facilities in Oregon and Washington, while those from coal-producing states are seeking faster permitting for the new terminals. But in the end, free-trade agreements may limit what Congress can do to restrict exports.

“I would like to stop them, but that probably wouldn’t be [World Trade Organization] compliant,” said Rep. Jim McDermott, D-Wash., ranking member of the Ways and Means Subcommittee on Trade.

The question of coal exports pits trade concerns against environmental ones. The industry and its supporters want to expand exports to compensate for dwindling domestic demand for coal. They argue that exports create jobs and help reduce the nation’s trade deficit.

Opponents raise both parochial and global concerns. Critics in the Northwest, including Oregon Gov. John Kitzhaber, a Democrat, are worried about the effect of coal trains traveling through the region, as well as coal dust at the ports.

Others worry that selling coal to China and other countries would contribute to global climate change. Coal burned at a Chinese power plant is just as damaging as coal burned domestically, and greenhouse gas emissions would end up offsetting any reduction in the United States, critics say.

“Here’s the issue we are facing: If you burn that coal in China, they put this smoke up in the air, prevailing winds are westerly,” McDermott said. “We’re sending our coal over there, and they get energy and we get fallout — much bigger issues here.”

Lawmakers, including Sen. Jeff Merkley, D-Ore., want the Army Corps of Engineers to engage in a lengthy environmental review of the export terminals, which would include accounting for emissions from burning coal overseas. The Environmental Protection Agency also has weighed in, supporting a full review of allowing the export terminals. So far, the Army Corps has resisted calls for a full review and has expedited permitting for one export terminal.

A group of 53 lawmakers, led by Rep. David B. McKinley, R-W.Va., signed a letter Oct. 19 complaining that opponents of the export facilities are “causing delays and confusion” that “creates enormous uncertainty in the industry.”

The lawmakers argued that the export facilities would help local economies, improve the nation’s trade balance and “allow the developing world to continue its forward march toward energy access so vital to sustain global economic growth.”

A spokesman said McKinley will consider taking legislative action, possibly with a rider on spending legislation or some other must-pass bill, if delays in moving forward with the terminals continue.

The coal industry wants Pacific Northwest terminals to maximize profits from the Powder River Basin in Wyoming and Montana.

“It is very important that it does happen — it is a growth market,” Lucas Pipes, vice president and senior equity analyst for Brean, Murray, Carret and Co., said earlier this year.

U.S. exports to China have increased 152 percent since 2011, and worldwide exports have jumped almost 24 percent, the U.S. Energy Information Agency reports. Currently, the industry meets Asian demand by shipping coal out of Canadian or eastern U.S. and gulf ports.

“Asia’s voracious appetite for coal to sustain its growth with affordable power logically benefits the country with the world’s largest coal reserves,” said Hal Quinn, president and CEO of the National Mining Association. “We have the most of what the fast-growing countries want the most of.”

Oregon Democrat Ron Wyden, who is line to become chairman of the Senate Energy and Natural Resources Committee next year if his party retains its majority, is urging the Obama administration to develop a policy to guide export decisions.

Wyden and Rep. Edward J. Markey, D-Mass., ranking member on the Natural Resources Committee, said the president has authority to adopt rules covering exports of coal, oil and gas under the Energy Policy and Conservation Act of 1975.

But McDermott doubts Congress can do much under free-trade agreements about coal exports and proposes approaching the issue another way. He introduced a bill in July to place a $10-per-ton fee on all coal extracted in the United States. Receipts would be distributed to states affected by coal transports, based on population, to mitigate the effect on infrastructure, health care costs and the environment. The legislation also would require coal-carrying freight cars to be covered.

The bill stands no chance of advancing in the waning days of the 112th Congress, but McDermott hopes it will lay the foundation for a broader debate next year.

“I believe in harnessing the power of this country,” he said. “But you have to be honest with what the true costs are.”

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