Interior board affirms BLM lease of new coal to Oxbow

The Interior Board of Land Appeals, over the objections of WildEarth Guardians and the Sierra Club, on March 27 affirmed a U.S. Bureau of Land Management decision to lease new coal reserves to Oxbow Mining LLC for its Elk Creek longwall coal mine in Colorado.

BLM properly approved a coal lease by application, absent preparation of an environmental impact statement, because to took a hard look at the environmental consequences of issuing the rights-of-way, considered all relevant matters of environmental concern, and made a convincing case that no significant impact will occur to the environment, the board ruled. These claims are being pursued under the National Environmental Policy Act (NEPA).

“BLM’s decision will be affirmed where the appellants fail to demonstrate, with objective proof, that BLM failed to consider a substantial environmental question of material significance to the proposed action, or otherwise failed to abide by the statute,” the board said.

WildEarth Guardians and the Sierra Club jointly appealed from and petitioned for a stay of the effect of a June 2011 decision record of the Acting State Director, Colorado state office of BLM, approving a lease by application (LBA) submitted by Oxbow Mining for the Elk Creek East tract. That tract contains about 786 acres of federal coal adjacent to Oxbow’s existing leases at the Elk Creek mine in the North Fork Valley area near Somerset, Colo. The decision record and a separate finding of no significant impact were based on a June 2011 environmental assessment.

Oxbow is the owner and operator of the Elk Creek mine, currently a 5,099-acre underground coal mining operation. The LBA would allow Oxbow to expand its operations into Elk Creek East, consisting of approximately 786 acres of federal coal in the D seam, which holds a high-Btu, low-sulfur bituminous coal.

Oxbow said that, absent leasing this coal, the Elk Creek mine, which began operation in 2002, would shut down when the economically recoverable coal reserves accessible without Elk Creek East are exhausted. Oxbow said that coal in the Elk Creek East tract is unlikely to ever be developed as a stand-alone mine if it is not recovered by Oxbow, because more coal resources are required to justify the expenses of building a mine to recover this coal.

Oxbow expects the mining of the estimated 3.96 million tons of federal coal in the tract to extend current operations up to 1 additional year, based on a current rate of extraction of 5 million tons per year, beginning in 2012. The recovered coal would continue, for the foreseeable future, to be sold for the generation of electricity in coal-fired power plants.

The environmental groups contended that BLM failed to adequately consider the environmental impacts of greenhouse gas (GHG) and other gaseous emissions likely to occur as a consequence of leasing and developing this tract, and reasonable alternatives to such emissions, or at least appropriate mitigation measures to address unavoidable adverse impacts of such emissions. The groups focused on the impacts to air quality attributable to mining and/or burning the coal, in particular emissions of carbon dioxide equivalent (CO2e), nitrogen dioxide (NO2), nitrogen oxide (NOx)/volatile organic compounds (VOC) (likely to contribute to the formation of O3 (ozone)), and particulate matter (PM2.5).

WildEarth’s challenge was based upon the expected exceedance and/or violation of National Ambient Air Quality Standards and Colorado Ambient Air Quality Standards, and the expected impacts to the human environment associated with global climate change.

This isn’t the only legal action with a similar theme. The concept of trying to hold coal mines responsible for the CO2 emitted from power plants burning that coal has been pioneered by WildEarth Guardians in an ongoing federal court lawsuit where the group is trying to get BLM to take into account those emissions when leasing coal in the Powder River Basin of Wyoming.

In its March 27 ruling on Elk Creek East, the Interior board pointed out that these environmental groups have previously made similar claims about PRB leasing. “We have previously considered most of WildEarth’s NEPA violation claims in the context of challenges to LBAs in the Powder River Basin of Wyoming, which is situated roughly 260 miles directly north of the Tract, as advanced by WildEarth Guardians, the Sierra Club, or other entities. Our consideration of WildEarth’s claims, repeated in the context of the current challenge to Oxbow’s LBA, leads us to conclude that WildEarth has failed to carry its burden of demonstrating a violation of section 102(2)(C) of NEPA.”

Oxbow Mining is a unit of Florida-based Oxbow Corp. The parent company’s Oxbow Carbon unit and its two affiliated companies – Gunnison Energy and Oxbow Steel International – have yearly sales in excess of $4bn, combined assets of nearly $2bn and over 1,100 employees worldwide. Oxbow’s primary businesses are the mining and marketing of energy and commodities such as coal, natural gas, petroleum, metallurgical and calcined coke.

Oxbow looks at reserves for brand-new Colorado mine

Notable is that Oxbow Carbon is already looking ahead at the end of Elk Creek’s life and is ready to explore federal coal reserves nearby in the Oak Mesa area of Colorado. Oak Mesa, north of the town of Hotchkiss, is a historical mining area. A 2000 U.S. Geological Survey report has shown there is more than 744 million recoverable tons of coal in the North Fork Valley.

“This step in exploration is an opportunity for Oxbow to continue producing clean, low-sulfur, super-compliant Colorado coal,” Randy Litwiller, Vice-President of Oxbow Mining said in a May 2011 statement about the exploration plans.

In addition to the hundreds of employees at the Elk Creek mine, there are more than a thousand indirect jobs supporting the mine. The North Fork Valley produces more than 40% of Colorado’s coal through Elk Creek and the nearby Bowie No. 2 longwall mine of Bowie Resources and the West Elk longwall mine of Arch Coal (NYSE:ACI).

The Oak Mesa exploration area contains about 13,873 acres. It covers upland areas located between the West Roatcap Creek and Leroux Creek drainages and north of Hotchkiss. The area lies generally west of the Orchard Valley coal lease tracts held by Bowie Resources. The geology and coal character are anticipated to be similar to the Orchard Valley coal lease tract with at least one seam of recoverable coal, outcropping on the southern slopes of the Oak Mesa, and dipping into the mesa at approximately 5 degrees.

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.