NCTA Issue 2, 2016 by National Coal Transportation Association

ISSUE 2 | 2016

Standing up for Affordable Energy

Reflections: Duane Richards

Our Journey Underground

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Typical Before Installation Photos

Typical After Installation Photos

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Contents 8

PUBLISHED BY: National Coal Transportation Association 4 W. Meadow Lark Lane Suite 100 Littleton, CO 80127-5718 Phone: 303-979-2798 Fax: 303-973-1848 www.nationalcoaltransportation.org Editor: Pat Scherzinger Phone: 303-993-7172 scherzinger@ nationalcoaltransportation.org Production By: Suckerpunch Creative Inc. info@suckerpunch.ca www.suckerpunch.ca ©2016 NCTA. All rights reserved. The contents of this publication may not be reproduced in whole or part, without the prior written consent of NCTA.

ISSUE 2 | 2016

FEATURES

DEPARTMENTS

Know Your Board: John Mayer

The Sense in Suspending State Planning on the Clean Power Plan

Message from the NCTA President – Kent Smith

Message from the NCTA Executive Director – Tom Canter

Our Journey Underground

Coal Country to Hillary: We Heard You

NCTA Committee Updates

STB Update

Calendar of Events

Standing up for Affordable Energy

Membership Benefits

Reflections: Duane Richards

Stats at a Glance

CONFERENCES

View from the Caboose

Forty-Second Annual Business Meeting & Conference

Membership List

Grand Hyatt, Denver, Colorado September 12-14, 2016

Index to Advertisers

Spring General Conference Recap

Cover Photo: by Robert Seten

Royal Sonesta, New Orleans, Louisiana April 10-13, 2016

Operations & Maintenance Conference Wrap-Up

Hyatt Regency, Austin, Texas June 10-12, 2016

The opinions expressed by the authors of the articles appearing in the Coal Transporter are those of the respective authors and do not necessarily reflect the opinion of the NCTA, its Board of Directors or its member companies. Publication of the articles does not constitute an endorsement of the views that may be expressed. COAL TRANSPORTER | 1

President’s Report / Kent Smith

A Message from NCTA President, Kent Smith

y fifteen year old daughter occasionally tries to get me to play a game called “Would you rather?” You basically are given two very unpleasant situations and must choose which you’d rather do. Some typical questions are:

• Would you rather wear a snowsuit to a hot beach or a swimsuit to Antarctica? • Would you rather use eye drops made of vinegar or toilet paper made from sandpaper? • Would you rather have 500 tarantulas or 1000 crickets crawling around your house?

Unfortunately, a very large number of people view the upcoming presidential election as a question that could easily be asked in this game. While each candidate has some very enthusiastic supporters, polls indicate both are viewed negatively by more than 50 % of those asked. Never in the history of polling have both candidates been viewed this poorly. Given these negative views of the candidates there is a temptation on the part of many to sit this election out. They essentially create a new “would you rather” question. • Would you rather not vote at all or vote for someone you view negatively? I personally believe not voting is a big mistake. In this case I think it’s best to ignore the individual candidate’s negatives and focus on key policy questions. After what we’ve seen over the past several years, this is a pivotal election on many fronts. This is particularly true for our industry. We often question how we can more effectively make our voice be heard. The act of voting is the purest form of this. Below are some key policy questions that are personally important to me. • The Makeup of the Supreme Court. The untimely death of Justice Antonin Scalia means the next president will likely be able to shape the balance of the court for a generation or more. Prior to his death, the court had dealt some serious setbacks to the EPA’s overreaching practices. Since then we’ve seen several key 4-4 decisions. How will the court ultimately rule on the Clean Power Plan and other important issues? 2 | COAL TRANSPORTER

• The Economy. In the 1992 election, Bill Clinton’s campaign manager, James Carville, coined the phrase “It’s the economy stupid!” It meant people almost always ultimately vote for the candidate they believe can protect or improve their personal economic situation. A robust economy is the key to solving many of our other issues. Without it we can’t address our massive debt or afford much needed services. A sound energy policy is a key component of a strong economy and coal needs to play an integral part in it. • National Security. I’m writing this just a few weeks after the deadly terrorist attack in Orlando and right after the Istanbul airport bombings. I simply can’t fathom how the president and some in the primary campaign can, with good conscience, call Climate Change our most pressing national security issue. • Runaway Political Correctness. My parents raised me to genuinely respect everyone, even those who are different than me. It seems though we crossed a line sometime over the past several years where common sense was replaced with a ridiculously extreme effort to avoid offending anyone. During her campaign for freshman class treasurer my daughter’s friend was told she had to stop handing out lollipops with the phrase “Don’t be a Dum-Dum, vote for Delaney” because the term “Dum-Dum” might offend someone. On our college campuses free speech and the open exchange of ideas have become prisoners to this political correctness. It reaches into almost every institution we have including education, law enforcement, and the military. Taking these issues and others into account, and ignoring the negatives of the candidates, I just don’t think it’s wise to sit on the sidelines and not vote. Also, while understandably the focus of the media is on the presidential race, it’s important to remember we aren’t just electing a president this year. As usual, the entire House of Representatives and 1/3 of the Senate will be up for grabs, as well as important state and local offices. So my answers to the “Would you rather” questions posed here are: I’ll go with the snowsuit on the beach, the vinegar eye drops, and the 1000 crickets. Lastly, I’m definitely voting in this election. The issues at stake are far too important not to. How would you answer them? s

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Executive Director’s Message / Tom Canter

A Message from NCTA’s Executive Director, Tom Canter

admit to maligning the Millennial Generation in a general way. The mass media and multitudes of parents are quick to tell you how this generation is disconnected from direct human interaction and almost solely rely on their many “electronic devices” and “apps” for communication and social life. All too many Millennials do not exhibit the discipline or desire to succeed in the rough and tumble world of business. They are misguided by an educational system, politicians, and media that exalt victimization and denigrate those that actually create real national wealth and provide opportunity. So, it is time to show the positive side of this young and bright group that is destined to pay for our Social Security. I am joining Kent (See President’s Message) in touting the wisdom and views of a fifteen year-old to make my point. I proudly disclose that my guest columnist is my granddaughter, Caroline Riley, who will be a junior this year at Arapahoe High School in Centennial, Colorado. The article (slightly edited by Caroline for print) is actually a speech she gave at the Future Business Leaders of America (FBLA) competition that won first place.

By Caroline Riley “When I was younger, every day after school, I enjoyed a very specific ritual. I would change out of my school uniform, a sleek pair of khakis and a charming, polyester polo shirt. I would cut up an apple, pour a refreshing glass of juice and race downstairs to sing in my family’s rock band, get trained in the art of espionage, or simply watch TV. All of these activities were accomplished Caroline Riley in the company of my big brother, Chase. Chase is 3 years older than me. He’s currently a senior in high school, a varsity wrestler and a dedicated mixed martial arts fighter. He is quirky, charismatic, motivated, and sometimes almost too persistent. Everything he does is with purpose. Chase is visually impaired and born legally blind. Growing up with a brother who needed help walking down the stairs or reading menus never seemed abnormal to me. To be honest, sometimes I even forget about it. Not because I am a spacey, inconsiderate sister, but because Chase, even with his low vision, is completely self-sufficient. He doesn’t need my help, and he certainly doesn’t need my pity. He refuses to be enabled by well-meaning teachers, over-eager counselors 4 | COAL TRANSPORTER

or good-hearted family. He refuses to let his low vision impact his present, or his future. This year, Chase won a full ride scholarship to the University of Colorado school of business for excellence with low vision. I suspect Chase is going to be a multimillionaire, the CEO of some great company or a pioneer of an innovative and groundbreaking way of business. Chase’s attitude has inspired me, and challenged me, in my experiences in FBLA. Since I was a little girl, my brother has ingrained in me a constant theme - Greatness is within us all, no matter the obstacle. Be determined. Be hard working. Be a leader. We live in the greatest country in the world where, with character, a man can overcome poverty, social status, abuse, lack of education, lack of resources, or being blind and still find success. Hellen Keller famously said, “Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.” The way I see it, in times of struggle, of high school drama, on the nights when the homework seems like it will never be finished, in the moments when the odds are stacked up against us and the last thing we want to ponder is our future, the last call we want to answer is the call to leadership, and in the times when success seems unattainable, that is when our character shines through. My brother is the only 18-year old I know who does his homework listening to motivational speeches. I know he will be successful and I am confident I will follow in his footsteps. I have the role model, I have the resources, and I have the hunger. I am learning the potential of my own future. I am appreciative of the business classes I am required, though happy, to attend to learn about the American economy and all the opportunities this country holds. I am proud to be a citizen of a country where my government requires my peers and I to attend school and become educated, to discover our passions, and to be trained for success. I am appreciative of my community of students just like me who want to go against the expected, to rise above the mediocrity and LEAD. Most importantly, I’m appreciative of my big brother Chase for manifesting the attitude of a future business leader of America and teaching me to overcome any obstacle that interferes with my quest for success.” My thanks to Caroline for reminding us we must continually overcome obstacles and we cannot withdraw into the mindset of a victim. Have a safe day producing wealth and the abundant energy for the people of North America. s

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Know Your Board / John P Mayer

Know Your Board:

John P Mayer

J John P Mayer

Fuels Strategist Associated Electric Cooperative, Inc.

“Never put off to later what you can get done now, because you never know what lies ahead.”

ohn Mayer is a Fuels Strategist for Associated Electric Cooperative Inc. (AECI), headquartered in Springfield, Missouri. AECI provides wholesale power generation and high-voltage transmission services to its six member-owners who in turn serve 51 distribution cooperatives in Missouri, southern Iowa and northeast Oklahoma. His current responsibilities include contract negotiation and administration for coal supply, rail transportation services, rail car leasing, rail car fleet management and maintenance. He is also responsible for AECI’s natural gas business, including enabling agreements, pipeline transportation services, supply origination, trading, accounting and reporting, enabling agreements for financial hedging activities, diesel hedge trading to manage fuel surcharge risk, renewable energy resources contract origination, negotiation, administration, and renewable energy reporting. While the tremendous breadth of his near-term responsibilities is daunting, his biggest challenge is making longterm recommendations on strategies when regulatory uncertainty is at such a high level. John said he believes that one should, “never put off to later what you can get done now, because you never know what lies ahead.” The favorite part of his job is developing and maintaining relationships with people inside and outside the organization. Seeing immediate results from work he is involved in brings a lot of satisfaction. John earned his undergraduate degree in human resource management

from the New School for Social Research, a liberal arts college in New York, while concurrently serving in the U.S. Navy. Also a graduate of the U.S. Navy’s Nuclear Power Program, John served seven years in Nuclear Power Propulsion. Part of that time he taught Nuclear Power Propulsion at the Kesselring Atomic Power Laboratory in Ballston Spa, New York, and was awarded the Master Training Specialist for his efforts there. He completed three deterrent patrols on the USS Pennsylvania, SSBN 735 Gold crew, ending his service as an Engineering Watch Supervisor. In the Navy, John realized that “speaking up about an issue and possibly being wrong is far better than not saying anything for fear of being called out.” Leaving the US Navy in 1993 was a difficult choice. John found submarine service to be unique and rewarding, but the Navy didn’t leave much time for family, and he ultimately chose the latter. After leaving the Navy, John earned an MBA from Drury University in Springfield, Missouri, and completed an executive management program at the University of Virginia, Darden School of Business. John earned his stripes in the commercial utility industry in power generation at City Utilities of Springfield. After five years on the generation side, he moved into the growing power marketing community during the Enron heydays. AECI was expanding its power marketing desk at that time and it was a good fit. In the early 2000s, following successes as a power marketer, John was asked to help AECI’s fledgling natural

“Speaking up about an issue and possibly being wrong is far better than not saying anything for fear of being called out.” 6 | COAL TRANSPORTER

NCTA WELCOMES ITS NEWEST MEMBERS!

he board of directors of the National Coal Transportation Association is pleased to announce that the applications for membership in NCTA of the following coal industry participants were approved. They join NCTA’s existing member companies working every day through the NCTA to foster the cooperation needed to resolve issues faced by coal consumers, coal producers, transporters, rail equipment manufacturers, and services companies.

Commtrex High Country Railcar Levin Richmond Terminal MPL Innovations, Inc.

gas operation develop strategies for fueling its burgeoning fleet of combined-cycle gas plants. Following a successful implementation of the new strategy, John received a “temporary” assignment to manage the coal and rail contracts, then considered the “crown jewels” of the fuel supply group. Eight years later, he’s still on the job. With legacy rail contracts nearing expiration, John spearheaded the rail contract negotiations focusing on the business partnership and mutual benefits. One result was a build out to another Class I railroad to lock in competitive deliveries of coal for many years to come. AECI has been a NCTA member for many years, and John has participated in most of the organization’s committee activities and initiatives over the past eight years. In 2015 he joined the Board of Directors, bringing with him his broad perspective of the association. He sees great value in relationships and lobbies hard internally to continue to invest in these. Unlike the power and natural gas industry, the coal and rail business has remained a very relational business, and the NCTA plays a big role in this. John comes from a large Catholic family and feels blessed all his brothers and sisters still around. John and his wife, Carolyn, have been married for 30 years. Together they enjoy hosting summer poolside parties at their home with friends, neighbors and co-workers. Other recreational endeavors include scuba diving, swimming, mountain bike riding, golf, and hunting. s

A complete list of NCTA member companies can be found on our website: www.nationalcoaltransportation.org/ index.php/membership/current-members

BENEFITS OF MEMBERSHIP • • • • • • •

Focus on Coal Transportation Conferences with Character Logistics and Planning Subcommittees Operations and Maintenance Subcommittee Commitment to Education Policy Insights Publications

COAL TRANSPORTER | 7

NCTA 2016 Fall Conference / Preview

NCTA 2016

Fall Conference Grand Hyatt, Denver, Colorado | September 12-14, 2016

he NCTA continues to offer “Conferences with Character” as it stages its 42nd Annual Business Meeting and General Conference, September 12-14, 2016 at the Grand Hyatt, Denver, Colorado. The challenges facing the coal industry have never been greater and one thing clear among producers, carriers, utilities, and suppliers is that “We’re All in This Together.” The NCTA offers you the best value for your travel and education dollars with a low member registration fee, an easily accessible location, and most importantly, all the people you want to see. Eric Butler, Executive Vice President and Chief Marketing Officer for the Union Pacific Railroad will be the Tuesday keynote speaker. Please check the NCTA web site for updated information and online registration or use the QR Code to register on your smartphone now.

8 | COAL TRANSPORTER

REGISTRATION

Registration is required for each attendee of the NCTA Annual Meeting and Conference. The registration fee is now $530.00 for those representing an NCTA member company and $730.00 for all other attendees. The registration fee includes access to presentation materials; entry to all sessions; the receptions on Monday and Tuesday evenings; continental breakfast on Tuesday and Wednesday; and all refreshment breaks. The Fall Sponsorships Program has been revamped and provides a wider variety of sponsorship options than any previous Fall Conference. You can pay during the conference registration process or request an invoice.

ACCOMMODATIONS

We are returning to the Grand Hyatt Denver Downtown. It is easier and cheaper than ever to get there now that the train is running directly from Denver International Airport to the recently remodeled Union Station. From there grab the free bus down the 16th Street Mall to get to the Hyatt. The fee is $9 but the pass is good all day on area trains and busses. The Grand Hyatt has 516 elegant guestrooms featuring free internet access, 42-inch flat-screen TVs, coffeemakers and rainfall showerheads. A recipient of the AAA Four Diamond Award, the Grand Hyatt is just two blocks from the 16th Street Mall. One of the most stunning features of the hotel is the 38th floor Pinnacle Club where we will be holding our networking receptions. It offers panoramic views of the Rocky Mountains, Mile-High Stadium, and the downtown area. Dining options at the Hyatt include a brewpub serving regional cuisine, a fireside bar and a Starbucks. The 4th-floor fitness center has an indoor heated pool and the rooftop holds both a tennis court and a running track. The Grand Hyatt is located at 1750 Welton Street, Denver, Colorado, 80202.

RESERVATIONS: Telephone: 303-295-1234 ROOM RATES PER DAY: $189.00/day Single/Double MONDAY, SEPTEMBER 12 All Day 1:00pm – 5:00 pm 5:30pm – 7:00pm

Packets at Hotel Check-In NCTA Board of Directors Meeting Welcome Reception

TUESDAY, SEPTEMBER 13 8:00am – 11:30am 11:30am – 1:00pm 1:00pm – 3:45pm 4:00pm – 4:30pm 5:00pm – 6:30pm

General Session Lunch by Individual Arrangement General Session NCTA Annual Business Meeting for Members Grand Reception sponsored by FreightCar America

WEDNESDAY, SEPTEMBER 14 8:00am – 11:30am General Session

THINGS TO DO AND SEE IN DENVER

Sadly, the Rockies are out of town and Broncos game is the Thursday preceding the conference. Besides, while it’s billed as a rematch of Super Bowl 50, it’s hardly that with all the personnel changes made during the offseason. But there are plenty of other things to do in and around Denver. If you’ve never played golf at Arrowhead Golf Club, put it your to-do list. They tout it as “300 million years in the making” (no, it wasn’t a government project) and you’ll see why as the scenery is amazing. If you just want a beautiful walk without all the swinging, check out the Denver Botanical Gardens. It’s close to downtown and there’s a great street taco restaurant a few blocks away we could highly recommend. For something different, try the Wings Over the Rockies Air & Space Museum, located on the site of the former Lowry Air Force Base. Now mainly new residential housing, Lowry was the original home of the US Air Force Academy. The museum has a bit of everything from a 1926 Eaglerock to a Star Wars X-wing Fighter. s

Denver Botanic Gardens 1007 York St, Denver, CO

Wings Over the Rockies Air and Space Museum 7711 E Academy Blvd #1, Denver, CO

Pinche Tacos 1514 York St, Denver, CO COAL TRANSPORTER | 9

2016 Spring Conference / Review

NCTA 2016 Spring Conference Royal Sonesta, New Orleans, Louisiana | April 10-13, 2016

he 2016 Spring Conference was held April 10-13 at the Royal Sonesta hotel in the lively French Quarter in New Orleans, Louisiana. Regardless of whether one arrived in time to enjoy the French Quarter Festival which featured 1,700 individual musicians or not, there was always music in the air in and around the conference venue. Those that had rooms facing Bourbon Street were regularly treated to the great music coming from Musical Legends Park just across the street from the hotel. This year the NCTA arranged for two optional networking activities on Monday afternoon. Attendees could choose between the annual golf tournament held at the Audubon Park Golf Course with its many lagoons and century old oak trees or a tour of the world class National World War II Museum. There wasn’t a wrong choice to be made, just something left to do on the next trip to New Orleans. The traditional sit down NCTA dinner gave way to a New Orleans Fête on Monday night. The evening began with some traditional purple, green, and gold Mardi gras beads for everyone. In a tradition dating back to the 1880’s, the purple symbolizes justice; the green represents faith; and the gold signifies power. Guests enjoyed refreshing beverages and a seemingly endless variety of New Orleans delicacies from several buffet stations. Any event that starts with delicious gumbo and ends with Bananas Foster is my kind of party. It wouldn’t be New Orleans without live music so guests line danced and tapped their feet to the musical stylings of the Nawlins Ramblers & Smitty Dee’s Brass Band.

The conference opened with Dan Elliott, the Chairman of the Surface Transportation Board discussing the STB Reauthorization Act. Thomas Wilcox, GKG Law P.C., followed with its potential impacts on coal shippers. Mining in the East and West was covered by Bill Bissett, Kentucky Coal Association and Stuart Sanderson, Colorado Mining Association, respectively. Both coal and gas markets were discussed with specifics on shale gas economics, coal and gas competition, and the future of coal. Shannon Angielski of the Coal Utilization Research Council presented the Council’s 21st Century Coal Program. Mike Baker of Diligence LLC covered the unique topic of cyber security. His presentation was followed by a panel and group discussion of electric grid and power plant security risks. Both Eastern railroads were on hand to give the group updates. Donna Cerwonka spoke on behalf of CSX Transportation and Todd Nuelle gave the CN view and update. The Tuesday afternoon session was devoted to the inaugural meeting of the NCTA Waterborne Transportation Committee. Conference attendees were joined by several folks from the local area that are involved in transportation in and around the Port of New Orleans. For complete details on this session see the committee update section of the magazine. The location for the 2017 Spring Conference, likely April 10-12, 2017, is currently being determined. s

2016 Spring Conference Sponsors NEW ORLEANS FÊTE

FLYER SPONSOR

CSX Coal & Ore Terminals

Trinity Rail

OPENING NIGHT RECEPTION

BANNER SPONSORS

Lighthouse Resources, Inc.

Appalachian Railcar Services Cooper Consolidated, LLC GATX Mabanaft Coal Trading Southern Company

FAT TUESDAY BREAKFAST Mississippi Valley Trade & Transport Council

BEIGNET WEDNESDAY BREAKFAST Impala Terminals

10 | COAL TRANSPORTER

Cindy and Wallace Taylor, Lin and Lynne Midyett

Jeff Griffin

Denise and David Boltz

Patricia Rodriguez-Bluto and Curt Bluto

Jay Leadingham and Kevin Koepke

Angeline Chong and Mike Kelly

Harry Mullins, Jonathon Shull, Aimee Andres, David Carlile

Stuart Sanderson, John Mayer, Dan Elliott, Brian Fuller

Don Drabant, Janet and Bob Wigg

Jim Gunther, Todd Nuelle, Gayle TenBrink, Jeff Zerkle

Michael Oâ&#x20AC;&#x2122;Grady and Randy Rahm

Scott Becnel, Gary Vontz, Bruz Hicks, Lin Midyett

COAL TRANSPORTER | 11

2016 O&M Conference / Review

2016 Operations and Maintenance Conference Hyatt Regency, Austin, Texas | June 13-15, 2016

CTA Operations & Maintenance Committee held its annual conference June 13-15 at the Hyatt Regency in Austin, Texas. Austin was a new location for the NCTA and while it is known as the “Live Music Capital of the World”. Early arrivals were treated to the sounds of Boston on their 40th Anniversary Tour as their music emanated from the nearby open air Skyline Theater. Generally, attendees seemed more interested in searching for the best barbeque rather than the best music. While it was hot during the day, the Hyatt’s waterfront hiking and biking trails were perfect for an early morning walk down to the railroad bridge and back. The meeting began on Monday with the annual private car owner Roundtable. This is a unique event within the industry, providing NCTA members the opportunity to discuss maintenance trends, do some problem solving, and share best practices. The Roundtable reconvened for all NCTA members. See the committee report section of the magazine for the results of the annual Executive Committee elections. The Monday reception was held at the Marker 10 Bar & Patio, located in the lobby, and already a favorite meeting spot for attendees. Most stayed inside to stay cool and just enjoy the river view. Tuesday’s general session began with a welcome to Texas from Carmen Sparks of Luminant Energy. Her entertaining presentation was right on target particularly when she discussed how hot the metal end of one’s seatbelt can get on a scorching summer Texas day. 1

12 | COAL TRANSPORTER

Operation and Maintenance Executive Committee Chairman Harry Mullins presided over the two day program focused on railcar mechanics, technology, and safety. Monday’s discussions of mechanical issues carried forward to the formal program that covered bearings, brakes, and the all-important wheels. The technology allowing cars to be monitored for mechanical defects while in service continues to improve and generates a wealth of data. Specific technology updates were given for machine visioning, cold wheels, and acoustic bearing detectors. The use of this data to make effective maintenance decisions was discussed. Safety topics covered included the philosophy and procedures of bridge inspection and train accident investigation and prevention. The Tuesday evening reception and dinner was a plated affair, held in the Foothills Ballroom with its awesome view of downtown Austin. At dusk everyone kept their eyes on the Congress Street Bridge to see if the bats would come out for their nightly foraging. I was there four nights and saw lots of people lining the bridge each night but I never even saw one bat! The annual NCTA O&M Golf Tournament was held Wednesday at the Grey Rock Golf Club. The group headed out after a hearty barbeque lunch. It was a hot afternoon and the beverage cart was always a welcome site as the golfers tried to stay well hydrated. The 2017 Operations and Maintenance Conference will be held June 12-14 at the Eldorado in Santa Fe, New Mexico, the nation’s oldest capital city. s 4

2016 O&M Conference Sponsors

PLATINUM Appalachian Railcar Services, Inc. ARS Nebraska

Commtrex FreightCar America FreightCar Parts

L-R: TOP 1 Michael and LaVera Dunn 2 Troy and Lisa Smith 3 Tom Simpson & Tom Canter 4 Gary and Tammy Shoenfeldt

BOTTOM 5 Lisa Vyvlecka, Colleen Zbylut, Sharon Pogue 6 Tod and Deanna Boothe 7 Amanda and Levi Sweazy 8 Brian Daschbach

L-R: TOP 9 Keith Gary, Justin Goertz. Bruz Hicks, Nathaniel Grove 10 Mark Coady and Fred Schulte 11 DeWayne Bradford & Peter Sutcliff

2ND ROW 12 Wayne Precure and Jerry Solt 13 Edward Patton & Dwight Porter 14 John Cruikshank & Justin Shoenfeldt

3RD ROW 15 Tom Sedarski 16 Bob Cover and David Puifoy 17 RB Wiley 18 Jim Flanagan 19 Kevin Johnson 20 Jeremy Bowers

4TH ROW 21 B: Therese Landa, Tom Clark, Fred Schulte, Michelle Straley, Melinda Canter, Sam Crespo F: Kent Metschan, Matt Neyland, Scott Marino, Martin Lew 22 Stacey and Karl Van Norman

The Greenbrier Companies MPL Innovations Inc. Progress Rail Services WHEELWORX, LLC GOLD A. Stucki Company iIRX, LP WestRail Wabtec SILVER Alpha Products Inc. Lexair Inc. Miner Enterprises TrinityRail COAL TRANSPORTER | 13

ore es Electricity M k a M n la P r e w onal, The Clean Po ely Unconstituti ik L is , rs e m u s s Con Expensive, Hurt nt the Environme e v ro p Im to e tl and Does Lit 14 | COAL TRANSPORTER

asi, By Michael J. N r L.L.P., Jackson Walke Austin, Texas

Three Fundamental Reasons

Why All States Should Put Their Pencils Down

The Supreme Court has suspended the 111(d) Rule, including all deadlines, in response to state declarations to the Court—some of the strongest of which made the argument that precious state resources should be focused on other priorities until it is clear that the 111(d) Rule will survive judicial scrutiny. States should not undermine this premise by continuing to dedicate state resources to a rule that has no deadlines in effect and might not survive.

Even states that opposed the stay motions should stop work because, as stewards of taxpayer dollars, state agencies should not be consuming state resources unless and until it is necessary and prudent to do so. Based on prior precedent and judicial review timelines, it is a near certainty that no state plan submittal deadline will be imposed in a timeframe that would warrant continued state planning activities next year, let alone before the new president is elected The 111(d) Rule’s future is uncertain at best and leading legal scholars believe the rule will, at minimum, need to be changed by the EPA to survive. States should not waste taxpayer dollars and stakeholder time and resources shooting at a moving target, especially given how politically divisive the state planning process is likely to be.

INTRODUCTION

On February 9, 2016, the United States Supreme Court (“the Court”) granted a stay of the EPA’s 111(d) Clean Power Plan rule (the “111(d) Rule” or “Rule”) through the completion of any proceedings in the Court. The Court’s stay order was unprecedented, and it has dealt a major blow, at the very least in the short term, to efforts by environmental groups and states allied with the EPA to use the 111(d) Rule to impose restrictions on electricity fleets to favor renewable energy at the expense of fossil fuels—first coal and ultimately gas. These same pro-111(d) Rule forces are now reshaping their message in hopes of keeping state planning going even though the impetus of most states’ planning activities—the September 2016 initial submittal deadline and the subsequent 2018 final plan deadline—are no more. In hopes of convincing states to do what the federal government currently cannot and may never be able to do, they have made both the false claim that the Rule’s compliance deadlines are not subject to the stay as well as the exaggerated claim that compliance deadlines could be reinstated so soon that states will lose precious time if they suspend state planning activities even for a short time. The purpose of this paper is to provide the legal context necessary to understand and evaluate these claims and to convey our strategic suggestions and recommendations for how states should proceed pending a final judicial determination of the Rule’s legality. Political considerations will also need to be factored into state strategies, and this analysis does not presume to provide advice on those issues. The bottom line recommendation of this paper is that there is no legal or strategic rationale for continuing state planning activities in the near term. At the very least, states can and should suspend activities for the remainder of 2016, after which the, the intentions of a new president, the legal fate of the Rule and the future makeup of the Court will be in much sharper focus.

LEGAL/PROCEDURAL BACKGROUND

One-hundred and fifty-seven parties filed 39 petitions challenging the Rule in court. Most, if not all, of those parties filed motions with the D.C. Circuit to stay the Rule pending judicial review. On January 21, 2016, the D.C. Circuit denied all the pending stay motions, stating only that the moving parties had not satisfied the “stringent requirements of a stay pending court review,” which include demonstrating a likelihood of success on the merits and irreparable harm if a stay is not granted. Instead of a stay, the D.C. Circuit set the case on an expedited briefing schedule, with opening briefs due February 19, and oral argument set for June 2 (and possibly June 3 as well). Numerous state and industry challengers applied to the chief justice of the Court for an emergency stay. On Tuesday, February 9, 2016, the Supreme Court, in a 5-4 decision, granted the applications, staying the 111(d) Rule through the conclusion of the litigation. All sides agree that the stay is unprecedented. It is the first time the Supreme Court has blocked any challenged EPA rule—indeed any federal regulation—from taking effect before the D.C. Circuit has reviewed and passed on the challenge on its merits. The Court gave no reason for its action, but to obtain COAL TRANSPORTER | 15

Existing Coal Power Plants Keep Electricity Affordable Hydro

Coal-Use States 9.4¢ / kWh 40% Coal

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California 15.5¢ / kWh <1% Coal Source: U.S. Energy Information Administration, Electric Power Monthly, February 2016. 2015 average retail electricity prices per kWh. Weighted average of CA and NE states equals 15.4 cents per kWh. ID, OR, WA excluded due to hydropower.

a stay, it normally must be shown that there is a “reasonable probability” that at least four justices will agree to hear the case, that there is a “fair prospect” that a majority of the Court will find that the lower court’s decision was erroneous, and that “irreparable harm” will result if a stay is not granted. Although responses to the Court’s decision ranged from near certainty that the Rule will ultimately be struck down by the Court to those characterizing the stay as a purely procedural bump in the road, all agree that the stay was a major rebuke to the D.C. Circuit panel that refused to grant a stay (after examining the same evidence) and which will also decide the merits of the legal challenge to the Rule. There is certainly a general feeling that the grant of the stay might cause the panel to be more circumspect in its review. Justice Scalia’s death factors in, but is not necessarily dispositive on the issue of whether the Rule is ultimately upheld.

DISCUSSION I. What is the effect of the Stay? Five stay applications were submitted to the Supreme Court. Three requested “an immediate stay of the” Rule. These applications were filed by (a) a coalition of 29 states and state regulatory 16 | COAL TRANSPORTER

agencies led by West Virginia and Texas; (b) a coalition of business associations led by the U.S. Chamber of Commerce and the National Association of Manufacturers; and (c) the state of North Dakota.1 An application filed by Peabody Energy and Murray Energy requested “an immediate stay of the final [R]ule,”2 and, in addition, argued in its “Conclusion” section that “the [Rule’s] magnitude and scope are unprecedented. It should be stayed, and all deadlines in it suspended, pending the completion of all judicial review.”3 Finally, the application filed by a coalition of utilities and allied parties, including electric cooperatives, asked the Court to “immediately stay the effectiveness of the final [R]ule,”4 and, additionally, specifically requested “an immediate stay of [the Rule] extending all compliance dates by the number of days between publication of the rule and a final decision by the courts, including this Court, relating to the rule’s validity.” Id. at 22 (emphasis added). Supreme Court stay applications are made to the justice responsible for the Circuit Court of Appeals where the underlying case is pending. The five stay applications concerning the Rule were filed with the chief justice of the Supreme Court because he is the circuit justice for

Non-Coal State Rates 60% More For Electricity Than Coal-Use States the D.C. Circuit, the court in which the legal challenges to the Rule are pending. A justice to whom a stay application is referred may act on the application alone or refer it the full Court. The chief justice referred all five applications to the full Court, and all were granted. The text of each stay order is the same: The application for a stay submitted to the chief justice and by him referred to the Court is granted. The Environmental Protection Agency’s (EPA’s) “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” 80 Fed. Reg. 64,662 (October 23, 2015), is stayed pending disposition of the applicants’ petitions for review in the United States Court of Appeals for the District of Columbia Circuit and disposition of the applicants’ petition for a writ of certiorari, if such writ is sought. If a writ of certiorari is sought and the Court denies the petition, this order shall terminate automatically. If the Court grants the petition for a writ of certiorari, this order shall terminate when the Court enters its judgment. Justice Ginsburg, Justice Breyer, Justice Sotomayor, and Justice Kagan would deny the application. It is indisputable that these orders stay the Rule and any and all of its deadlines that pass while the litigation is pending. In addition, the general rule is that a judicial stay “halt[s] or suspends[s]” a regulation by “suspending the source of the authority to act”5 and maintain[s] the status quo pending a final determination of the merits of the suit.”6 Applying this general rule to the stay of the 111(d) Rule would result in a stay and extension of each and every one of the Rule’s deadlines from the stay was granted, February 9, 2016, until the final conclusion of the litigation. This includes not just a stay and extension of the 2016 deadline to file a state plan or request a two-year extension and the 2018 deadline to file a state plan if an extension is granted, but also the 2022 deadline to

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Stopping EPA's Momentum: State Responses to CPP Stay **

*Colorado’s governor has announced that plan development will continue despite AG action. ** Pennsylvania is a non-litigant but has announced that plan development will continue.

States challenging rule & not yet decided on plan develop.

States Supporting EPA & Announced continued Plan Develop.

States Opposing EPA & Suspending Plan Develop.

States With Internal Disagreement (e.g. Gov. , Leg., AG)

States Intervening in Support of EPA

States That Did Not Enter Into Case

begin emissions reductions and the 2030 final compliance deadline. Just such a stay and extension of all the Rule’s deadlines was expressly requested by the utility and allied petitioners, and arguably at least impliedly request by the other applicants. Further, the EPA’s response in the Supreme Court stated that it understood all applicants to be seeking a stay of all the Rule’s deadlines,7 and that “[t]he effect of such relief would be that, even if the Rule is ultimately held to be valid, every

sequential step in the Rule’s implementation (including, for example, the 2030 deadline for full compliance by regulated sources) would be delayed for a significant period.”8 Thus, any arguments by EPA-friendly states or environmental groups that the deadlines were not stayed along with the Rule are misleading because all of the deadlines and lead time contained in the Rule are a part of the Rule provisions that were formally noticed, commented upon, and finally adopted by the EPA. If

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the EPA ultimately prevails, however, and the stay is lifted, it could seek to shorten some of the deadlines, such as, for example, shortening the final compliance deadline back to its original, pre-stay 2030 date. This issue is addressed in the next section. Notably, the Supreme Court’s stay of the Rule and its deadlines will remain in place even if the D.C. Circuit rules in the EPA’s favor and upholds the Rule. It is unimaginable that the losing side at the D.C. Circuit will not petition the Supreme Court for review, and it is virtually certain that that petition will be granted—especially if the D.C. Circuit rules in the EPA’s favor.9 Although a seemingly minor procedural observation, this affirms the notion that all hypothetical timelines should assume the Court will review the D.C. Circuit decision, which adds several months to the timelines discussed in the next section. II. How soon could state plans be due if the Rule is ultimately upheld? Even assuming the D.C. Circuit issues an opinion shortly after oral argument—and even on a fast track it should take a few weeks—the earliest the case could be taken up by the Supreme Court is during the term that begins in October 2016. Traditionally, the Court issues opinions in important cases—and this surely qualifies as an important case—on the last few days of the term, which ends in late June or early July.10 The only directly relevant judicial precedents for how compliance deadlines will be reinstated upon the lifting of a stay are the Nitric Oxide State Implementation Plan (NOx SIP) call and the Cross State Air Pollution Rule (CSAPR). In the NOx SIP call case, when the stay was lifted, the EPA extended the deadlines for SIP submissions by the amount of time the stay had been in place because doing so was necessary to “restore the status quo preserved by the stay.”11 Similarly, in CSAPR, the D.C. Circuit stayed the rule shortly before it was to go into effect in January of 2012. After facial challenges were successful at the D.C. Circuit, but ultimately rejected by the Supreme Court, the D.C. Circuit opted to lift the stay during the pendency of EPA’s resolution of deficiencies in the rule identified by the court in its decision

Crown-half pg-Coal Trans ad-vert-7-16-final.pdf

on remand against the EPA on the as-applied challenges. The EPA reinstituted the start date and the subsequent deadlines three years into the future from the original dates, which was nearly the exact amount of time the stay was in effect. If a similar approach is followed for the 111(d) Rule (assuming it is ultimately upheld) approximately 16-18 months would be added to the original schedule. Some may disagree with this analysis and contend that the EPA could shorten some of the deadlines if the Rule is ultimately upheld. Even if that were true, however, it would not be legal or feasible for the EPA to require states to compress into one year all the work they would have been expected to complete between October 2015 and September 2018—this would render the stay a nullity and not preserve the status quo. And, even if the EPA could shorten deadlines to negate some of the effect of the stay, and even if it could do so by fiat, without having to go through notice and comment rulemaking, it would still almost certainly take several months to finalize these new deadlines which would delay the state plan deadline to no sooner than the Fall of 2019, almost exactly a year after it was initially required. This timeline solidifies the prudence of at least a 12-month suspension as further explained in the remainder of this paper. III. What does this tell states about what they should be doing in 2016 and beyond? Some states have said that they will continue to work on state plans notwithstanding the Supreme Court’s order. Likewise, the EPA has said it will work with states that voluntarily choose to proceed while the stay is pending. The EPA appears to agree, however, that it likely lacks authority to approve any state plans until the stay is lifted. In contrast, several states have made it clear that they will not proceed with state planning activities and others should follow their lead. The first to speak on the issue were the attorneys general of West Virginia and Texas when they sent a letter to the presidents of the National Association of Regulatory Utility Commissioners (NARUC) and the National Association of Clean Air Agencies (NACAA), arguing that states should suspend state planning activities given that the legal effect of the Supreme Court’s ruling was to stay all the Rule’s deadlines. Governor Scott Walker followed suit with an Executive Order saying basically the same thing. All these letters/measures are attached to this paper for reference, along with a table containing initial responses that have been voiced by a wide range of states. Environmental groups have claimed that states will be losing precious time if they do not continue (based on many of the false/exaggerated timeline claims noted above). This section attempts to debunk these timeline myths and set out the basic facts that fully solidify the prudence of states putting their pencils down for at least the remainder of 2016 (and maybe forever). As discussed in the prior section, even assuming the

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4:22 PM

DC Circuit Court Opinion SCOTUS GRANTS STAY

SCOTUS Decides Whether To Take Case

Feb. 9, 2016

OCT. 23, 2015 Rule Implementation

SEPT 2016

EPA Approves/ Disapproves State Plan (EPA’s up-to 1-year review will begin earlier if final plans submitted at earlier date)

Final State Plans (with Extensions) Due to EPA

Late 2016

Fall 2016

Message to States: PUT PENCILS DOWN!

Possible SCOTUS Decision

Summer – Late 2017/Early 2018

SEPT 2017 Progress Reports on Extensions Due

State Plans or Two Year Extension Request Submitted (EPA has 90 to decide on extension) If no State action, EPA’s position is that it can act immediately to impose a Federal Plan

CPP Deadlines Tolled "Maintain Status Quo"

–Precedent Establishes that Timelines Shift Forward

Emissions Target Requirements Begin

2022-25

SEPT 2019

SEPT 2018

OCT 2018

SEPT 2019

SEPT 2020

SEPT 2021 2021-2022?

Likely Effect of Stay (based on CSAPR): Extension of All Deadlines Progress Reports on Extensions Due

Rule Implementation

State Plans or Two Year Extension Request Submitted (EPA has 90 to decide on extension) If no State action, EPA’s position is that it can act immediately to impose a Federal Plan

SEPT 2019

OCT 2018 Rule Implementation

Final State Plans Due to EPA

Potential EPA Compression of Deadlines

Final State Plans (with Extensions) Due to EPA EPA Approves/ Disapproves State Plan (EPA’s up-to 1-year review will begin earlier if final plans submitted at earlier date)

SEPT 2020 EPA Approves/ Disapproves State Plan (EPA’s up-to 1-year review will begin earlier if final plans submitted at earlier date)

2022 Emissions Target Requirements Begin

Rule is ultimately upheld, the most likely result is that the Rule’s deadlines will be extended by the amount of time the stay was in place. This is especially true for the earlier deadlines, in particular the 2018 deadline for submitting final states plans and quite possibly the 2022 start date to begin emissions reductions. Even assuming the Rule survives in whole or in part, it is unknown what a surviving rule would look like so it’s impossible to know with certainty what a fully compliant state plan would look like. And the EPA may itself make modifications after the litigation is over and before any deadlines come into effect. Thus, any state planning activities at this time may very well end up being irrelevant after having almost certainly been costly, divisive, and controversial to develop. Furthermore, if it is the EPA’s intent to reset all the deadlines if the Rule is upheld, then it’s not necessary for states to do anything during the pendency of the stay; states will still have the same amount of total time to seek extensions and develop state plans. If shortening the deadlines is the EPA’s desire, it may play into the EPA’s hands if states continue working on state plans while the stay is pending. If a majority of states have already made substantial progress on state plans when the stay is lifted, the EPA will have more leverage to argue for shortening the timelines since so much progress has been made on state plans notwithstanding the stay. Moreover, those states that moved for a stay took the position that they would experience irreparable harm during the pendency of the litigation if a stay were not granted. It would be inconsistent with these arguments—and terrible optics—to con20 | COAL TRANSPORTER

tinue to

is to prevent them from having to do exactly that. From the perspective of the states challenging the Rule, the absolute worst Family MPG Clean Power Plan thing that could realistiRequirement cally happen is the Rule Standard for NEW plants – EPA sets MPG standard could be upheld by the 1400 lb/ MWhr CO2 (EPA for NEW cars at 60 MPG Supreme Court in midadmits that retrofits cannot (EPA admits that retrofits 2017, and then the EPA beat 1800) cannot beat 40) could maneuver to require Standard for EXISTING EPA then imposes a 70 state plans between late plants – 1305 lb/MWhr MPG on your family’s 2018 and Fall 2019. The CO2 (Tx was 237) EXISTING cars front end of this range is Tx budget 1042 (some in EPA assumes you can buy unlikely. First, it would 900s) (EPA assumes fuel an EV, take bus, or work probably be more trouble switching from fossil to from home; so sets your renewable & coal to gas) MPG req. at 80 MPG that it would be worth for the EPA to attempt it, as it Existing renewable You cannot count the would assuredly be subject energy is not credited Prius you bought in 2011 toward compliance toward the goal to further legal challenge which would likely have the ultimate effect of extending the deadline to submit a state plan further out. A much more likely result is that the three-year structure governing state plans are reinstituted, as happened in the CSAPR litigation. At the very worst, the EPA might compress that structure down to one to two years, which would mean that state plans would come due in the Fall of 2019-2020. Accordingly, there are no real advantages—or at most very minimal— and some real potential disadvantages for states to continue working on state plans while the stay is in effect. Much time and money could be invested and work on a state plan during the stay. This ultimately wasted if the Rule is set aside is especially true for states that filed decor even upheld but changed. larations expressly stating that, without a Instead, it makes sense for states stay, they would have to expend substanto do nothing for at least 12 months tial resources between the publication of or, for stronger opponents of the Rule, the final Rule and the conclusion of the while the stay is in effect. At most, litigation. The whole purpose of the stay states should probably do no more than

In Terms Everyone Can Understand: CPP Applied to Cars

END NOTES

1 See Stay App. by 29 Stat,es and State Agencies, No. 15A773 at 1 (Jan. 26, 2016); Stay App. of Business Ass’ns, No. 15A787, at 1 (Jan. 27, 2016); Stay App. of North Dakota, No. 15A793, at 1 (Jan. 29, 2016). 2 Coal Industry Stay App. at 1 (Jan. 27, 2016). 3 Id. at 36 (emphasis added). 4 Stay App. of Utility and Allied Parties at 1. 5 Nken v. Holder, 556 U.S. 418, 428 (2009). 6 Washington Metro. Area Transit Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 844 (D.C. Cir. 1977). 22 | COAL TRANSPORTER

prepare a “plan to develop a plan,” i.e., a plan to go about developing a state plan on various timelines, depending on the ultimate outcome of the litigation. Furthermore, with Justice Scalia’s passing, there is no guarantee that the litigation will be concluded by mid2017. For institutional reasons, the chief justice, and, indeed, the entire Court, may not wish to decide a case of this magnitude without a full complement of justices, regardless of the party affiliation of the president who appoints the next justice. If the Senate succeeds in delaying the appointment of a new justice until after the next presidential election, this may (but not necessarily will) delay final resolution of the challenges to the Rule until the next term. In that event, however, it is possible, although how possible is impossible to predict, that the Court might not wait until the end of the next term, i.e., until June or July 2018, to issue its decision but might do so earlier.

CONCLUSION

Now that a stay has been granted, states should avoid commitments or resource expenditures on detailed plan development as it is premature, and possibly prejudicial, to do so. Moving forward with state plans would be resource-intensive, divisive, and premature given the stay; if the Rule is upheld, it could be used by the EPA as a justification to try to maintain or reinstitute the deadlines in the original Rule. Actions that could be warranted in each state include executive orders, legislation directing agencies to forego planning activities, and/or appropriation restrictions on such activities for the duration of the stay, or at least for 12 months (until the election is over and the new administration and its plans are known). s

7 See On Applications for Immediate Stay of Final Agency 10 However, the fact that a stay has been entered might cause Action, Memorandum for the Federal Respondents in Opthe Court to push up the announcement of the opinion position at 2-3, Nos. 15A773, 15A776, 15A778, 15A787, somewhat. In the Cross State Air Pollution Rule case, the 15A793 (Feb. 4, 2016). D.C. Circuit stayed the rule before it went into effect. The Supreme Court issued an opinion upholding the rule 8 Id. at 3. against a facial challenge in April, rather than at the end of 9 Justice Scalia’s death does not change this analysis because, term. by tradition, it only takes four votes for the Supreme 11 Order, Michigan v. EPA, No. 98-1497, ECF 524995 Court to accept a case for review. (D.C. Circuit, June 22, 2000).

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tours TWENTYMILE MINE By Pat Scherzinger

24 | COAL TRANSPORTER

n June 28th, the NCTA staff had the privilege of touring Peabody Energy’s Twentymile Mine located in Routt County, Colorado. While it is a good four-hour drive from Denver, we just happened to be “in the neighborhood” after attending the Rocky Mountain Coal Mining Institute’s Annual Conference in nearby Steamboat Springs. Twentymile Mine is one of the largest underground mines in the United States. It is a longwall operation, with one of the fastest, most powerful shearers in operation and longwall panels that are 1,000 feet wide and more than two miles long. The mine was in a longwall move that will take up to two months to complete (because of a change in the coal seam to be mined) but we were game for a tour anyway. While our fearless leader, Executive Director Tom Canter had been underground many times over his years with Cyprus and Cyprus-AMAX, it was a first for Melinda and me. We were both excited to have this opportunity. Seriously, of all the people in the United States, how many have actually been in an underground mine. If I can’t be a wealthy 1%’er like Warren Buffet, I’m happy being an underground 0.0001%’er if I’m in the same company as the professional team that we met at Twentymile. It actually wasn’t my first opportunity to tour an underground mine but for the life of me I can’t remember now why I had to pass up that particular trip. I was the Fuel Manager for

If I can’t be a wealthy 1%’er like Warren Buffet, I’m happy being an underground 0.0001%’er if I’m in the same company as the professional team that we met at Twentymile. Portland General Electric at the time and we had been buying some Utah coal to blend with our PRB supply. Although I couldn’t make the trip, we did send our top fuel analyst (he couldn’t remember why I didn’t go either when I emailed him about this article), the gal from Generation Engineering that ran our Coal Quality Impact Model, and the one guy in the company that actually had a degree in Mining Engineering. Just to show how times have changed, Nad Brown our sales rep brought Coastal’s corporate jet for the trip, complete with fresh seafood on ice among other goodies. That being said, the tour could not have been any better than the one we received. Upon arrival at the Twentymile property, we were required to attend a training session before even passing the guard shack. This training included but was not limited to Peabody’s safety vision and the many important safety aspects of navigating a

mine property. After documenting our training and a very short drive to a parking space, we were ready for our more specific training for our underground tour. The underground training consisted of a training film and a practice session with the actual equipment that may need to be used in the event of an emergency. In the event of an emergency, a breathable air supply is key for self-escape, so we were trained on the use of self-contained self-rescuers (SCSR). We would carry a short term (10 minutes) SCSR on our person and would also have immediate access to a longer term (1 hour) SCSR. The 1 hour SCSRs are also stored in caches throughout the mine. We were also instructed in the mine’s lifeline rope system that would provide information on direction of travel and on primary and secondary routes even in total darkness. We all took our training very seriously. The hands-on portion of the training was particularly important just to locate, see, and feel the parts and to experience the use of the equipment. Once we had worked with the equipment enough to be comfortable (OK, so the nose pinchers are uncomfortable, but critical to the rescue process) using it in an emergency and filled out some more government paper work, we were ready to go. The next step was to suit up. We were provided with coveralls with safety reflectors, boots, gloves, earplugs, safety glasses, dust masks, and hardhats complete with front and rear headlights. Our belts carried unique GPS trackers and a 10 minute COAL TRANSPORTER | 25

SCSR. We were also each given a 1 hour SCSR to take in the truck. By the time our truck entered the portal into the mine, we had a good idea what to expect. We had reviewed the mine map in the training session and that was helpful. The first thing I noticed was how white the walls were with their powdered Like tunnels, underground mines are an efficient way to do the job limestone coating. We passed many breaks or crosscuts in the roadway along the way, such breaks being too. It now has a new home in my curio cabinet and every time necessary for mine development by continuous miners. Some I walk by it, I think about fondly of the folks at Twentymile and were full of stored equipment and others were empty and served our underground tour. as turnouts to yield the right of way to oncoming traffic and as If the mine face is the heart of the operation, the conveyor temporary parking spots. system is the blood. We stopped at several different spots to see We stopped quite a few times along the tour and exited the it in action. We were even able to talk with some miners that truck to look at things in detail. Each stop added a new piece to were working on constructing a new segment that would be the mining puzzle – ventilation, roof support, lighting, equipneeded shortly. One of the spots we viewed was the conveyer ment. and surge capacity facility known as the “glory hole”. To get At every stop, the air was fresh and crisp. The temperathere we had to go through a series of closed chambers. I joked ture was perfect in the mine, a nice relief from the hot summer it would have been a great place to hide Jimmy Hoffa. But the Colorado day on the surface. We were told that in the winter, inspection tags on the equipment told another story. Somethe air gets heated on the surface before entering the mine. Our one had been by just hours earlier as they would be again in tour guide periodically showed us his air quality monitor that the hours to come as constant safety inspection is unrelenting indicated that the air in the mine was nearly identical to that requirement of mining. on the surface. Air flow was very strong at the inlet point where we stopped to take a look at the vertical shaft and elevator that could take miners directly to the surface if necessary. One of the most interesting things about the mine was the roof support system. On one of our stops we were able to see the actual roof bolting equipment used in the process and could envision the operator at work. Constant inspection of mine roof conditions is part of daily life in an underground mine. With the light from the truck bouncing off the limestone coated walls as we drove and with our front and rear headlamps turned on when we stopped, it never seemed to me to be particularly dark in the mine. The trickiest thing about navigatLongwall operation ing a mine with headlamps is not looking directly at someone when you talk with them. While it initially feels rude, we knew from our training that blinding them with the light from your As we were heading to the exit portal and our eyes tried to headlamp is even worse. I suspect over time underground minquickly adjust to all that light, (Even Tom, the old submariner, ers give off other signals that they are paying attention. I felt a sighs when he sees daylight again!) I asked our guide how far little spacey looking at the roof a lot but, honestly, I was paying underground we had been at the lowest point on our tour. I was attention. told 1,100 feet. On the way back to Denver, as we went through At one point we all stood at the back of the truck in an the Eisenhower Tunnel on I-70, I couldn’t help but wonder how alcove and turned off our headlamps. We were immersed in total much overburden was on top of us then. Thanks to the interdarkness. I envisioned my pupils opening up as wide as they net, the answer was pretty darn easy to find – 1,470 feet at the could and still finding nothing. I was riveted to my spot but it highest point. I wondered how many people in the 32,167 cars1 that travel that 1.7 mile long tunnel every single day, even think wasn’t scary at all. I was down to just four senses but I knew it about such things. s was only temporary. Although we weren’t able to tour the mine face – the heart Our thanks go to our trainer and tour guide Mark, and our of the mining operation where coal is being cut away from surfacilitators April, Sage, Greg, and Pat Sollars, the General Manager. rounding rocks – at one stop, Melinda bent over and picked up a small chunk of coal. Like a kid in a candy store, I wanted one 26 | COAL TRANSPORTER

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NCTA COMMITTEE

UPDATES

NCTA Committee work is at the heart of the Association. The committees provide valuable information and education to members, foster best practices, improve communications among the parties, and keep members up-to-date on new rulings and technologies. This is where members get payback many times over for their annual membership fees.

Waterborne Transportation Committee The Waterborne Transportation Committee held its Inaugural Meeting amongst the din of jazz, shiny beads, and traditional King Cake in the Big Easy. How appropriate to meet near the banks of the great Mississippi River in conjunction with the NCTA Spring Conference. The afternoon began with attendee introductions. This is water, and each attendee commented on the state of their corner of their world. As with all modes of transportation, coal movement on the waterways is down. Similar to the rail industry seeing coal cars placed in storage, some coal barges are being repurposed until demand returns. Terry May, the Committee Chairman, arranged an informative agenda. Commander Brian Khey, US Coast Guard, presented highlights of the 2016 High Water conditions. Sean Duffy with the Big River Coalition enlightened water users on the importance of infrastructure, dredging and funding. Lastly, Mark Czarnecki with ACBL updated participants on the changes in the barge industry as well as commodity demand. The Waterborne Industry has not been insulated from the economic effects of the Administration’s EPA rules. The Environmental Protection Agency’s (EPA) greenhouse gas emissions 28 | COAL TRANSPORTER

plan will cost America’s economy more than $50 billion annually between now and 2030, according to a new report issued by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. “Assessing the Impact of Potential New Carbon Regulations in the United States,” the report estimates the economic impacts associated with the EPA’s Clean Air Act, section 111. • Lowered U.S. Gross Domestic Product (GDP) by $51 billion on average every year through 2030 • 224,000 fewer U.S. jobs on average each year through 2030 • U.S. consumers to pay $289 billion more for electricity through 2030 • Lower total disposable income for U.S. households by $586 billion through 2030 With numbers like this we have to continue to fight for coal as an affordable and abundant energy source. The election is right around the corner and we are hopeful that when that corner is turned so will the tide for coal and all of its uses. The committee does not have a date for the next meeting, but watch for Water Bulletins and meeting information in 2017. s

Logistics & Planning Committees

Edwin Fisher and Jeff Zerkle

VOLUNTEERS NEEDED

Eastern Logistics and Planning Committee Chairman Edwin Fisher (Arch) and Western Logistics and Planning Committee Chairman Jeff Zerkle (AEP) planned a joint meeting of their respective committees in St. Louis in March. Chris Zygmont of Ameren was also instrumental in securing a great meeting location and AKJ â&#x20AC;&#x201C; Nalco sponsored lunch for attendees. Western carriers provided their traditional updates on operations and capital plans. Beth Zeigler (UP) also covered a new system that issues notifications when mainline incidents may potentially delay a customerâ&#x20AC;&#x2122;s shipments. The group was introduced to Jason Plett, BNSF who is replacing the now retired Will Cunningham. The CSX was also represented with Mike Hale covering train accident investigation and prevention. Dave Andrews of NCTA member Metro East Industries showed a video detailing the transformation of an Ameren coal car to honor military veterans. One of two powerful presentations came from Jacob Williams (Peabody Energy) who advocated for the affordability of coal generation and highlighted the success the industry has had in improving air quality. The other one was by Andy Blumenfeld (Arch) who gave a reasoned coal market outlook for 2016 and beyond that was much more optimistic than many might have expected. s

Education Committee The application deadline for the 2016 Scholarships for children of employees of NCTA member companies was July 31st. The four winners will be announced in September and will be profiled in Issue 1 2017 of the Coal Transporter. We are currently looking for volunteers to help in the selection process and assist Jared Wicklund (The Empire District) who is the new Education Committee Chairman. The NCTA has suspended its University scholarship program for 2016 due to budget limitations. This program will be reevaluated during the 2017 budget process. s

COAL TRANSPORTER | 29

NCTA COMMITTEE

UPDATES Operations and Maintenance The Operations & Maintenance Committee just completed its annual conference in Austin, Texas. The conference was very successful, containing great educational content and a wealth of networking opportunities. Austin was hot but hospitable and the barbeque was delicious. For details and photos of other conference events, see the conference recap in this issue. Troy Smith (Consumers Energy), Harry Mullins, (Southern Company), and Cathy LeFevers (Duke) were elected by the membership at the Monday afternoon Roundtable to serve 3-year terms on the Executive Committee. Paul Shattuck (Xcel Energy) had previously been appointed to the committee to fill a seat vacated by former Chairman Dennis Wanless who retired earlier this year. Participation on any of the Operations and Maintenance committee’s activities is open to all members. The Operations and Maintenance Tech Review Committee (TRC) extended the deadline for participation the wheel study for six additional months. On January 1, 2017 the study will move forward or will be discontinued. Wheel change-outs are the number one maintenance expense for coal car owners. The TRC hopes that a large (owner anonymous) database on wheel removals can be analyzed for trends and commonalities pertaining to wheel life that might lead to opportunities to save money on premature wheel change-outs. To facilitate the data collection, the TRC has developed a Universal Wheel Removal

(B) Kevin Johnson, Paul Shattuck, Kurt Stroer, Scott Marino, Tom Sedarski (F) Robin Andersen, Troy Smith, Gayle TenBrink, Cathy LeFevers, Harry Mullins Template for the use by the membership. A group of companies have already submitted the data but more is needed to identify trends that are statistically significant. If you need a copy of the template or wish to submit your data, please contact Melinda Canter at wheelweardata@gmail.com. s

NCTA Outreach Executive Director Tom Canter visited Washington, D.C. on April 5th and 6th to support the Freight Rail Customer Alliance. NCTA Board Member Emily Regis of AEPCO and Kenn Gray of Western Fuels Association also attended. There was a presentation at the Capitol by STB Commissioners and staff followed by a reception with staffers in the Senate caucus room. The group visited with Senators Enzi and Barrasso of Wyoming the next morning and later with Congresswoman Martha McSally of Arizona. Meetings with Commissioner Ann Begeman and Commissioner Deb Miller’s Chief of Staff, Brian O’Boyle, to discuss the current STB initiatives rounded out this Washington visit. s 30 | COAL TRANSPORTER

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Editorial

Coal Country to Hillary: We Heard You

Christian R. Palich, President, Ohio Coal Association

arch 13th, 2016 will be remembered by coal advocates across the country as the day the national Democratic Party officially closed the book on our industry. It was the day that their Presidential candidate, Hillary Clinton, now infamously claimed: “We’re going to put a lot of coal miners and coal companies out of business.” Watching this take place live in my home in Columbus, Ohio, I was so shocked that I had to rewind my DVR to confirm what I heard. A major party candidate for President actually promised to end the livelihoods of hundreds of thousands of hardworking men and women; and destroy the affordable energy source that makes up the majority of America’s energy portfolio. Here in the Buckeye state we count on coal to help drive our economy. Nearly 60% of our electricity comes from coal and we produce nearly 20 million tons a year. Albeit it was around 80% of our energy mix and nearly 30 million tons before President Obama began his war on coal. With 25 of our 88 counties essentially relying on the

32 | COAL TRANSPORTER

coal industry to support their families, Secretary Clinton offended a third of the state’s voters. Believe me, she knows this because during her first trip to Ohio after those chilling comments, our Association and a hoard of coal miners rallied at the event. We gained national media coverage and prompted her to backtrack on the statement. Her handlers now claim the rhetoric was “unartful,” which is perhaps the biggest understatement of the campaign. The unfortunate part about this political line in the sand is that coal families aren’t red or blue. They don’t care what someone’s political affiliation is, they just want to work and provide energy like they have for over a century. These are the workers who helped win two world wars and build the strongest middle class the world has ever seen. However, President Obama has changed the direction of our industry in an effort to appease the most radical sect of his party, who see coal as the cause of global problems. Over the last eight years, the leader of the free world has demonized our industry and made it a litmus test to garner national support as a Democrat. What a dramatic shift in the politics of energy. What’s the one positive of President Obama and Secretary Clinton’s views on the coal industry? Friends of coal don’t have to guess what a Clinton Administration energy policy would look like. She told

us in her own words. Also, the nation’s largest radical environmentalist organizations (NRDC and Sierra Club) strongly support her candidacy, proving that we can expect to see a continuation of the same job-killing energy policies that Mr. Obama started. In fact, under Clinton, it certainly could be worse. Ohio is always a critical swing state and our 18 electoral votes normally hold the key to the White House. That means Ohio’s coal country may be a deciding factor in this Presidential election. You know what they say about Karma. It is our responsibility as believers in American coal, to get the message out that we must see a change in policy. Without a commitment from America’s next leader to stop the alleged “Clean Power Plan” and the “Stream Protection Rule,” I am afraid this downturn might be the new normal. Here in Ohio we will hold every candidate’s feet to the fire when it comes to supporting coal. Standing on the sidelines is no longer a viable option. I believe that if in November, true friends of coal win the White House and continue to occupy Congress, that just maybe, as one candidate says, we can make coal great again! s

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Surface Transportation Board / Update

Surface Transportation Board Update

By Sandra Brown, Partner, Thompson Hine LLP

n addition to the Surface Transportation Board’s regular workload of abandonments, trackage rights, lines sales and related transactions, the STB has been busy in 2016 implementing the Surface Transportation Board Reauthorization Act of 2015. The remainder of 2016 will continue to be interesting even with the April withdrawal and termination of the Canadian Pacific Railway’s proposed acquisition of Norfolk Southern Railway, as the STB will need to address some big issues related to competition, rates and preemption.

Continued Implementation of the STB Reauthorization Act of 2015 The STB has been busy this year updating, revising and making technical corrections to its regulations consistent with the STB Reauthorization Act of 2015, P.L. 114-110. The Act has the STB jumping to comply with provisions requiring new rulemakings and publication of reports on the status of various proceedings. The quarterly reports and other updates on the Act can be found on the STB’s home page, under Quick Links: “STB Reauthorization” or by the following link: http://

34 | COAL TRANSPORTER

www.stb.dot.gov/stb/rail/ReauthorizationAct.html. The quarterly reports published by the STB include a report on Unfinished Regulatory Proceedings, a report on Rate Case Review Metrics and a report on Formal and Informal Service Complaints. The STB also publishes on its website summaries of Nonpublic Collaborative Discussions which are meetings that were authorized under the Act to allow the STB Members to discuss official agency business with the STB’s General Counsel present. A couple of proceedings from the quarterly reports with dates projected still yet to come this year include: EP 661, Rail Fuel Surcharges (Safe Harbor), expected to be released in September and EP 664, Petition of the Western Coal Traffic League to Institute a Rulemaking Proceeding to Abolish the use of the Multi-Stage Discounted Cash Flow Model in Determining the Railroad Industry’s Cost of Equity Capital, expected to be released in October. The STB is also dealing with several passenger rail issues including the need to establish procedures for resolving certain disputes as required of the STB under the Fixing America’s Surface Transportation Act of 2015, P.L. 114-94, that was signed into law on December 5, 2015.

The STB has been busy this year updating, revising and making technical corrections to its regulations.

The Act has also resulted in three new rulemakings issued in mid-2016. These include: EP 730, Revisions to Arbitration Procedures, Notice of Proposed Rulemaking served May 12, 2016. Comment period ended July 1, 2016; EP 731, Rules Relating to BoardInitiated Investigations, Notice of Proposed Rulemaking served May 16, 2016. Comment period will end August 12, 2016; and EP 733, Expediting Rate Cases, Advanced Notice of Proposed Rulemaking served June 15, 2016. Comment period will end August 29, 2016. Another aspect flowing from the Act will take some time to implement the addition of two new STB members. The STB members must be appointed by the President and confirmed by the Senate. No more than 3 members may be appointed from the same party and the members serve 5-year terms and if appointed after a term is started, fill the remainder of that term. Members are limited to 2 terms. With Congress already recessed for the summer and a presidential election upcoming in November, no movement is expected on these appointments until 2017. Chairman Daniel R. Elliott III is

currently serving his second term that will expire December 31, 2018. Vice Chairman Deb Miller is in her first term that will expire December 31, 2017. Member Ann D. Begeman’s first term expired on December 31, 2015. Member Begeman can remain on the STB until a successor is appointed and qualified, but only for a period not to exceed one year. As a result, there could be 3 open seats on the STB starting in 2017.

Revised Competitive Switching Rules – EP 711 On July 27, 2016, the STB issued its decision on the National Industrial Transportation League’s (NITL) request for a rulemaking that had been pending since July 7, 2011. The STB granted NITL’s proposal in part and issued a Notice of Proposed Rulemaking (“NPRM”) seeking comments on the STB’s proposed regulations governing reciprocal switching under a new sub-docket, Docket No. EP 711 (Sub-No. 1) Reciprocal Switching. The STB found the NITL proposal to be a valuable starting point, but stated that the conclusive presumptions or “fast pass” were problematic because of

fairness concerns. Therefore, the STB stated its proposed rules would be available “more equally … to all shippers.” Under the STB’s proposal, a shipper has two paths to obtain reciprocal switching based on a case-by-case evaluation of factual evidence provided by the parties. The proposed paths require a showing that the switching would be either: (1) practicable and in the public interest or (2) necessary to provide competitive rail service. Under the first path, the STB would balance the likely benefits of the switching arrangement against any detriments to the involved railroads. The non-exhaustive list provided by the STB included: the efficiency of the route, access to new markets, the impact on capital investment, the impact on service quality, the impact on employees, the amount of traffic that would use the switching arrangement, the impact on the rail transportation network, and the rail transportation policy factors under 49 USC §10101. Under the second path, a shipper would need to establish that there are no effective competitive transportation alternatives available. For this analysis, the Board proposed applying a market

COAL TRANSPORTER | 35

dominance test similar to the one used in rate cases. Under either path, the STB removed a prior hurdle for reciprocal switching that required a shipper to prove that the railroad had engaged in anticompetitive conduct. The STB also provided that it would look at whether there is or can be a working interchange between the carriers within a reasonable distance of the shipper and that both carriers must be Class I railroad. The STB made it clear that the railroads were entitled to an affirmative defense by showing evidence that the proposed switching “is not feasible or is unsafe” or that the presence of such switching would “unduly hamper the ability of that carrier to serve its shippers. In asking for comments on the proposed regulations, the STB also requested comments on the methodology to be used for access pricing. The following procedural schedule was established: Written comments due September 26, 2016. Reply comments due October 25, 2016. Requests for ex parte meetings by October 10 for meetings held between October 25th and November 14th. Summaries of the meetings will be posted to the docket and a final comment period will be held at the conclusion.

Rail Construction Proceedings of Interest to Coal Shippers Rail construction has often been used by coal shippers to create or enhance competition and efficiencies. Two rail construction proceedings of potential interest to coal shippers saw some STB decisions recently – one decision to start the formal environmental review and one to end the project. The Great Lakes Basin Transportation, Inc. (GLBT) plans to file for authority to construct and operate an approximately 278-mile rail line from Indiana to Wisconsin to create a bypass of the Chicago area. On March 18, the STB announced the beginning of the formal environmental review and intention to prepare an Environmental Impact Statement. The STB held 10 public scoping meetings in April in Illinois, Indiana and 36 | COAL TRANSPORTER

Wisconsin to help identify and assess the potential environmental consequences of the proposed GLBT construction. The comment period for this phase of the project closed July 15, 2016. On April 26, the STB dismissed the Tongue River Railroad Company, Inc.’s (TRRC) petition to construct a rail line to the Otter Creek mine in Montana. The TRRC rail construction project can be traced back to 1986 and underwent several revisions. TRRC’s most recent application was filed in 2012 and in November 2015, TRRC requested the STB to hold the proceeding in abeyance pending a Montana decision on the Otter Creek Coal mine permit which was suspended pending bankruptcy proceedings affecting the Otter Creek Coal and its parent company, Arch Coal, Inc.. Rather than granting the abeyance, the STB dismissed the proceeding without prejudice for it to be re-filed.

The Effect of Federal Preemption on State and Local Laws There are approximately a dozen cases that have been ruled on or are pending in the first half of 2016 that seek the STB’s guidance or determination on the applicability or extent of the STB’s federal law preemption over state or local laws. These cases range from homeowner disputes with railroads over flooding clean-up allegedly caused by the railroad to cases seeking a ruling on the extent of federal preemption on state and local permitting or environmental review of various projects. Issue 1/2015 of the Coal Transporter contained an article I wrote on an interesting preemption case at that time under an article titled Could Preemption be a Defense to Environmental Claims on Coal Dust During Transportation? And if so, is there any Benefit for Shippers? Two current cases also containing some potentially broader implications have been filed by Valero Refining Company and Tesoro Refining & Marketing Company. In STB FD 36036, Petition for Declaratory Order, Valero Refining Company– California, Valero seeks an order from the STB that the Benicia Planning Commission’s decisions that denied Valero’s construction of a crude oil rail transload facility are preempted by the Interstate

Commerce Commission Termination Act (ICCTA). The key question will be how far does preemption go to protect indirect regulation of rail transportation in a case where the shipper is building the rail-related facility rather than the railroad building the components necessary for rail transportation. Replies were due by July 8. Individual railroads and the Association of American Railroads have filed in support of Valero and numerous parties have filed comments or replies against the project. In STB FD 36041, Tesoro Refining & Marketing Company, LLC-Petition for Declaratory Order, Tesoro seeks a ruling from the STB that federal law (such as the right to common carrier rail service) prevents efforts by the Swinomish Indian Tribal Community (SITC) to limit BNSF’s transportation of crude oil trains across Reservation Land. SITC has sought an injunction in federal court to limit the BNSF crude oil trains crossing over SITC lands based on an easement contract that SITC entered into with BNSF in 1991. The implications that this case could have on the railroad common carrier obligation will be interesting to watch. Replies were due by July 13. BNSF Railway Company petitioned to intervene on June 23 and Equilon Enteprises, LLC d/b/a Shell Oil Products US petitioned to intervene in support of Tesoro on June 20.

Railroad Fuel Surcharge Litigation

The STB determined back in 2006 that certain practices of the railroads related to fuel surcharges were unreasonable practices. That decision, in part, spurred a class action lawsuit to be filed in 2007 against the railroads to recover damages from an alleged conspiracy to overcharge for fuel. The class action antitrust case has had many ups and downs over the past nearly nine years, including a remand, an ethical problem with the plaintiffs’ expert, and needing to address various decisions by the U.S. Supreme Court in separate unrelated class actions. However, in July 2016, the case took a step forward with the U.S. District Court for the District of Columbia issuing an order establishing the format for a new class certification hearing to be held over the course of five days starting on September 26, 2016. s

NCTA CALENDAR 2017

OF EVENTS

January 31, 2017 Payment Due for 2017 Annual Membership Fees February 10, 2017 Advertising and Editorial Deadline for Issue 1 2017 of the Coal Transporter Magazine

2016

April 10-12, 2017 Spring General Conference Location TBD

Summer/Fall 2016 Presentation of NCTA Scholarship Awards: David L. Laffere Scholarship Three Members’ Children Scholarships

June 12-14, 2017 Operations and Maintenance Conference Eldorado Hotel & Spa, Santa Fe, New Mexico

September 12-14, 2016 Forty-Second Annual Business Meeting and Conference Grand Hyatt, Denver, Colorado

July 7, 2017 Advertising and Editorial Deadline for Issue 2 2017 of the Coal Transporter Magazine

December 30, 2016 Receipt at NCTA office of all re-certification forms for the UMLER Fee Waiver for Calendar Year 2017

September 11-13, 2017 Forty-Third Annual Business Meeting and Conference Grand Hyatt, Denver, Colorado

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Editorial

Standing up

Thomas Pyle, President, Institute for Energy Research

for Affordable Energy

nergy is the key to a strong economy and a prosperous society. It keeps our lights on and powers our factories, schools, and hospitals. More importantly, it has lifted billions out of poverty. The very foundations of the industrial and technological revolutions here in the United States were laid by the abundant, affordable, and reliable supply of energy. This is especially true of coal, which has been the bedrock of our country’s prosperity thanks to its affordability, its reliability, and its sheer abundance, particularly as a source of electricity. In recent years, however, coal’s market share of electricity generation has fallen significantly. In 2008, coal made up nearly 50 percent of our country’s electricity generation, but by the end of 2015, that number fell to around 32 percent. Opponents of coal claim this decline in market share is due to low natural gas

38 | COAL TRANSPORTER

prices stemming from the shale revolution. Market forces have certainly played a role, but much of the blame can be attributed to government policies that are targeting the production and use of this vastly important resource. A combination of regulations targeting coal plants, subsidies and mandates for more expensive forms of electricity, and draconian federal lands policies are all hammering down on the coal industry while at the same time propping up less reliable electricity sources like wind and solar. Despite the weight of these policies, there are reasons to be optimistic. With the right policies, coal’s future can be bright again. In a more free-market setting, coal would continue to flourish as an important source of electricity generation.

Coal is Abundant

One of coal’s greatest attributes is its sheer abundance, specifically in the United States and throughout North America. In fact, the U.S. is home to the largest supply of coal in the world. And when combined with the resources from Canada and Mexico, North America has three times as much coal as Russia, which has the world’s second largest supply of coal. According to data from the U.S. Energy Information Administration (EIA), the U.S. alone has 478,415 million short tons of coal in its Demonstrated Reserve Base (the amount of coal believed to exist based on geologic and engineering data or that can reasonably be expected to exist on the basis of geologic evidence).1 The U.S. consumes 801.6 million short tons of coal a year.2 That means our Demonstrated Reserve

Base contains 597 years of coal at our current rate of consumption. But the Demonstrated Reserve Base is not the total amount of coal that exists in the United States. The U.S. Geological Survey believes there are an estimated 10.3 trillion short tons of total (“in-place”) coal resources in the United States.3 That is 12,849 years of coal at our current rate of consumption.

Coal is Affordable

The shale revolution has no doubt provided America with cheap and abundant natural gas, but coal still remains one of the most affordable options for electricity generation. My organization, the Institute for Energy Research (IER), recently released a study on the levelized cost of electricity that shows existing coal resources remain one of the most affordable options for electricity generation. A key takeaway from our research is that prematurely shutting down existing coal generation and replacing it with new sources, whether they be natural gas, wind, or solar, will result in electricity that is on average anywhere from two to four times more expensive. The following chart illustrates this disparity:

Coal also gives the U.S. a global competitive advantage by providing American manufacturers with affordable, reliable electricity. The following chart from the EIA shows electricity prices in some European countries versus the United States. In the U.S., average electricity prices are about 12.5 cents per kilowatt hour versus nearly 40 cents in Germany, and 23 cents in the U.K. The only state in the U.S. that has true European-like electricity prices is Hawaii and that is mainly due to its geographic isolation.

Coal Alleviates Energy Poverty While coal has helped keep electricity prices low in the United States, it also helps people in developing countries obtain reliable access to electricity for the first time. Billions of people around the world lack electricity that is reliable and affordable. In fact, according to the International Energy Agency, 1.2 billion people still live without access to electricity, and 2.7 billion live without clean cooking facilities.4 In the face of these sobering statistics, coal is lifting millions of people across the globe out of energy poverty each year. The EIA projects that world-wide coal-fired electricity generation will increase from 8.6 trillion kWh in 2012 to 9.7 trillion kWh in 2020 and 10.6 trillion kWh in 2040. Total electricity generation from coal in this forecast is 23 percent above the 2012 total. In EIA’s forecast, China and India account for 69 percent of the worldwide increase in coalfired generation.5 Much of this worldwide increase in electricity generation is going to families who have only known energy poverty.

Here in the U.S., most families do not suffer from energy poverty thanks to an abundant, affordable, and reliable supply of coal, oil, and natural gas. Even so, the least fortunate among us still suffer from the effects of energy poverty and current government policies targeting the use of coal will only serve to exacerbate this problem. That’s because lower-income households spend a significantly higher portion of their income on meeting their basic energy needs. According to a 2010 Bureau of Labor Statistics survey, households that made less than $10,000 per year paid over eight times as much, as a percentage of their income, on energy than the most affluent households. Furthermore, household that earn between $10,000 and $30,000 spend about three times as much on energy as percentage of their income.6 For these low-income families, higher energy prices can force them to choose between essentials like food, medical care, and transportation. By providing people with affordable, reliable power, coal helps American families avoid making such difficult decisions.

Technology Makes Modern Coal Use Cleaner When people think of coal, they tend not to think of modern power plants using sophisticated pollution control technologies that minimize everything from particulate matter to sulfur dioxide. They instead see images of early coal mining and combustion operations and are told by the media, celebrities, and even our national leaders that coal is a categorically dirty form of energy. Nothing could be further from the truth. Coal has made us healthier and wealthier while emissions of

Source: The U.S. Energy Information Administration COAL TRANSPORTER | 39

harmful pollutants have plummeted. Coal production doubled between the 1970’s and 2000’s, yet economy wide, total emissions from the six criteria pollutants declined by 70 percent. The reality is that today’s technologies make the modern use of coal cleaner than ever before.

Threats to coal’s future

Despite all the societal benefits of coal, there is an ongoing effort by the national environmental lobby and their allies in government to eradicate the coal industry. The federal policies stacking the deck against coal are too numerous to list, but a few major policies include: 1) regulations from the Environmental Protection Agency (EPA) that shut down coal-fired power plants, 2) lavish tax subsidies awarded to other sources of electricity generation—namely wind and solar power—that distort the economics of coal power, and 3) federal land use policies based on a flawed “keep it in the ground” philosophy that seeks to prevent coal production. Combined, these policies threaten to bring more energy poverty to the U.S. So much for protecting the little guy.

EPA Regulations

In 2008, then-candidate Barack Obama infamously promised to bankrupt coal and claimed that under his energy plans electricity prices would skyrocket. President Obama tried to make good on his promises by making cap-and-trade legislation a high priority during his first

Source: The Environmental Protection Agency 40 | COAL TRANSPORTER

term. But after failing to push it through Congress, the administration decided to bypass the legislative branch and carry out their agenda through the EPA. Take for example the EPA’s Mercury Air and Toxics Standards (MATS), a regulation that requires coal-fired power plants to meet stricter emissions standards by incorporating emissions control technologies. This regulation is a lesson in how to attack an industry first and ask questions later. MATS was finalized in 2012, with a compliance date set for 2015. However, in June 2015, the Supreme Court rebuffed EPA for not fully considering the costs of the regulation. Unfortunately, by the time the courts ruled, utilities had already started down the road of compliance. As a result, 40 GW of coal had already been shut down, enough electricity for 30 million homes. And while the rule could cost upwards of $9 billion annually, EPA’s own estimates show the rule will only provide mercury-related benefits to the tune of $6 million7. EPA Administrator Gina McCarthy even suggested on the Bill Maher Show that the Court’s ruling wouldn’t matter: “But even if we don’t [win in court], it was three years ago. Most of [the utilities] are already in compliance, investments have been made, and we’ll catch up.” Now EPA is attempting to use the MATS blueprint to force carbon dioxide regulations on existing power plants (commonly referred to as the “Clean Power Plan” or CPP). The CPP suffers

from even deeper legal issues and more dramatic ramifications for the country. It will close an additional 40 GW of generating capacity and will lead to doubledigit electricity rate hikes in more than 40 states. Despite these enormous costs, the CPP is estimated to limit global temperature rise by a mere 0.01 degrees Celsius by the year 2100.8 In addition to the regulation targeting existing generation sources, the EPA has also issued standards regulating carbon dioxide from new sources. This regulation serves as a de facto ban on the construction of new coal-fired generation. The message from these regulations is clear: the Obama administration is doing everything it can to harm the coal industry.

Market-Distorting Subsidies

These heavy-handed regulations aren’t the only thing impacting coal generation. Subsidies for politically-favored electricity sources also directly attack coal’s financial bottom line. In his 2010 State of the Union Address, President Obama called for Congress to “finally make clean energy the profitable kind of energy in America.” That is exactly what Congress and the White House have done—tipped the scales against coal and in favor of politically preferred wind and solar at taxpayer expense. The single biggest culprit is the wind Production Tax Credit (PTC). This multi-billion dollar federal subsidy pays owners of wind facilities $23 per megawatt-hour of electricity production no matter the value of the power being produced. The PTC often provides wind producers as much revenue as the market price of electricity itself, or more in some cases. As it relates to coal’s profitability, the PTC uses taxpayer dollars to depress wholesale electricity markets. In the worst case, wholesale prices actually go negative because the PTC allows the wind industry to profit by offering negative bids. This market distortion simply wrecks the economics of coal. But even in the absence of negative pricing, the PTC subsidy enables predatory pricing that undercuts reliable baseload sources of power like coal.

The Investment Tax Credit (ITC) for solar power is quickly catching up to the PTC in terms of its market distorting effects and overall tax burden. In this case, taxpayer funds reimburse thirty percent of the up-front investment in solar energy facilities, dramatically lowering their cost and increasing the amount of solar power on the grid. Flooding the power grid with subsidized solar power has the same effect as with wind power—traditional, reliable sources of electricity struggle to stay profitable. The widespread subsidization of wind and solar power imposes real costs, not only on the taxpayer, but also on the operation of the power grid. To counter these impacts, many states and organized markets are now choosing to subsidize reliable sources. The better action is to remove the original distortions by repealing the PTC and the ITC, along with state-level mandates, rather than trying to fight subsidies with more subsidies.

“Keep It In The Ground” Federal Lands Policy The anti-energy crowd changes labels constantly, but today they refer to themselves as the “keep it in the ground” 1 U.S. Energy Information Administration, Annual Coal Report, 2014. http://www.eia.gov/coal/annual/pdf/table15.pdf

movement. Their goal is to change public policy to end the production of coal, oil, and natural gas on federal lands. They have a friend in the Obama administration. The Department of Interior recently placed a moratorium on new coal leases on federal lands. And because federal lands have accounted for over 40 percent of total coal production in the U.S. in recent years, the moratorium is no empty gesture. Combined with a continuous stream of harmful EPA regulations, it has the potential to snuff out the coal industry as we know it. By deliberate action, this administration has stifled not just coal production, but all fossil fuel production on federal lands, including oil and natural gas. This agenda will take a significant toll on our economy by depriving the American people of jobs, higher wages, and affordable energy. IER recently commissioned a report titled “The Economic Effects of Immediately Opening Federal Lands to Oil, Gas, and Coal Leasing,”9 which shows the huge potential of energy production on federal lands. If this “keep it in the ground” movement has their way, the U.S. will miss out on over $20 trillion in increased economic activity over the next 37 years. And in addition to the jobs that have been lost in the coal industry, there are millions of potential jobs across

the economy being prevented by the mismanagement of our federal lands. Our report estimates that opening up federal lands would add 2.7 million jobs annually over the next 30 years.

Conclusion

The World Bank notes that, “Lack of energy limits opportunity, job creation, business development, and access to health and education.” Simply put, modern life would not be possible without access to affordable, reliable energy. Here in the U.S., coal is a critical part of our energy mix. And in developing countries around the world, coal has the potential to lift countless people out of energy poverty. Unfortunately, many policymakers have bought into the myth that coal is dirty, antiquated, and even dangerous. However, if we examine coal’s impact on society without bias, we see the immense benefits it brings. It is an abundant, affordable, and reliable source of energy. It keeps the lights on and powers our economy. It has lifted billions of people out of poverty. It’s hard to name a product that has done more good throughout the world than coal has. That’s why at the Institute for Energy Research we continue to fight against the misinformation and harmful policies that are threatening the future use of this vital energy resource. s

2 U.S. Energy Information Administration, Monthly Energy Review, June 2016. http://www.eia.gov/totalenergy/data/monthly/pdf/sec6_3.pdf 3 The Institute for Energy Research, North American Energy Inventory. 2011 http://instituteforenergyresearch.org/wp-content/uploads/2013/01/Energy-Inventory.pdf 4 The International Energy Agency. http://www.iea.org/topics/energypoverty/ 5 The Energy Information Administration, International Energy Outlook 2016, May 11, 2016. http://www.eia.gov/forecasts/ieo/electricity.cfm 6 American Coalition for Clean Coal Electricity, The Social Costs of Carbon? No the Social Benefits of Carbon, January 2014. http://www.americaspower.org/sites/default/files/Social-Benefitsof-Carbon.pdf 7 Michigan v. EPA http://www.supremecourt.gov/opinions/14pdf/14-46_10n2.pdf 8 The Cato Institute, Spin Cycle: EPA’s Clean Power Plan, August 5, 2015. http://www.cato.org/blog/spin-cycle-epas-clean-power-plan 9 The Institute for Energy Research, The Economic Effects of Immediately Opening Federal Lands to Oil, Gas, and Coal Leasing, December 2015. http://instituteforenergyresearch.org/wp-content/uploads/2016/01/IER-Mason-Study.pdf

COAL TRANSPORTER | 41

NCTA Membership Profile / xxxx

MEMBERSHIP BENEFITS

our company may belong to more industry associations than just NCTA, but no other association provides the unique combination of education and real world results that come from NCTA membership. The financial impact associated with the procurement and delivery of coal demands this focus. NCTA maintains a high level of national prominence and credibility by participating in hearings, workshops, and symposiums, coordinating with ad hoc coalitions, providing resource material for governmental agencies, negotiating and educating on issues of general membership concern with carriers.

Conferences with Character

For three days in the spring and fall of each year, NCTA provides coal industry professionals with an exclusive opportunity to share their outlook and knowledge and to exchange ideas. NCTA conferences provide its members the opportunity to learn from the experiences of others with similar responsibilities and from outside experts in an open and noncompetitive environment. Think of the ideas you can borrow, the pitfalls you can avoid and the valuable insight you can give and receive. Members attend all conferences at a preferential rate.

Logistics and Planning Subcommittees

The Eastern and Western Logistics & Planning Subcommittees do much of the heavy lifting to solve problems with respect to the efficient operation of the coal delivery process. An important source of strength is the NCTA working committee system that is made possible by the dedication and expertise of our member representatives and the cooperation of the rail carriers. Each Logistics & Planning group meets at least twice annually. These working group meetings are open meetings and are free to attend.

Operations & Maintenance Subcommittee

For companies that do not have the resources, or have diminished resources to support company representation on industry and consensus-based technical panels, the O&M subcommittee helps to fill this gap. The annual conference program provides excellent information on new technologies and best practices for coal car design, maintenance, and repair.

Access to Railcar Leasing Exchange Board

NCTA members have exclusive access to a railcar leasing exchange board where excess train capacity can be posted for lease and where members can post railcar needs. With 86,000 private cars owned and operated by NCTA members, this is a good place to start when you need to adjust your capacity requirements. 42 | COAL TRANSPORTER

Commitment to Education

Education is a hallmark of NCTA. NCTA educates its members through its annual conferences and publications. NCTA also supports education through its scholarship program that awards scholarships to students in transportation at several major universities as well as to the dependent sons and daughters of employees of member companies.

Policy Insights

The Board of Directors continues to meet in Washington, D.C. each year to visit governmental agencies and other trade associations. Maintaining a presence in Washington enables NCTA to have input into federal policymaking and to better represent member concerns on federal issues. NCTA fosters relationships with key personnel and departments within the Department of Energy, the Department of Transportation, the Surface Transportation Board, the Federal Railroad Administration, and with various elected representatives. NCTA is an educational entity and does not officially lobby for or against legislation. However, we do actively participate in hearings and rulemaking proceedings of interest to our membership.

Communications

Through its ever growing web presence, NCTA communicates with the world about the coal industry and with NCTA member companies - linking potential customers to its members and linking its members to other useful Web sites throughout the Internet. A â&#x20AC;&#x153;Members Onlyâ&#x20AC;? section provides detailed member contact information, valuable updates on current subcommittee initiatives, a railcar leasing marketplace and other items of interest exclusively to NCTA members. The conference archives date back to 2004, creating a virtual library of information on energy and transportation issues. The semi-annual Coal Transporter magazine focuses on getting to know people in the industry, as well as informing NCTA members and the coal industry as a whole of new and relevant events occurring within the organization. Membership in NCTA is a sound business decision with a solid return on investment and we look forward to serving you. A member company of the National Coal Transportation Association is not just another utility, coal supplier, rail equipment supplier, or coal related services organization. It is part of a tradition of excellence that through affiliation with NCTA, it signals exceptional commitment and obligation to the market, its customers and to the public.

STATS AT A GLANCE The California Experiment The Duck has Landed California truly is a leader when it comes to renewable energy. They are also the first to experience some of the headaches that come with integrating significant quantities of unreliable and uncontrollable resources into the grid. Right now most people use electricity whenever they want. One possible way to alleviate the “duck” problem is to automatically adjust household or commercial building energy use to meet the needs of the grid. Sounds fun doesn’t it?

The figure shows a net load curve for the March 31 for years 2012 through 2020. This curve shows the megawatts the system operator must follow on the y axis over the different hours of the day shown on the x axis. A downward ramp occurs after the sun comes up around 7a.m. when on-line conventional generation is replaced by solar generation and starts producing the belly of the “duck”. When the sun sets and solar generation goes with it, resources that can meet the steep upward ramp, the duck’s neck, must be dispatched. Immediately following this steep ramp up, as demand on the system deceases into the evening hours, resources must be reduced or shut down. Sounds totally efficient right?

COAL TRANSPORTER | 43

Reflections / Duane Richards

DUANE RI

44 | COAL TRANSPORTER

Left: Matt Rose with Duane at the Western Fuels 40th Anniversary Dinner

Top: First Day of Spring 1970. Donna and Duane posed for this picture for a local newspaper. Left: With brother Bruce and sister Cathy in 1964. Styling with a clip-on tie and an itchy wool Christmas sweater! BR: Playing with granddaughter in 2000.

ICHARDS Above: With daughter Kelly in Portland. Gotta love the 80s!

COAL TRANSPORTER | 45

Reflections / Duane Richards continued

uane Richards was born on April 18, central Minnesota when grain prices fell 1952 in Mora, a small town in east following World War I. They logged and central Minnesota. It was the closest for a time raised minks. His grandmother hospital to the even smaller town was Norwegian and his grandfather was of Isle where he grew up. He was about half German and half Irish. In the the oldest of three children born to Raymond 1940 census, his grandfather was listed as and Murrel (Tramm) Richards. Duane was six a driller/shotfirer at a granite stone quarry, when his brother Bruce was born and eight a job that cost him most of his hearing. when the family welcomed his sister Cathy. That was about as close to mining as this Both of his parents came from large families side of the family got. While they were – his mother had 3 brothers and 6 sisters and very self-sufficient, Duane’s grandfather his father had 5 brothers and a sister. also worked outside the home for adDuane can trace his family tree back ditional money. His grandmother did several generations and how they came to most of the chores like milking the cows settle in Minnesota. His great-great-grandby hand and feeding the animals as well as father was George Washington Richards the cooking and cleaning for the family. who had spent part of his life in Northern “My Grandparents were absolutely the very West Virginia in the 1800’s and was probbest and I can’t ever thank them enough for ably involved in coal mining to some degree. At their contribution to my life. They never Age 10 The famous some point he moved to Indiana where his son, complained and loved each and every one B&W elementary photo Duane’s great-grandfather grew up. Duane’s paterin their family totally and unconditionally.” nal grandmother’s father was born in Germany and of the times. Duane’s father joined the Army in was the only family member of that generation to 1946 and became a paratrooper in the immigrate to the US. Originating in eastern Ger101st airborne division He was in the many, few of the remaining German Japanese occupation forces until 1949 family members survived WWI and when he was discharged. Shortly after he WWII. Most were killed during the returned to Minnesota, he met Duane’s Russian occupation post WWII. mother Murrel, still in high school, Duane’s paternal great-grandthrough mutual acquaintances. parents planned to go to Oklahoma Duane’s father had many jobs over for the land rush shortly after getting his lifetime and worked long hours for married, but were unable to make it low pay. Duane often visited him at in time eventually ended up in South work just to see him. He remembers Dakota instead. His paternal grandthat his father operated a large coalparents, Cleveland and Alvina (Peters) fired boiler that heated the buildings Richards met there and were married in town during the winter and having in 1910 at in South Dakota’s famous to shovel in the coal and shoveling Corn Palace. They moved to a fairly out the clinkers and ashes. He retired remote area of Minnesota in 1915, as the chief custodian of the high traveling in a box car with all of the school in town. His mother was a possession including their young chilhomemaker and spent much of her dren and farm animals. In Minnesota time with her mother and sisters. they became self-sufficient dairy farmers, His father encouraged Duane to surviving by selling milk, growing their attend college and actually discourown food, hunting and selling logs off aged him from learning manual the land. Duane never met his grandfalabor trades or skills that may have ther Cleveland as he died in 1935. Alvina sidetracked him. He didn’t want his and many of Duane’s aunts and uncles on life for his son. A college deferment High School graduation that side of the family moved to Califoralso meant no trip to Vietnam. The was complete with a full head nia prior to World War II. They found eking out heading to a stalemate anyway and Duane is of blonde hair! a living from the rocky soil in Minnesota was too the kind of guy that fights to win. much work with too little reward and jobs were plentiful on the Growing up, Duane’s life pretty much revolved around growing west coast. family and church. Sundays were always spent in church and As such, Duane was much closer to his maternal grandparthe rest of the day was spent at his grandparent’s house. Duane ents Walter and Hazel (Knutson) Tramm. He saw them most was an Acolyte and as such it was his job to light the candles days in during his childhood. Their families both moved from in church at all services. He did this from 7th grade until he the rich crop farming soil area in southwestern Minnesota to left for college. His grandmother never let an opportunity go 46 | COAL TRANSPORTER

Checking out an interesting engineering project in March 2010.

by without begging him to become a minister as she knew he who then only had to pay half of it back interest free after would be the first member of the family with the ability to atgraduation. She also had Duane do odd jobs around house as a tend college. way to provide him with some college savings. Mining sounded Like others profiled in the Coal Transporter that grew up very interesting because he wanted to live out west and work in small towns in the late 50’s and early 60’s, childhoods then outdoors. Throw in the big equipment moving lots of dirt and were lots of fun. Duane and his friends had the freedom to roam he was intrigued. However, Duane’s original intent was to major about town and not much money was required to have a good in physics and mathematics. time. The one time he did ask his parents for a $10 telescope, he Duane met his wife Donna in his junior year in high felt so guilty that he never asked for anything again. Summers school. Her father was a disabled veteran of World War II and were spent waterskiing and swimming had moved his family to Isle where he on Mille Lacs Lake, the second largest planned to spend his retirement years inland lake in Minnesota. When not fishing and hunting. Duane and Donna at the lake in the summer riding horses were married while Duane was still in and climbing tress with friends was an college. Duane says, “I’m pretty sure that activity that kept him busy. Winters were I wouldn’t have been able to finish colspent playing hockey at the local skating lege without her working and supporting rinks. Later, in high school, football, us at the time.” basketball and baseball kept at least the Donna worked for Victoria Elevator boys’ busy year around. Company, a company owned by a Cargill After 6th grade he started working family member, supporting the traders in - mowing lawns, delivering newspapers the back office at the Grain Exchange in and bagging groceries. As he got older, he downtown Minneapolis. One day she let worked at a printing shop, a gas station Duane know they were looking for help and for various farmers baling hay. Any at the company’s grain elevators. Duane money needed for school expenses had to reported the next day and spent his last come from working. two summers of college shoveling various Starting with his 6th grade teacher grains, mostly corn, out of box cars. It Mrs. Faue, Duane was taught more adwas big money for hard work – muscle Hiking around Echo Lake in vanced subjects separately from the other Colorado with granddaughter Grace. over brain and lots and lots of overtime. 40 or 50 members of his class. The high This was before the Stagger’s Act and school math teacher, Mr. Robb, taught railroad operations were poor at best. him calculus which was not part of the senior year curriculum. Many times he arrived at work and the empty cars hadn’t been Duane credits his elderly neighbor Mrs. Kotz as the person who removed and the loaded boxcars had not been delivered. That had the biggest impact on him getting into the mining industry. meant spending the day cleaning up under the conveyor belts She showed him an article about a program at the University of and in the dust collection system. After the cars were emptied, Minnesota that provided $1,500 per year to mining students Duane and others rode the cars out of the elevator down a slight COAL TRANSPORTER | 47

Reflections / Duane Richards continued

Mediterranean Cruise for 40th Wedding Anniversary incline to the end of the tracks. If the hand brake didn’t work, they scrambled to crawl down and jump off before it hit another car or the end of the tracks. If going to school and unloading boxcars wasn’t enough, the Richards grew into a family of four during those college years, with daughters Amie born in 1971 and Kelly born in 1974.

FROM THE MIDWEST TO THE ROCKIES

Duane graduated in 1974 with degree in Mineral Engineering. The country at that time was pretty much out of Vietnam and recovering from the Arab Oil Embargo. Jobs were plentiful in coal mining. After interviewing with eight companies, he had seven job offers. He accepted a job with the Atlantic Richfield Oil Company (ARCO) in the oil shale industry and moved to Rifle, Colorado. “Moving our two daughters away from both sets of grandparents and their great grandparents was very painful for them but we thought of ourselves as taking off on life’s great journey. However, all of our vacations were spent returning to Minnesota so they could spend time with our kids – summers and winter holidays.” It didn’t take long to see the oil shale project was too expensive to go forward. Not wanting to be the last one out the door, Duane contacted Shell Oil Company, Mining Ventures, another of the companies that had originally offered him a job. 48 | COAL TRANSPORTER

Dining out in NYC with daughters Kelly (left) and Amie (right). He worked for Shell for several years on the initial development of coal mines in Montana and Wyoming. Duane and Klaus Mylotta were probably the first people to ever layout a mine plan for the Buckskin Mine. Shell’s projects either fell through or were going to take too long and he wanted to work at an operating mine, so he took an engineering job at PacifiCorp’s Bridger Coal Mine in Rock Springs, Wyoming. He thinks Donna might have thought he had lost his mind at the time, but things happened quickly from there. In no time, he was moved into a production supervisory position. The next year he was asked to take the chief mining engineering position at the Dave Johnston (DJ) Mine near Casper, Wyoming. That’s where he met Mike Stevermer, who was a summer intern student at the time. Donna was able to attend Casper College and got her business degree there.

Tom Canter, Duane, and Charlie McNeil at Duane’s retirement party.

Receiving the David Laffere Distinguished Service Award from the Western Coal Traffic League in February 2016.

OFF TO THE WEST COAST

After several years at DJ, NERCO was formed as subsidiary of Pacificorp and he was transferred to Portland, Oregon to be the project development manager for the Antelope Coal Mine. Probably one of his biggest accomplishments in his career was to lead the successful Antelope Mine development project. The original mine plan was designed to preserve the coal leases and service a one million ton per year contract with Platte River Power for their Rawhide Plant. Ken Brockway, one of NERCO’s coal salesmen at the time, famously claimed that “we will never be able to sell another ton of coal from that mine.” Luckily, that turned out not to be the case. John Hart, another face familiar to NCTA members, worked there as well.

BACK HOME AGAIN

Duane worked his way out of a job at Antelope when it became operational in 1985. In 1986 after getting in contact with a former college classmate, he was offered a job with Northern States Power in Minneapolis. It was the perfect opportunity to move back home to family. Given that he was new to the utility industry and having to start a new career in a new industry it enabled him to learn all phases of the utility business. He worked alongside Dennis Wanless and Bob Kermes as well as many others.

Duane and Dennis worked very closely with the power plants as they were just converting to PRB coal. The PRB coal was a bit dustier than Illinois coal the plants were used to, requiring major modifications to be made in the handling systems. There were many trips made to the PRB so the plants managers could see firsthand how to do it. Convincing the company to build rapid discharge coal cars was also a challenge, but Duane knew that having employees crawling under the cars provided by the railroads to shut the doors with their feet was a nonstarter. Duane earned a MBA at The College of St Thomas in St Paul, Minnesota in 1990 while working for Northern States Power. While he thought that his lack of plant experience may limit his advancement opportunities at the utility, he was offered a job in NSP’s economic evaluation group but was pulled back in the Fuels group by Lou Matis who wanted him to run the coal procurement business. This ultimately led to being responsible for procurement of all fuels including nuclear, wood, garbage, oil, and gas. Ordering 10 million gallons of #2 oil was pretty heady even if it could be burned in a day or two.

THE FINAL MOVE

There were several attempts at mergers during the 1990’s by NSP, and in 2000 Duane was part of a small group asked to work on the merger with New Century Energy which had resulted from an earlier merger of the Public Service of Colorado and Southwestern Public Service. The combined companies became Xcel Energy. In the process Duane met and had the pleasure to work with Karen Roberts, Barry Johnson, Gerry Zimmerman, Steve Reed, Steve Bush, and others. Duane was transferred to Denver to become Managing Director, Coal for the new company. After several years at Xcel, it became clear that coal was not going to be the focus of the company in the future. Duane began seeking other opportunities in the industry and as good fortune would have it, he was offered the CEO position at Western Fuels Association (WFA). Back in Isle, the local dairy and utility COAL TRANSPORTER | 49

Coal industry professionals pretending to be fly fishermen.

Enjoying a round of golf at Pebble Beach this past Spring!

industries were co-ops so he had some familiarity with how they worked. It was a good fit for him. Everything he had done in his career was what was required at WFA. Most people will remember Duane’s tenure at WFA for the rate case involving WFA, Basin Electric and the Burlington Northern Santa Fe (BNSF) Railway. After 10 years of litigation that included a favorable ruling from the STB in 2009, a settlement was finally reached in May of 2015. The result was a mutually beneficial contract that will ensure favorable railway transportation rates for WFA members for years to come.

those no longer with us like Dave Laffere, Rod Wolf, and Ron Boesen. His only regret was only seeing everyone twice a year at the conferences however even that was enough to make some lifelong friends. Duane’s first WCTA meeting was at the Westin Mission Hills Golf Resort in Rancho Mirage. There were many supplier sponsored events over the years that were great fun, from the Greek restaurant party sponsored by Peabody in Palm Springs, the night at Briarhurst Manor in Manitou Springs sponsored by Arch, in San Antonio at Howling at the Moon and the live band provided by Peabody the most recent outing in Tucson. Those were memorable events because they were spent having fun with great people, another great benefit of joining forces with others. Duane was also very involved with other organizations throughout his career including the WCTL where he served as President for several years, the Colorado Mining Association where he served as Chairman in 2014, and the BNSF’s Customer Advisory Board, at least until the Laramie River Rate case.

INDUSTRY INVOLVEMENT

Duane has always believed that the best results come from joining forces with others. It’s true when a group needs more leverage to lobby for resources or equitable treatment. Educating each other is also a big benefit in working with others, as no one person has all of the knowledge and experience. He also believes that each of us must be engaged and provide leadership in an industry we believe in and that supports us. This is why he joined WCTA and its successor organization the NCTA. He was honored to serve on the NCTA board with some very special people like Betsy Monseu, Dan Fleming, Steve Holloway, Dave Warneke and many more and will always miss

Relaxing with Mike Shaw after a hard day’s “work”. 50 | COAL TRANSPORTER

DENVER IS HOME NOW

Duane Richards retired as CEO of WFA in June of 2015. He and Donna plan to stay in Denver with Amie and granddaughter Grace, who will be an Arapahoe High senior next year. There are still plenty of reasons to visit Minnesota though. All of Duane’s siblings and family members still live there and Kelly and her husband, a Marine and National Guard veteran, live in small town in NW Minnesota where they own and operate several small businesses. Their daughter Michaelah attends St John’s University in Queens New York majoring in Asian studies and languages. As far as retirement goes, Duane’s to-do list includes traveling and visiting with friends, golfing, skiing, bike riding, and playing slow pitch softball and neighborhood tennis. The past summer Duane traveled to St Louis to play golf with Mike Shaw and Jeff Maier, Paul Freund was invited but was unable to join the group. He may do some consulting if opportunity comes up but honestly he may have trouble finding the time! Duane claims, “I never really had any hobbies as all of my jobs required extensive traveling and long commutes.” But now who knows he might take one up. s

The humo sometime rous s serio , sometim us ra es mbl of be st frie ings nd Pete and A s nn.

The View from the Caboose

THE VIEW FROM THE CABOOSE By Pete Moss & Ann Thrawsite

ANN: Hi Pete! How are things going? PETE: Well, just so you know, I picked the worst possible time to give up drinking. I’ve never seen a tougher time for the coal industry. ANN: Sure there have been tougher times. Look at all the strides we’ve made in terms of safety and efficiency. We’re not giving any of that back even with reduced loadings. There is a whole laundry list of things that can turn the market on a dime. PETE: Ann, you always know what to say to make me feel better. ANN: I really don’t know what the future brings, but I do know it’s never what you think it is going to be. That’s where the whole concept of diversification comes from. No energy type is problem free. Just ask those quacks in California about their duck problem. PETE: Oh, I like duck hunting. I could totally go out there and help them out. ANN: No, Pete. It’s the problem created by the influx of photovoltaic technology in the California energy system. If you look at their hourly load net of the PV resources, it’s shaped like a duck. Its belly seems to be getting bigger as more PV gets installed. PETE: Oh. That doesn’t sound nearly as fun. Besides, no one likes a big belly. I’ve been working on getting rid of mine. ANN: Well, it has created some problems, mainly shorter, steeper ramps at dusk for conventional resources, the risk of oversupply mid-day, and a decreased ability to respond to fluctuations in frequency. I don’t think that I’d want a job in the California ISO. It’s getting more stressful than an air traffic controller job. PETE: Does Hillary know this? Didn’t she promise to have more than half a BILLION solar panels installed across the country by the end of her first term. That’s a lot of ducks.

I love it when the market makes things happen that the government just can’t quite accomplish. ANN: For example? PETE: Well, have you played this new Pokémon Go game? ANN: Sure, it’s great fun. The technology is amazing and my son even went on a walk with me the other night. That hasn’t happened in years. PETE: My point exactly. Pokémon Go got more people off the couch and out walking in 24 hours than the government’s billion dollar “Let’s Move” program did in five years. The government should stick to what it does best, although I’m not quite sure what that is anymore. ANN: I don’t know either. Maybe promise everything, deliver nothing, and then blame someone else? PETE: Well the folks at NCTA aren’t like that. The Fall Conference is coming up and they always deliver with a great agenda. I can’t wait to get back out there. I love Denver in September. It will be so interesting to see what people think about the upcoming election. Like you said earlier, the future is never what you think it might be. No one called this particular match-up. ANN: Yes, what a shocker. Every once in a while the electorate jumps up and shouts “I’m mad as hell and I’m not going to take it anymore.” I too am looking forward to the conference. We are still moving a lot of coal so I don’t want to take my eye off the ball. Why don’t you come out early and we can go duck hunting and get caught up? PETE: Great, let’s go. I need to find Psyduck. I haven’t caught him yet. ANN: Gotcha!

ANN: Laying a whole lot of eggs no doubt. PETE: Well I think the government should leave the market to its own devices and quit trying to pick winners and losers. Besides,

Have something to say to Pete? Send comments or questions to pete@nationalcoaltransportation.org COAL TRANSPORTER | 51

NCTA Membership List A. Stucki Company AKJ | NALCO Alliant Energy AllTranstek LLC Alpha Coal Sales Co., LLC Alpha Products, Inc. Ameren Missouri American Electric Power Amsted Rail Appalachian Railcar Services Arch Coal Sales, Inc. Arizona Electric Power Coop. Arizona Public Service Arkansas Electric Cooperative Associated Electric Power Cooperative Associated Terminals LLC Aventics Basin Electric Power Cooperative Blackhawk Mining, LLC Bowie Resource Partners CANAC, Inc. CDG Engineers, Architects, Planners CIT Rail City Utilities of Springfield Cleco Cloud Peak Energy Colorado Springs Utilities Commtrex CONSOL Energy Inc. Consumers Energy Company Cooper Consolidated CPS Energy

Crown Products CSX Coal & Ore Terminals Dairyland Power Cooperative David J. Joseph Company Detroit Edison Duke Energy Dynegy, Inc. Ecofab Australasia Empire District Electric Company Entergy Services, Inc. Exponent, Inc. FirstEnergy Florida Power & Light Company FreightCar America GATX Global One Transport, Inc. Grand River Dam Authority Great River Energy The Greenbrier Companies Hall St. Coal Terminal Hendricks River Logistics Hi Crush Partners LP High Country Railcar IHS - Energy Publishing, LLC iIRX LP Impala Terminals Burnside JPMorgan Kansas City Power & Light KCBX Terminals Co. / C. Reiss Coal Co. Kiewit Mining Group Inc. Kinder Morgan Terminals Levin Richmond Terminal

Lexair, Inc. LG&E and KU Energy Lighthouse Resources, Inc. Locomotive Service, Inc. Lower Colorado River Authority Luminant Energy Maxeefish LLC MEAG Power Metro East Industries, Inc. MidAmerican Energy Midland Railway Supply Midwest Industrial Supply, Inc. Miner Enterprises Inc. Minnesota Power MinTech Enterprises Mitsui Rail Capital, LLC MPL Innovations, Inc. Muscatine Power and Water Nebraska Public Power District New York Air Brake Northern Indiana Public Service NV Energy OG&E Electric Services Oglethorpe Power Corp. Omaha Public Power District Otter Tail Power Company Peabody Energy PacifiCorp Platte River Power Authority Portland General Electric Progress Rail Services, Corp Rail Link Railroad Financial Corporation

RAS Data Services RESIDCO Romeo RIM RungePincockMinarco Salt River Project Sandy Creek Energy Station Seminole Electric Cooperative ShipXpress, Inc. SMBC Rail Services LLC Southern Company Operations Standard Steel Strato, Inc. T. Parker Host Talen Energy Tampa Electric Company Tennessee Valley Authority Three Rivers Marine & Rail Terminals The Timken Company Transportation Services Inc. TrinityRail Tri-State G&T Association TUCO/NexGen Coal Services Tucson Electric Power Wabtec Corporation WEC Energy Group Wells Fargo Rail Westar Energy Western Farmers Electric Western Fuels Association, Inc. Westmoreland Coal Sales Co. WestRail Xcel Energy Xcoal Energy & Resources

Index to Advertisers Aero Transportation Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Amsted Rail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Appalachian Railcar Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 CFACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Cloud Peak Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC Crown Products & Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 CSX Coal and Ore Terminals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Lexair, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IFC MinTech Enterprises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OBC

52 | COAL TRANSPORTER

Mitsui Rail Capital, LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 NexGen Coal Services, Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 PRB Coal Userâ&#x20AC;&#x2122;s Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Platts Coal Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Slover & Loftus LLP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Thompson Hine, LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Western Fuels Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Xcoal Energy & Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ÂŽ Energy to Power the Country

Contact Us: Mike Kelley 720.566.2906 Director, Sales and Marketing 307.685.6130 Mary Lou Risley 720.566.2915 Leslie Thorn 720.566.2909 Bill Wallace Corporate Headquarters: 505 S. Gillette Ave. (82716) P.O. Box 3009 Gillette, WY 82717 307.687.6000 Colorado Office: 385 Interlocken Crescent Suite 400 Broomfield, CO 80021

Providing low-sulfur, high-quality subbituminous coal. We deliver on quality, with a vision for the future. www.cloudpeakenergy.com

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