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### Law Office of Robert Ukeiley

507 Center Street ◦ Berea, Kentucky 40403 ◦ tel.859-986-5402 ◦ fax.866-618-1017

Robert Ukeiley rukeiley@igc.org



# VIA EMAIL

February 22, 2013

Jeff Hunt, EPA Region 10, Office of Air, Waste and Toxics (AWT–107), 1200 Sixth Avenue, Suite 900, Seattle, WA 98101

Email: R10-Public_Comments@epa.gov

RE: Revision to the Washington State Im plementation Plan; Tacoma-Pierce County Nonattainment Area EPA–R10–OAR–2012–0712;

Dear Mr. Hunt:

On behalf of the Sierra Club and its many thousands of members and supporters who are at risk of adverse impacts of exporting coal mi ned in the Powder River Basin (PRB) via ports on the West Coast, we are writing to comment on the 2008 Baseline Emissions Inventory and

Documentation for the Tacoma-Pierce Count y PM2.5 Nonattainment Area (Tacoma Emission Inventory). The United States Environmental Prot ection Agency (EPA) has assigned this action

Docket EPA-R10-OAR-2012-0712.

As explained in detail below, the West Coas t is facing potentially fi ve new coal export facilities that would export coal mined in the PRB to Asia. Coal would be transported via rail and/or barge to the ports and then shipped abroad. There are also existing coal trains traveling through Washington to Canadian port s. Finally, trains carrying ta r sands oil to refineries may also rapidly increase. Thus, it is imperative that the Tacoma Emission Inventory clearly and accurately document emissions from trains as this railroad track stands to have substantially increased traffic due to export facilities . An accurate emission inventory is necessary not only

for the Tacoma nonattainment SIP but also for proper implementation of general conformity determinations by federal agencies, such as th e Bureau of Land Management, which authorize the coal mining which produces the coal which may be exported.2 I. PRB MINES

The PRB is located in northeastern Wyomi ng and southeastern Montana. Several coal mining companies within the PRB have expresse d interest in exporting coal to Asia. These companies, and the mines with which they ar e affiliated, include: Peabody Energy, Arch Coal, Cloud Peak Energy, Westmoreland Coal Compa ny, Ambre Energy, and First Energy. Each company and its mine holdings ar e discussed in more detail:

1. Peabody Energy

Peabody Energy has nearly 9 billion tons of reserves and manages or owns interests in 28 mining operations in the United States. See http://www.peabodyenergy.com/Operations/CoalOperations.asp . Peabody Energy has shown great interest in the coal markets in Asia, in cluding China and India, fo r electricity and steelmaking purposes. According to their most recen t “Analyst and Investor Forum,” they are planning to sell PRB coal to Asia, and are looking at joint ventures there as well: “The real goal here is to see if we can’t get large volumes of Powder River Basin coal to Asia,” said Peabody Coal CE O Gregory Boyce, “obviously it's a longerterm project. See http://www.peabodyenergy.c om/pdfs/Session%202%20-%20Navarre.pdf “Our goal is to get large volumes of Powder River Basin [western U.S. Powder River Basin] coal to the Pacific Rim. We know we can sell it in China and

Korea.” See http://www.businessspectator.com.au/bs.nsf/Article/Coal-miner-Peabody-eyesAustralia-Mongolia-expansi-6QPGV?OpenDocument . They cite the PRB’s optimal location, premium metallurgic and thermal coal reserves, lower cost for a seabor ne supply, high potential for growth and expanding export capabilities with rail/port access as reasons for expanding mining for export to Asian markets. Peabody al so expects that the world demand for coal (metallurgic and thermal) will rise in the next five years, which will necessitate higher annual exports. Peabody will consider constructing an export terminal that can hold a capacity in excess

of its initial estimation of 20-30 MT, and has announced plans for that terminal to be Cherry Point in Bellingham, WA.

2. Arch Coal

Arch Coal is one of the country's larges t coal producers, behind industry leader Peabody Energy. Arch Coal produces roughly 120 million tons of coal a year from about

20 mines in the western US and Central Appalachia, with an es timated 2.8 billion tons in reserves. Arch also owns and operates Arch Co al Terminal near the Ohio River, which is primarily used to store and ship its Appalachian coal.

In its 2011 Global Metals/M ining Conference presentation, Arch Coal expressed great interest in coal exports to Asia a nd predicted that by 2015 the company could be exporting as much as 90 million tons of coa l/year. Currently, Arch Coal has access to seaborne coal markets through its holdings on the East Coast (DTA at Newport News, VA), West Coast (Ridley Terminals) and Gulf region (river facilities in KY and IL). Arch also acquired a 38 percent stake in the proposed Longview, WA, export terminal3 site for $25 million plus other benefits with the expectation that this site would be utilized to export coal to Asia.

3. Ambre Energy

Ambre Energy is an Australian-base d mining and technology company that purchases oil shale and coal resources in Australia and the U.S. The company is involved in steel manufacturing, electricity generation and coal-to-liquid conversion. They operate surface mines in North Dakota, Wyoming and Montana. Their U.S. operations are based in Salt Lake City, UT, although a majority of th eir coal operations are based in Australia. An increase in the price of extracting co al in Australia has led Ambre energy to seek cheaper resources in coal producing ar eas of the United States. They have used various parameters to find viable areas to mine, including transportation options, financial modeling, and negotiati on of contract terms with a ppropriate parties. According to their yearly report (2009), if conditions are favorable, they will move to acquire at least one operating mine in development sites it has marked. Despite the recession and uncertainty in financial markets over the pri ce of coal, Ambre Energy is confident that they will gain the necessary financ ial backing for a mine acquisition.

4. Cloud Peak Energy

Cloud Peak Energy operates three coal mi nes located in the Powder River Basin. The company was formerly a subsidiary of Rio Tinto, and is capable of producing about 100 million tons of coal annually. It has 1 billion tons of co al in reserves. Originally formed in 1993 as Kennecott Coal, it changed its name to Rio Tinto Energy America (RTEA) in 2006, and went public as Cloud Peak Energy in 2008. Cloud Peak owns dedicated storage sp ace at the Vancouver, BC, Westshore Terminal, where it has been successfully exporting coal to Asia. See http://www.coalage.com/inde x.php/features/504-cloud-peak-e nergys-spring-creek-rampsup.html . The company exported 3 million tons of thermal coal to Asia through the Westshore terminal last year, which was nearly doubl e the amount it exported in 2009. See http://www.coalage.com/index.php/f eatures/992-west-coas t-exports-materialize.html. See also http://billingsgazette.com/business/arti cle_23a03acc-53be-5ed3-a2fb-ff75909c3f34.html. Colin Marshall, chief executive officer of Cloud Peak Energy has stated in late 2010, “expansion is absolutely more than a pipe dream” Marshall has also stated that the only limiting factor is terminal capacity.

5. First Energy

FirstEnergy is a diversified energy company headquartered in Akron, Ohio. In late 2009, as part of joint venture with The Boich Group a nd Global Coal Sales, First Energy purchased the Bull Mountain mine and renamed it Signal P eak Mine. Since then, more the $450 million
dollars has been invested in the mine, and cont racting a 35 mile railroad spur that leads to4 the BNSF's main rail line in Broadview, M ontana. Due to these enhancements, mine representatives have projected that producti on at Signal Peak could reach 14 million tons a year as early as 2011. See http://www.mont anacoalinvestment.com/john-baugues-jr.html. First Energy has significant interests in exporting the coal it produces and although either company refuses to confirm the report, it is rumored that Signal Peak has already successfully shipped two Pana max cargoes, 60,000 to 70,000 DWT and a capsize load, 125,000 tonnes, through Vancouver, Britis h Columbia. Don Drabant president of Global Coal Sales Group has also stated: "We' re getting some traction in Asian thermal markets, and we're in discussions with seve ral people about term bus iness in the Pacific

Rim market." See http://www.steelguru.com/raw_material_news/G lobal_Coal_to_send_sever al_trial_cargoes_of_c
oal_to_Asia/112615.html First Energy has also indicated it has in tentions to begin mining in the exact location of the recently announced Bureau of Land Management coal lease sale starting in 2013. The BLM leases are on 61 million tons of federally-owned coal and will be auctioned through a competitive bidding proces s late in the summer of 2011. There is no

official word on how much of the 72 million tons of private and state coal reserves First Energy intends to buy. See http://www.victoria advocate.com/news/2011/apr/20/bc-mt-coalsale1st-ld-writethru/?business&business-wire

II. EXPORT TERMINALS

Within the Northwest, there many ports that would have the potenti al to export coal.

A. Ports

Washington State has eleven (11) deep draft ports, including seven (7) in Puget Sound, one (1) on the Washington coast, and th ree (3) on the lower Columbia River.26 Powder River Basin coal shipped on BNSF rail li nes can access each port. There are five active coal export proposals includi ng: Cherry Point/Bellingham and Longview, WA; Coos Bay, Morrow and St. Helens, OR. Additionally, there ar e three terminals in Canada, and some U.S. coal travels by rail through Wa shington to reach these ports.

B. Northwest Coal Export Proposals that would impact Tacoma

1. Washington: Cherry Point/Bellingham—G ateway Pacific Terminal—SSA Marine and Peabody--24-50 MTPA

In late February 2011, Peabody Energ y, the world’s largest coal company, announced plans to export 24 million tons of coal from a large new shipping terminal to be built at Cherry Point, north of Belli ngham. However, Fred Palmer, a senior vice president for Peabody was quoted saying the Cherry Point terminal “could reach up to 50 million tons per year.” It signed an agreem ent with SSA Marine, the largest terminal5 operator in the world. 1 Peabody, the largest coal compa ny in the United States, had been hinting since last fall that they were l ooking to announce a new West Coast port space by year’s end that could ship 20 to 25 million tons of coal annually, which is the Cherry

Point terminal. 2 However, the terminal may also serve other coal companies apart from Peabody. 3 The cost estimates for such a terminal were $400-500 million, with a construction time of 18 months. The facility’s capacity would be around 25 MTPA, which is more than twice the current PRB export to Asian markets (around 10 MTPA).

2. Canadian Ports

Arch Coal announced that it had reached an agreement with Canadian Crown Corporation Ridley Terminals Inc. in Prince Rupert, British Columbia to export 2.5 million tons of PRB coal annually. The U.S. coal being shipped via the Canadian ports is likely shipped via Washington through the

Tacoma area. The 2.5 MTPA from the Arch deal likely adds 1-2 trains/day to Washington rail

routes. 4

III. RAILROAD CONNECTIONS

A. Potential rail routes

Burlington Northern Santa Fe (BNSF) rail road has major rail lines that stretch from the PRB to Washington, near Woodla nd and the port of Longview and Cherry Point. The port at Longview has eight be rths, seven of which are rail accessible in varying capacities: directly ac cessible, direct transfer, tran sfer into storage and hopper to rail. The port at Cherry Point will feature be rths for three ships and will be linked to the shore by a 1,250 foot trestle th at will move cargo to or fr om the ships in enclosed

conveyor systems. 5

One rail route for Canadian or Cherry Point coal would be from Billings , MT, west to Sandpoint, ID, and then northwest to Cherry Point/Bel lingham (All BNSF) – 1,003 rail miles. The same

route extends to Canada. See http://www.wstc.wa.gov/Rail/RailFinalReport.pdf In order to move 20-30MTPA along one of th ese rail routes, BNSF must move 55,000-82,000

1 See http://phx.corporate-ir.net/phoenix.z html?c=129849&p=irolnewsArticle&ID=1533973/

2 See http://www.oregonlive.com/environment/inde x.ssf/2010/09/global_mining_companies_are_fo.ht

ml

.
3 http://www.coalage.com/inde x.php/features/992-west-coas t-exports-materialize.html

4 See http://news.archcoal.com/phoenix.zhtml?c =107109&p=irolnewsArtic le&ID=1517028&highlight ; http://www.rupertport.com/ridleyterminals.htm.

5 See http://www.gatewaypacificterminal.com/project/what.shtml .6 tons of coal/day.

Additionally Cherry Point is projected to be 48-54 MTPA. At volumes of 50 MTPA, that amounts to more than 22 loaded coal trains, e ach more than a mile long. And to support both Longview and Cherry Point, it is likely that a dditional rail capacity would be needed, or that existing freight traffic would be impacted. Accord ing to rail line operators, issues of congestion at chokepoints, slower train velo cities, delayed trains, and shor tages in locomotives, equipment and crew makes the addition of 5-7 trains/day unrealistic with the curr ent system. Additional pressure on the Washington rail system will in crease in the next decades. Between 2005 and 2025, the output of the Washington State economy (measured as gro ss state product) is expected to grow at an average of 3.5 percent per ye ar. The total freight tonnage moved over the Washington State rail system is expected to increase by about 60 percent over the period. To accommodate this growth, many more rail lines w ithin Washington State will be operating at or above their practical capacity. 6

Washington’s current Transportation Pl an (2007-2036) heavily funds the northsouth rail lines ($200 million). 7 Even though there is $1.15 milli on earmarked for a study on capacity constraints on mainlines, major projects and st udies for the east-west line are going unfunded. In order to remedy this, $114 million has been budgeted for funding of regional development projects and mitigation of impacts on the east-west rail line, and the problem has been flagged as “unfunded, high priority” for the next transpor tation study, currently out for public comment. The plan does not make any specific references to which rail lines or terminals servicing these lines would be part of the development project.

B. Impacted Rail Communities

On the Powder River Basin side, more 50 trains per day would be nece ssary to transport 140 million tons of a coal a year to the West Coast. Communities along the rail line, from the Powder River Basin in Mont ana and Wyoming, to Idaho to Washington and beyond will experience increased rail traffic through their communities. In communities split by rail lines, this could significantly increase the amount of coal dust emitted into the air and water, impact local air quality from increased train and ship diesel emissions, delay traffic, cause delays for em ergency vehicles, increase noise pollution, and enhance the likelihood of pedestrian accidents and auto -train collisions.

There are several different communities across the western United States that currently and would increasingly be impacted by coal trains on a daily basis. Below is list of some of the different poten tial scenarios given the empha sis on exporting coal from the state of Washington: • Taking the northern line out of Spokane the communities would be Wenatchee, Monroe (west side of Cas cades), and then after meeting up with the north-south running line, Everett, north of Seattle. Much of this line is

6 See http://www.wstc.wa.gov/Rail /RailFinalReport.pdf (p.10)

7 See http://www.wsdot.wa.gov/NR/rdonl yres/083D185B-7B1F-49F5-B865- C0A21D0DCE32/0/FinalWTP111406.pdf

.7 designated as congested • Taking the middle lin e out of Spokane the communities would be Kennewick, Yakima including Yakima I ndian Reservation, Ellensburg (on outskirts of town), and then after m eeting up with the north-south running line, Auburn, just south of Seattle. • Taking the southern line out of Spokane the communities would be Kennewick, Vancouver turning north running along the I-5 corridor and hitting the town of Centralia. Then it hits Lakewood entering the SeattleTacoma metropolis where it meets w ith the middle line at Auburn. Running north from Auburn that line goes th rough Kent, Renton, Seattle, Richmond, Edmonds, and then meets with the north line at Everett. At Everett all three lines merge and the one line runs north through Marysville, Mt. Vernon, Burlingt on , Bellingham and into Canada.

IV. TACOMA EMISSION INVENTORY

As EPA acknowledges, the emission inventor y must be “comprehensive, accurate, and current” and it must be of “actual” emissions. 78 Fed. Reg. 4804, 4805 (Jan. 23, 2013). To begin with, the Tacoma Emission Inventory is not comprehensive. It does not include fugitive

coal dust emissions. See State Implementation Plan Re vision, Tacoma-Pierce County Nonattainment Area (Nov. 2012)(SIP submittal) at 42. If the current fugitive coal dust

emissions are zero because there are no coal trains traveling th rough the Tacoma nonattainment area, then the inventory should sa y that. Again, this information is important so that everyone can accurately and easily determine the increas e in PM2.5 emissions from fugitive coal dust should coal trains be projected to start coming through the Ta coma nonattainment area due to new coal export facilities.

Similarly, the SIP submittal says that emi ssion estimates for 2008 and emission inventory activity level, as measured in gallons of diesel consumed by locomotives, were provided by BNSF, UPRR and Amtrak. However, a comprehens ive and accurate emission inventory needs to provide the figures for gallons of diesel consumed and emission factors or other calculations used in the emissions estimates. Again, this inform ation is critical so that all involved, including members of the public and other federal agenci es with Clean Air Act general conformity obligations, can calculate the increase in emissions in the Ta coma nonattainment area which will come should coal export facilitie s be approved or rail shipment of tar sands oil increase.

In conclusion, the SIP submittals emission inventory needs additional information before it can be approved. We appreciate the opportunity to provide these comments and look forward to EPA requiring this additional information prior to taking final action so that it does not have to disapprove this submittal. Sincerely,

Robert Ukeiley

Counsel for Sierra Club