Rail union asks Obama to back off on MATS rule

The Teamsters Rail Conference, a union representing railroad workers, said March 21 that it is urging the U.S. Environmental Protection Agency to reconsider tough new environmental regulations for coal-fired power plants that could negatively impact railroad workers.

The EPA recently issued a final rule establishing its Mercury and Air Toxics Standards (MATS), with power generators given three years to comply, with a fourth year available under certain circumstances. “This rule has the potential to cost our membership a staggering number of jobs by significantly decreasing the amount of coal used in electricity generation,” said Teamsters Rail Conference President Dennis Pierce.

In a March 16 letter to President Obama, Pierce alerted the White House about the impact the rule could have on rail workers who are members of the Brotherhood of Locomotive Engineers and Trainmen (BLET) and Brotherhood of Maintenance of Way Employees Division (BMWED), which are divisions of the Teamsters Rail Conference. Pierce also serves as President of the BLET.

“Nearly one in five railroad jobs are related to coal haulage,” Pierce said in the letter. “If these jobs are lost, it is not likely that new business generated on our nation’s railroads will ever make up for the loss of coal.”

According to the EPA, 40% of coal-fired power plants in operation in the U.S. are not equipped to comply with the new requirements. Bringing the plants into compliance would be so expensive that some power companies already have announced that they intend to close plants. Pierce stressed in the letter that, in these tough economic times, America needs more jobs, not less.

Pierce asked the administration to support petitions from industry parties for reconsideration of the new rules. “We also ask you to include coal in your ‘all of the above’ plan for America’s energy future so that a balanced energy policy can be maintained,” he said.

The major coal-hauling railroads in the eastern U.S. are the Norfolk Southern (NYSE:NSC) and CSX Transportation. The major western railroads, both of which originate coal in the Powder River Basin, the largest U.S. coal production region, are the BNSF Railway and Union Pacific (NYSE:UNP).

As an example of how dependent railroads are on coal, CSX Transportation parent CSX Corp. (NYSE:CSX) said in its Feb. 21 annual Form 10-K report that its coal business shipped 1.5 million carloads and accounted for nearly 32% of revenue and 24% of volume in 2011. The company transports utility, industrial and export coal to power plants, steel manufacturers, industrial plants and deep-water port facilities. Roughly one of every three tons of export coal and nearly all of the domestic coal that the company transports is used for generating electricity.

NS said in its Feb. 15 Form 10-K report that coal is NS’ largest commodity group, as measured by revenues. Revenues from coal accounted for about 31% of NS’ total railway operating revenues in 2011. NS handled a total of 177.9 million tons in 2011, most of which originated on NS’ lines from major eastern coal basins with the balance from major western coal basins via Memphis and Chicago gateways. NS’ coal franchise handles the electric generation market, serving slightly over 100 coal-fired plants, as well as the export, metallurgical and industrial markets.

Coal and petroleum coke transportation accounted for the largest share of the UP’s freight revenue, 22% in 2011, said the Feb. 3 Form 10-K from the UP. The railroad’s network supports the transportation of coal and petroleum coke to utilities and industrial facilities throughout the U.S. Coal traffic originating in the Southern Powder River Basin (SPRB) area of Wyoming is the largest segment of the UP’s energy business.

For the BNSF, the transportation of coal contributed about 27% of freight revenues in 2011. More than 90% of all BNSF’s coal tons originating from the Powder River Basin of Wyoming and Montana, its Feb. 27 Form 10-K said. BNSF is controlled by Berkshire Hathaway (NYSE:BRK.A).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.