EPA-230/l-75-058a SEPTEMBER 1375 ECONOMIC IMPACT OF INTERIM FINAL EFFLUENT GUIDELINES ON THE U.S. COAL MINING INDUSTRY QUANTITY U.S. ENVIRONMENTAL PROTECTION AGENCY Office of Planning and Evaluation Washington, D.C. 2046O .» ------- This document is available for inspection through the U.S. Environmental Protection Agency, Public Information Reference Unit, Room 2404, Waterside Mall, 401 M Street, S.W., Washington, D.C. 20460. Persons wishing to obtain this document may write the Environmental Protection Agency, Economic Analysis Division, Waterside Mall, 401 M Street, S.W., Washington, D.C. 20460, Attention: Distribution Officer PM-220 ------- ECONOMIC IMPACT OF INTERIM FINAL EFFLUENT GUIDELINES ON THE U.S. COAL MINING INDUSTRY -ntal Protection on V, I,::. r,ar7 South l?::?l.i'..;\ S,-r-,i;> Report to U.S. ENVIRONMENTAL PROTECTION AGENCY EPA-230/l-75-058a SEPTEMBER 1975 U.S. Environmental Protection Agency Region V, Library 230 South Dearborn Street Chicesto, Illinois 60604 ------- TABLE OF CONTENTS Page Preface i List of Tables ±v List of Figures vi I. SUMMARY 1 A. PURPOSE AND SCOPE 1 B. IMPACT 1 1. Soft Coal Segment 1 2. Hard Coal Segment 1 3. Preparation Plants 2 4. Industry Impact C. LIMITATIONS OF THIS STUDY 2 II. U.S. COAL INDUSTRY - AN OVERVIEW 3 A. COAL MINING AND PREPARATION TECHNOLOGY 3 1. "Soft" Coal Segment (Bituminous, Sub-bituminous, and Lignite) 3 2. Anthracite ("hard" coal) Mining 4 3. Coal Cleaning and Preparation 4 B. COAL RESOURCES 6 C. DEMAND 6 1. Domestic "Soft" Coal 6 2. Exports 13 3. "Hard" Coal 13 D. SUPPLY 13 E. COAL PRODUCING FIRMS 16 1. Bituminous Coal and Lignite 16 2. Anthracite 23 ii ------- TABLE OF CONTENTS cont'd Page F. SEGMENTATION OF MINES AND PREPARATION PLANTS 23 1. "Soft" Coal Mines 26 2. Hard Coal Segment 26 3. Coal Cleaning/Preparation 32 4. Relationship of Segments to the U.S. Coal Mining Industry 36 G. COAL TRANSPORTATION 36 H. GOVERNMENT INFLUENCE 36 III. IMPACT ANALYSIS 40 A. SOURCES AND CHARACTERISTICS OF MINE DRAINAGE 40 B. REGIONAL DISTRIBUTION OF ACID MINE DRAINAGE 41 C. INTERIM FINAL EFFLUENT GUIDELINES 41 D. STATE WATER REGULATIONS 41 E. COSTS OF COMPLIANCE WITH INTERIM FINAL GUIDELINES 45 F. COAL PRODUCTION COSTS 45 G. COAL PRICES 46 H. IMPACT ANALYSIS 50 1. Status of Current State Regulations 53 2. Impact Based on Model Mine/Treatment Plant on the "Soft" Coal Segment 53 3. Impact on Anthracite Segment 58 4. Impact on Coal Preparation Plants 58 5. Summary 59 APPENDIX A 60 APPENDIX B 66 iii ------- LIST OF FIGURES Figure No. Page 1 Mining Methods Used in United States Bituminous Coal Production 5 2 Coal Fields of the United States 7 3 Coal Consumption by Market Categories 12 4 Productivity at Bituminous Coal Mines 21 5 Characterization Scheme for U.S. Coal Industry 25 vi ------- I. SUMMARY A. PURPOSE AND SCOPE The purpose of this study is to provide the Environmental Protection Agency (EPA) with information regarding the economic impact of Proposed Interim Final Effluent Guidelines on the United States coal mining industry. This industry comprises: SIC Code 1111 - Anthracite (hard coal) Mining and Preparation Plants SIC Code 1211 - Bituminous Coal and Lignite (soft coal) Mining and Preparation Plants The proposed Interim Final Effluent Guidelines would impose a pH lim- itation of 6-9 on point source discharges from existing coal mines and prep- aration plants to navigable waters of the United States. B. IMPACT 1. Soft Coal Segment Only mines with acid mine drainage will be affected by the Guidelines. Acid mine drainage is concentrated mainly in the Appalachian states; con- sequently our analysis has concentrated on this region. Many of the states where acid mine drainage is likely to be a problem have some form of regulations limiting on the pH of discharges as part of effluent or waste discharge standards. The most lenient seems to be a pH limitation of 5 to 10. However, our study of state water laws was not exhaustive. We are not certain if existing state regulations are applicable to all point sources from coal mines and preparation plants. We do not know the degree to which state laws are enforced. If the regulations cover all point sources and enforcement of state regulations is good, incremental costs to meet Interim Final Guidelines will be minimal. However, since this may not be so, we studied the impact of neutralization costs on model mines. A model mine approach was used as there are a large number of estab- lishments engaged in coal mining in the United States, making a mine by mine analysis impossible. The costs of compliance with the Interim Final Guidelines were provided by the EPA. The annualized operating costs, as a result of compliance, increased less than 12 cents a ton. The capital requirements range from $3,500- 77,000. For the large mine segment we have looked at the combination of a large mine and preparation plant and the cost increase is relatively modest. For the medium and small surface mine segments the capital require- ments may range from 0.3 percent to 3.2 percent of capital investment (excluding treatment equipment). Thus, on the basis of costs for model ------- The trends in mining methods for the period 1940-1973 is shown in Figure 1. 2. Anthracite ("hard" coal) Mining The anthracite district of northeastern Pennsylvania is generally cha- racterized by steeply dipping, folded and faulted sedimentation. Anthracite seams vary in thickness from district to district and can range from part- ings of a foot to major seams averaging 36 feet. Four methods are currently employed in producing anthracite: deep mining, strip mining, culm bank reprocessing, and dredging. Deep and strip mining have been discussed in reference to soft coal. Anthracite production in 1973 from deep mines was 726,000 tons and 3,279,000 tons from strip mines. Lower recovery costs have made old culm and silt banks dumped in the early days of anthracite mining an important source of fine sized coal. This source accounted for 2.4 million tons or about 35% of total production in 1973. The culm material, formerly regarded as waste, is currently trucked to preparation plants for reprocessing. Dredging operations are found on the Susquehana and Schuylkill Rivers. Fine coals which have accumulated from erosion of mine waste and culm and silt banks are recovered by means of suction devices and then processed, washed and sized on board. In 1973, dredging accounted for 441,000 tons. 3. Coal Cleaning and Preparation The objective of coal cleaning is to remove foreign matter such as rock and slate from coal. The advantages thus derived are a reduction in ash and sulfur content, control of ash fusibility, increase in calorific value and improvement of coking properties. The need to clean coal prior to shipment has resulted from factors such as the adoption of mechanized mining that does not differentiate between coal and impurities and the imposition of stringent quality specifications by consumers. Mechanical cleaning of coal is possible because of the difference in specific gravity between the free impurity (1.7-4.9) and coal (1.3). Generally, cleaning processes are classified as gravity-based stratification or non-gravity processes. Included in the former category are wet processes such as laun- der washers, jigs, classifiers, and tables; the non-gravity category includes the heavy media methods (in air or water) as well as froth flotation. ------- 100 t, Strip and Auger Mining CONVENTIONAL MINING - Hand Loading A///A///A///A///A/// CONVENTIONAL MINING - Mechanical Loading 10 0 1940 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1973 Source: U.S. Bureau of Mines FIGURE 1 MINING METHODS USED IN UNITED STATES BITUMINOUS COAL PRODUCTION ------- TABLE 1 DEMONSTRATED COAL RESERVE BASE OF THE UNITED STATES ON JANUARY 1. 1974 BY METHOD OF MINING (Million short tons) Potential Mining Method State Alabama Alaska Arizona Arkansas Colorado Georgia Illinois Indiana Iowa Kansas Kentucky, East Kentucky, West Maryland Michigan Missouri Montana New Mexico North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania South Dakota Tennessee Texas Utah Virginia Washington West Virginia Wyoming Total Underground 1,798 4,246 420 14,000 1 53,442 8,949 2,885 9,467 8,720 902 118 6,074 65,165 2,136 31 17,423 860 1 29,819 667 3,780 2,971 1,446 34,378 27,554 Surface 1,184 7,399 350 263 870 12,223 1,674 1,388 3,450 3,904 146 1 3,414 42,562 2,258o 2 16,003 3,654 434 2 1,181 428 320 3,272 262 679 508 5,212 23,674 297,235 136,713 Total 2,982 11,645 350 665 14,870 1 65,665 10,623 2,885 1,388 12,917 12,624 1,048 119 9,488 107,727 4,394 31 16,003 21,077 1,294 1 31,000 428 987 3,272 4,042 3,650 1,954 39,590 51,228 433,948 Source: U.S. Bureau of Mines. 1Includes measured and indicated categories as defined by the USBM and USGS and represents 100% of the coal inplace. 2Less than 1 million tons. ------- TABLE 2 DISTRIBUTION OF U.S. DEMONSTRATED COAL RESERVES BY SEGMENTS AND POTENTIAL MINING METHODS (million short tons) Segment Potential Mining Method Central Component States Northern Md., Pa., Ohio, Va., Appalachia W. Va. Southern Ala., Ga., East Ky., Appalachia N.C., Tenn. Ark., 111., Ind., Iowa, Kan., West Ky., Mich., Missouri, Okla., Texas Intermountain Ari., Colo., N. Mex., Utah Great Plains Mont., N. Dak., S. Dak., Wyo. West Alaska, Ore., Wash. Underground 85,493 11,964 81,468 19,916 92,719 5,693 Surface 10,872 4,954 26,573 3,740 82,667 7,907 Total 96,365 16,918 108,041 23,656 175,386 13,600 Total 297,235 136,713 433,948 Source: U.S. Bureau of Mines ------- TABLE 3 CONSUMPTION OF BITUMINOUS COAL AND LIGNITE. BY CONSUMER CLASS, Year 1967 1968 1969 1970 1971 1972 1973 Electric Utilities 271,784 294,739 308,461 318,921 326,280 348,612 386,879 Bunker , Lake Vessel & Foreign 467 417 313 298 207 163 116 WITH RETAIL DELIVERIES IN THE UNITED STATES (Thousand short tons) Manufacturing and Mining Industries Beehive Coke Plants 1,372 1,268 1,158 1,428 1,278 1,059 1,310 Oven Coke Plants 90,900 89,497 91,743 94,581 81,531 86,213 92,324 Steel & Rolling Mills 6,330 5,657 5,560 5,410 5,560 4,850 6,356 Other Manufacturing and Mining Industries 92,464 92,028 85,374 82,909 68,655 67,131 60,837 Retail Deliveries to Other Consumers 17,099 15,224 14,666 12,072 11,351 8,748 8,200 Total of Classes Shown 480,416 498,830 507,275 515,619 494,862 516,776 556,022 Source: U.S. Bureau of Mines ------- consumption and do not include the rapidly growing demand for exported coal needed to support steel operations throughout the Western World and to sup- ply power, mostly in Canada. Exports are discussed in the next section. It can be seen from the trend curves of Figure 3 that the principal coal consuming sectors are the electric utility and basic steel industries. The former is by far the largest and fastest growing market, accounting in 1973 for nearly 70% of the domestic consumption. While utility coal demand should remain strong for the next decade or so, the continued utilization of coal as a boiler fuel will depend on present and future air quality standards. In the recent past, it was not uncommon for low-sulfur oil, most of it imported, to displace coal in a wide and increasing segment of the utility market, largely because economically viable pollution control technologies are not yet available for coal-fired boilers. Among the de- velopments that could combat this trend and permit the utilization of higher sulfur coal in the future are conversion of coal to clean (high- or low-Btu) gas, conversion to low-sulfur liquids, and stack gas cleaning systems such as scrubbers. Coal consumption by the steel industry has remained virtually constant over the last decade, despite large increases in raw steel output. This is a consequence of improvements in blast furnace technology, including supplementary fuel injection, high top-pressure operation, and better fur- nace burden preparation. The most important use of coal in modern steel production is in the manufacture of metallurgical coke, either in beehive or byproduct coke ovens. Almost 99% of the coal consumed in coke ovens in 1973 went to byproduct oven coke plants. In modern byproduct coke-making operations, high-volatile coal usually is blended with either or both medium- and low-volatile coals to provide the charge for the coke ovens. These coals should contain as small amounts of sulfur and ash as are economically feasible, because the amount of these components present in the coal mixture directly affects the quality of the coke produced and its performance in the blast furnace. For this reason, most coals used for the production of metallurgical coke are beneficiated prior to use. Generally, the demand for metallurgical coal is relatively inelastic, in relation to price, in the short run, and may in fact remain so in the long run. Substitution of non-metallurgical coals or other fuels would occur when mechanically acceptable chars can be produced from non-coking coals and if alternative fuel costs become more favorable. Similarly, where coal is clearly the cheapest fuel, the demand for steam coal would be expected also to be inelastic. However, it should be observed that the steam coal demand function is generally complex and dependent to a large degree on interfuel competition, i.e., cost/availability of fuel oil and natural gas. 11 ------- o o to o 700 600 - 500 - .- 400 c g a E 3 1/1 o O "55 O O Total Domestic Consumption 300 G 200 h 100 H 1950 FIGURE 3 COAL CONSUMPTION BY MARKET CATEGORIES 12 ------- 2. Exports Following World War II, bituminous coal exports became an important item of U.S. foreign trade contributing positively and significantly to the international balance of payments. Table 4 shows the trend in coal exports for a selection of years between 1940 and 1973. Exports fluctuated prior to 1961 because of various emergencies abroad; the lack of any major fuel crises since then up to 1970 has enabled exports to increase steadily. In 1970, the United States exported 70.9 million tons of coal, stemming from an unprecedented rise in world steel production, a depletion of large coal stockpiles and a reduction in coal mines capacity abroad. Similarly, the reduction in 1972 exports resulted generally from diminished steel de- mand abroad, improved world coking coal supply, and sufficient coal stocks abroad. Accordingly, coal buying became selective and the adequate world coal supplies and lower demand resulted in a sharp focusing on prices. There was a further decline to 52.9 million tons in 1973, stemming primarily from reduced demands in Canada and Western Europe. But despite the lower export volumes, the value of coal exports rose slightly over the prior year to about $1 billion. In 1973, Japan retained its premier position as an importer of U.S. coal, receiving about 36% of the total foreign shipments. Shipments to Canada, Europe, and South America accounted for 30.7%, 26.9%, and 5% re- spectively. U.S. exports accounted for less than 10% of production. Compared to 1972, less coal was exported from the Appalachian and Cen- tral coal regions in 1973. Shipments from the former were 18 million tons less than in 1972 while shipments from Western Kentucky, Illinois and Indiana were approximately 2 million tons below those of 1972. Shipments from the Western states increased almost 14 million tons in 1973. 3. "Hard" Coal Anthracite consumptions by domestic user categories are similarly shown in Table 5. Apparent consumption in the U.S. in 1973, (calculated as production minus exports, including purchases by the Federal Government to supplement the fuel needs of the U.S. Armed Forces in West Germany), totaled about 5.6 million tons, of which 51% was used for space heating, 25% by electric utilities, 13% by the iron and steel industry, and the remaining 11% was distributed among cement plants, colliery fuels, and other uses. D. SUPPLY In 1973, the United States produced 591.7 million tons of bituminous coal and lignite, thus accounting for about 18% of the world's total out- put of 3.3 billion tons. Domestic anthracite production was 6.83 million tons, equivalent to 3.6% of the world total. 13 ------- TABLE 4 TREND IN U.S. COAL EXPORTS Year Total Exports* (000 tons) 1940 16,466 1945 27,956 1950 25,468 1955 51,277 1960 36,541 1965 50,181 1970 70,944 1971 56,633 1972 55,960 1973 52,903 *Excludes fuel or bunker coal loaded in vessels engaged in foreign trade and shipments to U.S. Military Forces. Source: U.S. Bureau of Mines 14 ------- TABLE 5 Trend in Domestic Consumption of Pennsylvania Anthracite by Consumer Categories (thousand short tons) Residential Iron and Steel Industry Year 1969 1970 1971 1972 1973 & Commercial Heating 4,209 4,042 3,850 2,960 2,917 Colliery Fuel 17 16 15 11 11 Electric Utilities 1,849 1,897 1,646 1,584 1,442 Cement Plants 213 W W W W Coke Making 543 472 451 474 467 Sintering & Pelletizing 623 464 339 283 231 Other Uses 1,355 1,357 1,037 603 603 W = Withheld to avoid disclosing individual company confidential data; included in "other uses." Source: U.S. Bureau of Mines, Mineral Industry Surveys. 15 ------- Table 6 shows the distribution of 1973 bituminous coal and lignite production by states, coal regions, and mining methods. Similar data are shown in Table 7 for Pennsylvania anthracite. The data of Table 6 indi- cate the Appalachian and Central regions dominated coal production, to- gether accounting for about 90 percent of total output. Among the individual states, the leading producers were, in order, Kentucky (21.6% of total), West Virginia (19.5%), Pennsylvania (12.9%), and Illinois (10.4%). In 1973, underground mining accounted for 50.6% of bituminous coal and lignite production, strip mining 46.8%, and auger mining the balance. Indications are that strip mining probably will increase steadily to about 55% sometime in the mid-1980's, underground mining will probably decline to about 44% and auger mining to 1%. Table 8 shows the trend since 1940 in the methods of coal mining. To some degree, however, the future trends in both total coal output and the method of production will depend on national energy policies and promulgated environmental (especially strip mining) legislations. Assuming that unduly restrictive strip mine legis- lations are not adopted, Western coals may account for as much as 33% of total U.S. production by 1985. It should be observed that domestic coal production has shown rela- tively little increase since 1969 despite an apparent increase in demand. This is believed to be due to the steady decline in labor productivity brought on largely by the enforcement of the 1969 Federal Coal Mine Health and Safety Act and several state strip mine laws. The trend in productiv- ity since 1950 is shown in Figure 4. Note that the decline has been most severe for underground mines where productivity has dropped from 15.61 tons per man-day in 1969 to only 11.20 tons per man-day in 1973. Strip mines have declined only marginally from 35.71 to 34.60 tons per man-day in this period. It had been hoped that 1973 would see the bottoming-out of the productivity slump and that productivity would gradually return to around 14-15 tons per man-day by about 1985. Such an expectation may have been erased by the provisions of the 1974 labor agreement between coal operators and the United Mine Workers. That agreement provided for addi- tional personnel in underground mines, and such an increase will be expected to lower productivity. In surface mining future Federal Strip Mine legis- lation may have a similarly adverse effect. It ought to be noted that, despite the decline in U.S. coal mine productivity in recent years, it is still substantially higher than that of most other coal-producing countries. In this regard, it is recognized that productivity is not based solely on mining practice, but is also a function of such other variables as seam thickness and geology, overburden ratios, and coal quality. E. COAL PRODUCING FIRMS 1. Bituminous Coal and Lignite About 4,000 companies produce bituminous coal and lignite. The top 15 firms are listed in Table 9, along with data on their ownerships, coal 16 ------- TABLE 6 1973 BITUMINOUS COAL AND LIGNITE PRODUCTION BY STATES, COAL REGIONS AND MINING METHODS (Thousand short tons) Region State NORTHERN APPALACHIA Maryland Pennsylvania Ohio Virginia West Virginia Sub Total SOUTHERN APPALACHIA Alabama Eastern Kentucky Tennessee Sub Total CENTRAL Arkansas Illinois Indiana Iowa Kansas Western Kentucky Missouri Oklahoma Texas (lignite) Bituminous Coal Underground 66 46,207 16,225 23,437 95,516 181,451 7,618 40,553 3,636 51,807 3 32,570 789 356 22,342 Strip 1,643 29,829 28,527 8,700 17,704 86,403 11,529 23,671 4,236 39,436 432 29,002 24,465 245 1,086 31,337 4,658 2,183 6,944 and Lignite Auger 79 366 1,031 1,824 2,228 5,528 84 9,742 348 10,174 _____ Total 1,789 76,403 45,783 33,961 115,448 273,384 19,230 73,966 8,219 101,415 434 61,572 25,253 601 1,086 53,679 4,658 2,183 6,944 Sub Total 56,060 100,352 156,410 ------- TABLE 6 cont'd oo 1973 BITUMINOUS COAL AND LIGNITE PRODUCTION BY COAL REGIONS AND Region State INTERMOUNTAIN Arizona Colorado New Mexico Utah Sub Total GREAT PLAINS Montana - Bituminous - Lignite N. Dakota - Lignite Wyoming Sub Total WEST Alaska Washington Sub Total TOTAL MINING METHODS STATES , Bituminous Coal and Lignite Underground 3,361 733 5,500 9,594 1 425 426 16 16 2.99.1354 Strip Auger 3,247 2,834 38 8,336 14,417 38 10,410 314 6,906 14,461 32,091 694 3,254 3,948 276,647 15,740 Total 3,247 6,233 9,069 5,500 24,049 10,411 314 6,906 14,886 32,517 694 3,270 3,964 591,719 Source: U.S. Bureau of Mines ------- TABLE 7 1973 PENNSYLVANIA ANTHRACITE PRODUCTION BY EXTRACTION METHOD Extraction Method Production (OOP tons) Underground 726 Strip Pits 3,279 Culm Banks 2,384 River Dredging 441 Total 6,830 Source: U.S. Bureau of Mines 19 ------- TABLE 8 PRODUCTION OF BITUMINOUS COAL AND LIGNITE, BY TYPE OF MINE Strip Mining 43,167 55,071 67,203 79,685 100,898 109,987 112,964 139,395 139,506 106,045 123,467 117,618 108,910 105,448 98,134 115,093 127,055 124,109 116,242 120,953 122,630 121,979 130,300 144,141 151,859 165,241 180,058 187,134 185,836 197,023 244,117 258,972 275,730 276,647 (000 tons) Auger Mining 205 1,506 2,291 4,460 6,075 8,045 7,946 7,320 7,641 7,994 8,232 10,583 12,531 13,331 14,186 15,299 16,360 15,267 16,350 20,207 17,332 15,554 15,740 Underground Mining 417,604 459,078 515,490 510,492 518,678 467,630 420,958 491,229 460,012 331,823 392,844 415,842 345,425 349,551 289,112 343,465 365,774 360,649 286,884 283,434 284,888 272,766 281,266 302,256 321,808 332,661 338,524 349,133 344,142 347,132 338,788 275,888 304,103 299,354 Total Production 460,772 415,149 582,693 590,177 619,576 577,617 533,922 630,624 599,518 437,868 516,311 533,665 466,841 457,290 391,706 464,633 500,874 492,704 410,446 412,028 415,512 402,977 422,149 458,928 486,998 512,088 533,881 552,626 545,245 560,505 602,932 552,192 595,386 591,739 Year 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 Source; Bituminous Coal Data, National Coal Association 20 ------- 40 35 30 Q 25 L £ c OJ ? 20 0) Q. t/5 o t 15 o -C 10 1950 1955 1960 1965 1970 1975 Source: Bituminous Coal Data, National Coal Association FIGURE 4 PRODUCTIVITY AT BITUMINOUS COAL MINES ------- TABLE 9 TOP 15 COAL-PRODUCING GROUPS IN 1973 NJ N> Company Peabody Coal Co. Consolidation Coal Co. Island Creek Coal Co. Pittston Co. Amax Group U.S. Steel Corp. Bethlehem Mines Corp. North American Coal Corp. Old Ben Coal Corp. Eastern Assoc. Coal Corp. Westmoreland Coal Co. General Dynamics Corp. Pittsburg & Midway Utah International, Inc. American Electric Power Total Ownership Coal Production Relative Standing (million tons) Kennecott* Continental Oil Occidental Public Amax Public Bethlehem Steel Public Sohio Eastern Gas & Fuel Public Public Gulf Oil Public Public 1973 69.92 60.5 22.9 18.8 16.7 16.2 14.1 12.5 10.8 10.6 8.8 8.7 8.1 7.4 6.6 1972 71.6 64.9 22.6 20.6 16.4 16.3 13.3 12.0 11.2 12.5 9.1 10.0 7.5 6.9 6.3 1973 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1972 1 2 3 4 5 6 7 9 10 8 12 11 13 14 15 1971 1 2 3 4 5 6 7 11 10 8 12 9 13 14 15 1970 1 2 3 4 5 8 6 12 10 7 11 9 13 14 17 1965 1 2 3 5 4 9 7 12 11 8 13 6 10 31 20 292.6 301.2 *Currently under U.S. Supreme Court order to divest itself of Peabody Coal Company. Source: 1974 Keystone Coal Industry Manual ------- production in 1972 and 1973, and relative rankings, in terms of coal output since 1965. Two companies, Peabody Coal Company and Consolidation Coal Company, with their subsidiaries, accounted for 22% of the bituminous coal production in 1973. The top 15 firms were responsible for 49.5% while the top 50 accounted for 66.4% Firms producing a million tons or more in 1973 were responsible for nearly 75% of total output. Of this group, about 26% were controlled by the coal industry itself. The oil industry controlled about 14%, steel and utilities about 12% each, and decreasing percentages by other industries. The large-scale acquisition of coal companies by "outside" industries was a phenomenon of the late 1960's and early 1970's. The coal industry characteristically had experienced poor profits and its management was re- garded as largely outdated. Operators thus were not averse to selling out at an acceptable price. The buyers, frequently large (petroleum) energy groups, saw the acquisition of a coal producer as a means of diversification into another energy source or for obtaining coal reserves in anticipation of substantial growth in coal utilizing industries. The utilities, chemi- cals, and metals firms generally acquired coal companies as a means of guaranteeing themselves adequate raw materials supplies at economical and controllable prices. Besides the large producers, the bulk of the coal mining firms are small independent operators or family-owned mines. These companies, though numerous, account for a far smaller proportion of the total coal production than the large firms. Over the last several years, these smaller firms have been forced to yield to economic pressures arising from low profita- bility, and the trend towards greater concentration in the industry is ex- pected to continue. 2. Anthracite Data from the Pennsylvania Department of Environmental Resources indi- cate that in 1973 there were about 181 companies involved in anthracite production. These companies operated one or more of the following types of facilities: deep mines, strip mines, culm bank mines, cleaning plants, and breaker preparation plants. Of these companies, only the 20 listed in Table 10 produced in excess of 50,000 tons of shippable anthracite. Their cumulative production amounted to about 5.1 million tons, equivalent to about 75% of the total output of anthracite. The balance of the producers are typically single-facility operations that serve specific local customers. Indications are that with time, these small operators may succumb to the economic and market pressures afflicting the anthracite industry, resulting in a general consolidation and concentration of the industry in the hands of a few relatively large firms. F. SEGMENTATION OF MINES AND PREPARATION PLANTS We have segmented the U.S. coal industry, as shown in Figure 5, as "soft" coal and "hard" coal mining and coal preparation plants, by geogra- phic regions, by type of mine and by size of mine. 23 ------- TABLE 10 TOP 20 PRODUCERS OF ANTHRACITE IN 1973 Operator Production Reading Anthracite Co. 757,759 Jeddo-Highland Coal Co. 572,808 Blue Coal Corporation 459,969 Greenwood Stripping Corporation 359,741 Kocher Coal Co., Inc., Leon E. 326,266 Lehigh Valley Anthracite, Inc. 324,390 Manbeck Dredging Co., Inc. 275,800 Gilberton Coal Co. 269,920 Hecla Machinery & Equipment Co. 246,221 United Gas Improvement Corporation 244,935 B-D Mining Co. 237,411 Kerris & Helfrick, Inc. 182,688 Beltrami Enterprises, Inc. 179,767 Glen-Nan, Inc. 164,153 Schuylkill Contracting Co. 147,029 Northwest Mining Co., Inc. 97,393 Split Vein Coal Co., Inc. 66,801 Raymond Colliery Co., Inc. 64,317 Schickram, William 59,845 Rosini Coal Co. 58,752 Total 5,095,965 Source: Pennsylvania Department of Environmental Resources 24 ------- Ln , Northern Appalachia Maryland Pennsylvania Ohio, Virg ma 1 Vest V l r~ I! S rgima H f + + Same as Underground Mining . \ $ f f J_ 1 3 3 Biturr Southern Appal ec hi. Alabama Eastern Kentucky J r ! a ! 0 3 f inous U S Coal Industry ^ * "Soft" Coal Mining j Sub Bituminous Lignite 1 i 11,1 C»"ll nntMounum Gt«t Plum 1 Weit mmo^5 OklSS™ Ar"ona Mon'a™ Alaska Indiana Texas Colorado North Dakota Washington Kansas Iowa New Mexico Wvom np | W Ken ucky Utah 1 r L. 1 i 1 crt V) w Sy, 5 ^T 5 X) 3 •» n o 50. ~ ™ » _ ™ o s a I r " Hard' Coal (Anthracite) Mining , i Coal Preparation Plants 1 , Pennsylvania Anthracite Field i 1 Anthracite Preparation Plants Bituminous Coal Preparation Plants i 4 i Underground i "^" ? Same as Underground Mining , 4 s! ?> <» s 8 £f ss SKIP Mining i Dredging Culm Banks r— + '» ItftYTY V u § H ^ u •? ^ •sl -i1 "° o ^ S s "1= '3 8I K r- * S 5 f 3 i aT 5 2 ? 2 S r~ 5 2 /) 3 S S V 2 ?' *™ 1 T /A 5 Z < 5 FIGURE 5 CHARACTERIZATION SCHEME FOR U.S. COAL INDUSTRY ------- 1. "Soft" Coal Mines Table 11 shows, for the period 1960-73, the distribution of active bi- tuminous coal and lignite mines as a function of mine size. The total num- ber of mines declined from 7,865 in 1960 to 4,744 in 1973. Virtually all of this decline occurred in the less than 10,000 net tons category decreasing from 4,645 in 1960 to 1,093 in 1973. All other categories remained relatively stable or increased in number. In terms of the proportionate share of coal production, all except the largest have lost ground since 1960. The over 50,000 tons/yr category has increased its share of total production from 49% in 1960 to 58% in 1973. On the other hand, the combined shares of the two smallest categories has slipped from 15.5% to 9.8% Tables 12 and 13 represent the number of mines and production derived from 1973 statistics from the U.S. Bureau of Mines—by mine size, mine type and region. Nearly 60% of the nation's coal mines were located in Northern Appalachia and accounted for about 46% of the total production. Auger mines accounted for 11% of the mines in the region and 2% of the production in this region. Southern Appalachia had the following distribution for its 1,586 mines— 41% underground, 34% strip and 25% auger. The Central region had 226 mines (4.8% of the national total) but accounted for a far higher proportion of "soft" coal output in 1973—i.e., 26%. In this region there were three times as many strip mines as under- ground mines and strip mines accounted for almost two-thirds of the region's coal production. Only 1% of the nation's coal mines were located in the Intermountain region but these accounted for 4% of the "soft" coal production. In the Great Plains and West regions, strip mines dominate coal production. Table 14 shows the distribution of employment, based on 1973 statistics from the U.S. Bureau of Mines. Northern Appalachian mines accounted for nearly 86,000 workers, of whom 55,000 were employed in underground mines producing over 200,000 tons per year. Small mines with coal outputs of less than 50,000 tons/yr accounted for only 15,500 employees, a little over 10% of the total. 2. Hard Coal Segment Table 15 shows the distribution of number of mines, production and employment for anthracite based on data from the Pennsylvania Department on Environmental Resources. Strip mining was the dominant mining method, accounting for 45% of the mines, 48% of anthracite production and 60% of employment. 26 ------- TABLE 11 PRODUCTION OF BITUMINOUS COAL. BY SIZE OF MINE OUTPUT Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 Over 500,000 Net Tons 202 195 204 224 238 259 274 281 275 295 307 256 280 280 200,000 500,000 Net Tons 258 225 240 242 220 224 221 244 260 263 266 315 310 308 100,000 200,000 Net Tons NUMBER 262 242 255 262 270 279 327 267 249 352 405 408 417 384 50,000 100,000 Net Tons OF MINES 396 420 414 499 553 555 589 542 533 524 617 671 617 600 PRODUCTION (THOUSANDS OF NET 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 204,999 202,923 213,772 242,548 267,363 292,707 308,868 326,578 318,938 337,683 359,516 294,171 336,604 344,380 81,013 73,118 76,458 77,411 73,893 71,897 70,177 77,011 84,118 83,370 84,297 97,661 100,313 95,074 37,204 33,694 35,878 36,001 37,540 39,498 45,220 51,787 48,822 48,770 55,729 58,096 58,523 52,629 27,894 30,325 28,831 33,745 37,985 38,390 41,335 37,695 27,890 37,108 43,310 46,920 44,072 41,707 10,000 50,000 Net Tons 2,102 2,183 2,201 2,250 2,299 2,367 2,386 2,079 1,951 1,898 2,104 1,888 1,945 2,079 TONS) 44,238 45,682 48,463 49,821 52,695 54,311 55,212 49,398 46,576 45,649 50,849 47,576 48,708 52,391 Less than 10,000 Net Tons 4,645 4,383 4,426 4,463 4,050 3,544 2,952 2,360 1,959 1,786 1,902 1,611 1,310 1,093 20,164 17,235 18,748 19,403 17,523 15,285 13,068 10,159 8,898 7,925 9,227 7,772 7,165 5,553 Total 7,865 7,648 7,740 7,940 7,630 7,228 6,749 5,873 5,327 5,118 ,601 149 ,879 4,744 415,512 402,977 422,149 458,928 486,998 512,088 533,881 552,626 545,245 560,505 602,932 552,192 595,386 591,738 Source: U.S. Bureau of Mines 27 ------- TABLE 12 1973 DISTRIBUTION OF "SOFT" COAL MINES BY SIZE OF PRODUCTION AND TYPE OF MINE Region NJ Number of Mines in Category: Northern Appalachia Southern Appalachia Central Inter-Mountain Great Plains West TOTAL >200,000 Underground 249 65 41 17 1 373 Tons /Yr /Mine Strip Auger 59 53 1 73 7 20 2 214 1 50,000-200,000 Underground 243 111 9 9 1 373 Tons /Yr /Mine Strip 345 157 37 4 2 545 Auger 18 48 — — — — 66 <50,000 Tons /Yr /Mine Underground Strip 494 475 5 12 4 1 991 1,139 336 61 3 10 1 1,550 Auger 290 340 1 631 SOURCE: U.S. Bureau of Mines ------- NJ VO Region TABLE 13 1973 DISTRIBUTION OF "SOFT" COAL PRODUCTION BY MINE SIZE AND TYPE Cumulative Coal Output (OOP Tons) By Mines Northern Appalachia Southern Appalachia Central Inter-Mountain Great Plains West TOTAL > 200, 000 Underground 147,880 33,686 55,181 8,097 315 245,159 Tons/Yr/Mine Strip Auger 29,986 . 19,059 267 95,511 13,794 31,739 3,940 194,029 267 50,000-200, Underground 24,583 10,637 930 1,283 96 37,529 000 Tons/Yr/Mine Strip 31,161 14,717 2,552 607 291 49,328 Auger 1,597 4,715 6,312 <50,000 Underground 8,989 7,484 89 214 15 16 16,807 Tons/Yr/Mine Strip 25,254 5,659 978 16 62 8 31,977 Auger 3,930 5,191 38 9,159 SOURCE: U.S. Bureau of Mines ------- TABLE 14 1973 DISTRIBUTION OF EMPLOYMENT IN "SOFT" COAL MINES BY SIZE AND TYPE OF MINE u> o Total Number of Employees in Category Northern Appalachia Southern Appalachia Central Inter-Mountain Great Plains West Sub-Totals >200,000 Tons/Yr/Mine Underground Strip Auger 55,294 4,750 13,997 3,228 45 12,043 9,795 2,462 784 126 1,380 375 83,922 20,312 45 50,000-200,000 Tons/Yr/Mine Underground Strip Auger 9,111 6,183 285 4,435 2,529 787 178 597 392 38 38 11 14,154 9,358 1,072 <50,000 Tons/Yr/Mine Underground Strip Auger 3,861 5,428 979 3,089 986 866 24 160 65 29 11 4 16 1 7,066 6,581 1,854 Underground Strip Auger 68,266 16,361 1,264 21,521 6,743 1,698 12,245 10,552 2,919 824 9 175 1,395 16 376 105,142 36,251 2,971 TOTAL -144,364 Sub-Totals SOURCE: Derived from U.S.B.M.'s manpower productivity data. ------- Number of Mines 1973 Production (000 tons) Mine Employment TABLE 15 CHARACTERIZATION OF ANTHRACITE INDUSTRY (1973) BY MINE SIZE AND MINING METHOD UNDERGROUND >50,000 Tons /Mine 2 243 286 <50,000 Tons /Mine 70 483 430 STRIP >50,000 Tons /Mine 17 2,336 814 <50,000 Tons /Mine 99 943 819 CULM BANKS >50,000 Tons /Mine 12 1,393 104 <50,000 Tons /Mine 50 991 223 u> Source: 1973 Annual Report of the Pennsylvania Department of Environmental Resources ------- The trend for both strip and underground mines has been one of declining output. In 1963 strip mines accounted for 7.5 million tons of anthracite compared with 2.3 million in 1973. This is due to the scarcity of econom- ically strippable reserves. The decline in underground anthracite output may be related to the fact that it is becoming increasingly more expensive to extract anthracite by underground methods from steeply dipping seams at greater depths. Culm and silt bank recovery is currently a promising source of anthracite and its proportionate share is likely to decrease. 3. Coal Cleaning/Preparation "Soft" Coal. Table 16 indicates that only about half of U.S. "soft" coal production in 1973 had been cleaned prior to shipment to the consumers. Ninety-five percent of the active cleaning plants were located in Northern and Southern Appalachia and in the Central Region. It should be pointed out that over 96% of the cleaned coal shipments in 1973 involved "wet" processes which had the potential of generating liquid effluents. A more detailed breakdown of the cleaning plants by states is given in Table 17. It is worth indicating that the metallurgical coal producing states (Alabama, Eastern Kentucky, Pennsylvania, Utah, and West Virginia) in 1973 accounted for a combined total of about 250 of the 382 cleaning plants, producing 159 million tons of cleaned coal (55% of the total). In addition, the high-sulfur coal states of Ohio, Western Kentucky, Illinois, and Indiana contributed 81 plants and above 102 million tons of coal. Coal cleaning is not generally practiced in the sub-bituminous and lignitic coal regions of the Great Plains and the West. Table 17 also suggests that jigs, heavy media separation, and water tables are, in that order, the most popular mechanical cleaning techniques. Their percentage contributions to the total cleaned coal output in 1973 were respectively 46%, 31%, and 12%. "Hard" Coal. To remove shale, slate, and other contaminants recovered along with the coal during mining, and to meet the quality specifications set by the consuming markets, it is necessary to clean all non-dredge Pennsylvania anthracite prior to shipment. Table 18 is a listing of the major cleaning plants operating in 1973. Estimated daily cleaned coal capacity is about 36,600 tons, equivalent to an annual value, on the basis of 250 operating days per year at full capa- city, of 9.2 million tons. Actual preparation plant output in 1973 (excluding dredge production) was 6.4 million tons, suggesting an apparent capacity utilization in that year of about 70%. It may be noted from Table 18 that the heavy-media, washing, and water table techniques are the preferred methods of anthracite preparation. 32 ------- TABLE 16 1973 REGIONAL CHARACTERIZATION OF "SOFT" COAL CLEANING PLANTS Region Northern Appalachia Southern Appalachia Central Inter-mountain Great Plains West , Other States Number of Cleaning Plants 241 54 67 10 N.A. 3 7 Total 382 Cleaned Coal Production (000 Tons) 153,687 35,114 88,107 5,237 N.A. 3,312 3.460 288,918 Percent of Total Coal Production 48.8 1. Includes Arizona, Arkansas, Iowa, Kansas, Maryland, Missouri, Montana, New Mexico, North Dakota, Texas, and Wyoming Source: U.S. Bureau of Mines 33 ------- State Alabama Alaska Colorado Illinois Indiana Kentucky: Eastern Western Ohio Oklahoma Pennsylvania (Bituminous) Tennessee Utah Virginia Washington West Virginia Other States TOTAL TABLE 17 1973 DISTRIBUTION OF MECHANICAL COAL CLEANING PLANTS, BY STATES No. of Cleaning Plants 19 1 3 36 10 33 18 17 3 68 2 7 32 2 124 5 Total Cleaned No. Coal Production, (103 11 1 48 19 22 20 14 45 1 3 17 3 75 3 tons) ,705 50 ,662 ,091 ,699 ,264 ,005 ,588 312 ,731 ,145 ,575 ,696 ,262 ,672 ,460 Jigs 12 — 14 5 20 88 13 1 2 16 1 42 2 of Plants Air Tables _rT — 2 — 3 2 25 1 — 8 — 18 3 Employing Flotation 3 -Not Avail. 1 4 — 11 — -Not Avails 13 — 1 10 — 47 1 Cleaning Heavy- Media 7 iV.1 n_™^ 3 12 — 31 5 ,vi _ ___ 29 2 1 17 — 97 1 Methods* Water Tables 12 — 4 1 21 1 15 1 1 12 — 57 — Washer 3 — 10 5 15 6 6 — 1 6 — 15 2 382 288,918 Clean Coal Production by each method (thousand tons): 136 62 91 205 125 69 132,655 10,505 14,201 88,203 34,935 8,418 *A plant may employ more than one cleaning method. Source; U.S. Bureau of Mines, 1973 Mineral Industry Surveys; 1974 Keystone Coal Industry Manual. ------- TABLE 18 PENNSYLVANIA ANTHRACITE PREPARATION PLANTS. 1973 Company/Location Blaschak Coal Co., Inc., Nicholas Blue Coal Corp., Ashley Taylor Buckley Coal Co., Eckley Cass Contr. Co., Marlin Gilberton Coal Co., Gilberton Glen Burn Colliery, Shamokin Gowen Coal Co., Fern Glen Greenwood Min. Co., Tamaqua Honey Brook Mines, Inc., Audenreid Jeddo-Highland Coal Co., Jeddo Lehigh Valley Anthr. Inc., Swoyerville Hazleton Shenandoah Manbeck Dredging Co., Tremont Pine Creek Coal Co., Spring Glen Reading Anthracite Co., Pottsville St. Nicholas Trevorton Reidinger Coal Service, Paxinos Rosinl Coal Co., Shamokin Thos. W. Schenck Coal Co., Pine Grove Sun Coal Co., Inc., Atlas Swatara Coal Co., Minersville Underkoffler Coal Service, Lykens Plant Name Blaschak Huber Taylor Eckley Marlin Gilberton Glen Burn Gowen Greenwood Audenreid Jeddo #7 Harry E Hazleton Shaft Mammoth Westwood Pine Creek New St. Nicholas St. Nicholas Trevorton Reidinger Carbon Run Breaker Diamond Breaker Underkoffler Cleaned Coal Capacity (tons/day) 1,050 7,500# 800 450 1,000 1,800 600 6,000 2,000 3,500# 1,625# 400 400 3,795# 350 1,000 NA 2,000 800 500 Cleaning Method(s)* W HM-W HM HM-W HM-W HM-W HM HM-WT HM-F-W HM HM-F HM-W HM-W HM-W WT WT-W HM-W W HM-W HM J-WT-W HM HM HM-WT HM * J F HM WT W = Jigs, jig washers - Flotation, froth flotation = Heavy media = Water tables = Washery # ADL Estimate Source; 1974 Keystone Coal Industry Manual, and ADL Estimates. 35 ------- 4. Relationship of Segments to the U.S. Coal Mining Industry Tables 19 and 20 summarize the relationship of each segment to the total "soft" and "hard" coal industry, in terms of the number of mines, production and employment. This information can be used to judge the im- portance of any significant adverse impacts to a segment as a result of compliance with Interim Final Effluent Guidelines, as it relates to U.S. Coal Mining Industry. G. COAL TRANSPORTATION In 1973, 52% of all coal was moved entirely by rail, nearly 19% was moved wholly or partly by barge, 12% by truck and lesser amounts on the Great Lakes, tidewater conveyor belts, and pipelines. Rail freight rates vary between 7 and 20 mils per ton-mile depending on location and distance. It costs about $7.00 to move a ton of coal 1,200 miles. H. GOVERNMENT INFLUENCE Spurred by public concern, government activity has focussed on (1) pre- serving or restoring the environmental quality of mined land and (2) en- suring the health and safety of the mine workers. Although President Ford recently vetoed bill HR 25, other state and federal laws regulate strip mining. State Strip Mine Laws. About thirty-three states have laws relating to strip mining, with most of the current legislation enacted since 1965. All of the state laws provide for an adminstrative agency to oversee regulatory programs. The assigned responsibilities consist of approving permits, super- vising mines, collecting bonds, and approving reclamation work. Three staces, Pennsylvania, Washington, and Tennessee, require an additional per- mit from the state water pollution control agency. Although state laws on strip mining are fairly extensive, they are generally regarded as sensible by the industry. Enforcement, which has been weak and spotty, is becoming more effective. Leasing of Federal Lands for Coal Mining. The Bureau of Land Manage- ment under the Department of the Interior is charged with the leasing of Federal lands for coal mining. It has proposed new regulations that will impose rigorous land reclamation requirements on Federal lands leased for coal mining. Federal Air-Quality Standards. While compliance with primary standards for the sulfur dioxide concentration of ambient air was set for July 1, 1975, compliance with secondary standards was set for October I, 1977. Individual air quality control regions have already submitted implementation plans, 36 ------- TABLE 19 NUMBER OF MINES, PRODUCTION AND EMPLOYMENT AS PERCENTAGES N. Appalachia No. of Mines Production Employment S. Appalachia No. of Mines Production Employment Central No. of Mines Production Employment Intermountain No. of Mines Production Employment Great Plains No. of Mines Production Employment West No. of Mines Production Employment Note; x = <0.04% Source: U.S. Bureau of Mines. Large 5.3 25.0 38.3 1.4 5.7 9.7 0.9 9.3 8.3 0.4 1.4 1.7 X 0.1 0.1 OF THE Deep Medium 5.1 4.2 6.3 2.3 1.8 3.1 0.2 0.2 0.1 0.2 0.2 0.3 X X X SOFT COAL Small 10.4 1.5 2.7 10.0 1.3 2.1 0.1 X X 0.3 X 0.1 0.1 X X X X X SEGMENT Large 1.2 5.0 3.3 1.1 3.2 2.2 1.5 16.1 6.8 0.2 2.3 0.5 0.4 5.4 1.0 X 0.7 0.3 OF THE Strip Medium 7.3 5.3 4.3 3.3 2.5 1.8 0.8 0.4 0.4 0.1 0.1 X X 0.1 X U.S. INDUSTRY (1973) Auger Small Large Medium 24.0 x 0.4 4.3 x 0.3 3.8 x 0.2 7.1 x 1.0 1.0 0.1 0.8 0.7 x 0.6 1.3 0.2 0.1 0.1 x x 0.2 x X X X X Small 6.1 0.7 0.7 7.2 0.9 0.6 x x X Subtotals 59.8 46.2 59.5 33.4 17.2 20.8 4.8 26.3 15.8 1.1 4.1 2.6 0.8 5.4 1.1 0.1 0.7 0.3 ------- TABLE 20 NUMBER OF MINES. PRODUCTION AND EMPLOYMENT AS PERCENTAGES OF THE HARD COAL SEGMENT OF THE U.S. INDUSTRY (1973) Deep Strip Subtotals Large Small Large Small No. of Mines 0.8 28.0 6.8 39.6 75.2 Production 3.8 7.5 36.6 14.8 62.7 Employment 10.7 16.1 30.4 30.6 87.8 Source: U.S. Bureau of Mines. 38 ------- had them approved by the EPA, and set them into effect locally. Neverthe- less, when these regulations will be enforced is unclear. A second uncer- tainty is how to achieve acceptable sulfur dioxide levels in the stack-gas when high sulfur coals are used. Since this uncertainty is enough to cur- tail the use of high sulfur coals severely, amendments have been proposed to extend the compliance schedules of the Clean Air Act and permit the use of intermittent control systems under certain circumstances. The Federal Coal Mine Health and Safety Act of 1969. This act was passed to reduce the hazards of underground coal mining. It seeks to ensure adequate underground ventilation at the coal face, ensure proper cleaning and rock dusting practices, provide adequate roof support, limit the rate of advance of continuous miners in order to keep the operator under bolted roof, and regulate the specification of underground coal mining equipment. 39 ------- III. IMPACT ANALYSIS In this chapter, we take a look at the sources and characteristics of mine drainage; the proposed EPA Interim Final Guidelines and state water regulations; and the effect of compliance with Interim Final Guidelines based on a model mine treatment plant approach. A. SOURCES AND CHARACTERISTICS OF MINE DRAINAGE Water handled and discharged in coal mining and preparation may generally be classified into two broad categories: (1) "process" water from either coal preparation by wet methods or that used for dust and fire protection and (2) "mine" drainage. "Process" Water. The coal mining and preparation industry consumes relatively little "process" water. The major usage of "process" water is in preparation plants. A majority of wet cleaning plants recycle a major portion of their process water. Suspended solids consisting of semi-col- loidal particles of coal, shale and clay form one of the principal prep- aration plant pollutants. Additionally, some minerals and salts such as chlorides and sulfates of alkalis and alkaline earth metals dissolve easily in water. In certain circumstances, these salts significantly change the pH of the water. Mine Drainage Discharge. Compared with process water discharges, the handling and disposal of unwanted mine drainage water is a much larger problem. The amount and nature of mine discharge is determined largely by the mining methods and the characteristics of the mine site. Two important mine characteristics which affect drainage properties are the geologic history and the chemistry of the coal-bearing strata. Mine drainage water originates from direct precipitation or from groundwater. Surface mining areas are directly exposed to precipitation and the nature of the exposed materials will affect the quality of the surface runoff. The degree of groundwater discharge depends on the depth of penetration made by cutting into the groundwater zone of the sub-surface. In general, the topographically high surface mines will encounter the least amount of groundwater and will provide smaller quantities of mine drainage, unless the surface mining intersects a water-filled underground mine. Water encountered in deep mines may come from different sources. In mines with light cover and without a firm solid roof, rainwater may seep directly into mine workings. This may also be true of deeper mines where pillar falls have broken the roof to the surface. In such cases, except where passing under a year round stream, the amount of water generated is usually pretty closely related to the precipitation in the region—more water during the wet months, less during the dry. The deeper a mine is, 40 ------- the longer it is before changes in rainfall are reflected in the quantity of drainage generated. Another source of water in underground mines, not connected with seasonal changes, is "old" water, accumulated over a period of time in abandoned workings of the mine, or from flooded adjacent mines. Here the water filters through coal and parting, or comes up through cracks in the floor. Similarly, core holes drilled to prospect the coal property can be a source of water. Water must be disposed from the mining areas, so that mining can con- tinue smoothly. Because of the interaction between mineral wastes from mining and related operations and mine waters, dissolved or suspended pol- lutants are generated. Pyrite oxidation leads to the production of acid in mine drainage ("acid mine drainage"). One of the main characteristics of wastes from coal mining operations is that they are generally unrelated to production quantities. The prin- cipal treatment method involves the use of alkaline chemicals, mainly hydrated lime and limestone and is usually combined with an aeration process for ferrous iron removal. B. REGIONAL DISTRIBUTION OF ACID MINE DRAINAGE Acid mine drainage from coal mining activity is concentrated in the Appalachian states particularly Pennsylvania, West Virginia, Maryland, Ohio, and Kentucky. It occurs to a limited extent in Illinois. C. INTERIM FINAL EFFLUENT GUIDELINES The Interim Final Effluent Guidelines proposed by the U.S. Environ- mental Protection Agency will impose a pH limitation of 6 to 9 on point source discharges from existing coal mines and preparation plants.to navigable waters of the United States. D. STATE WATER REGULATIONS Almost all the states have water quality standards which are essentially stream standards based on the designated usage of the water. Many states have approved programs for the National Pollutant Discharge Elimination System (NPDES). This system requires a discharger to obtain a permit, which specifies limitations on the pollutants being discharged. Some states have effluent limitation based on state laws regulating waste discharges to state waters. The pH limitation for certain states are summarized in Table 21. Usually water quality standards are stricter than effluent standards. If there is a potential conflict, some state regulations require suitable limitations of pollutants (usually in the writing of the permit) to ensure 41 ------- TABLE 21 EFFLUENT LIMITATIONS FOR CERTAIN STATES State PH Colorado Illinois (NPDES) Indiana (NPDES) Maryland (NPDES) Ohio (NPDES) Pennsylvania (NPDES) Tennessee W. Virginia 6.0-9.0 (standards for waste discharge) 5.0-10.0 (in case of violation of WQS, suitable limitation to comply with WQS) 6.0-8.5 (WQS) Regulation on disposal of gob and coal fines so as create minimal acid mine drainage and minimum deposit of coal fines in state waters. Law similar to Illinois in that WQS cannot be violated. 6.0-8.5 (effluent limitation) Standards on industrial waste 5.0-9.0 6.0-9.0 6.0-9.0 (WQS) 6.0-8.5 (predominantly acid streams relaxed to 5.5) Source: Environmental Reporter - State Water Laws, The Bureau of National Affairs, Inc., Washington, D. C. 42 ------- TABLE 22 COSTS OF MEETING INTERIM FINAL EFFLUENT GUIDELINES IN NORTHERN APPALACHIAN MINES Large (1,000,000 tpy) Capital ($) 0 & M , Chemicals ($/yr) Deep 61,250 60,600 Surface 61,250 20,000 Medium (100,000 tpy) Capital ($) 0 & M1, Chemicals ($/yr) 3,500 5,300 13,000-26,000' 6,600 Small (50,000 tpy) Capital ($) 0 & M1, Chemicals ($/yr) 3,500 2,900 6,000-12,000' 3,500 0 & M includes sludge removal. The upper range represents having to build 2 treatment facilities over the life of the mine, as surface mines are not fixed at a location. Source; EPA, B. M. Jarrett's memo of August 27, 1975. (Effluent Guidelines Project Officer.) ------- TABLE 23 COSTS OF MEETING INTERIM FINAL EFFLUENT GUIDELINES IN NORTHERN APPALACHIAN PREPARATION PLANTS Size: 1 million tons per year, 25-year life, 350-400 tons per hour Capital ($) Settling Basin Lime Feeders Total 3,000 12.000 15,000 Operating Costs ($/yr) 0 & M 1,000 Chemicals 2.500 0 & M and Chemicals 3,500 Source; EPA, B. M. Jarrett's memo of August 27, 1975 and discussions with him. (Effluent Guidelines Project Officer.) 44 ------- that water quality standards are not violated. Based on a review of the Environmental Reporter - State Water Laws (compiled by the Bureau of National Affairs, Inc.)> a survey by the EPA of water pollution control agencies and our telephone conversations with state water pollution control agency personnel, we find that a number of state agencies have jurisdiction on the control of effluents. Of the current state laws limiting the pH of discharges, the most lenient standard is pH 5-10. We found that local conditions may be taken into account in the writing of permits. For example, West Virginia allows discharge with pH of 5.5 if the receiving stream is predominantly acid. In Pennsylvania where the effluent standards for coal mining are pH 6 to 9 effluents may be allowed from a neutralization plant with a pH greater than 9 into predominantly acid streams for its beneficial effect on the stream. Our study of state water laws is not exhaustive in that we have not looked at all agencies that might have control on the discharge of effluents. We do not know the extent to which state laws are being enforced. An anal- ysis of such enforcement practices is beyond the scope of this study. E. COSTS OF COMPLIANCE WITH INTERIM FINAL GUIDELINES The costs of compliance with Interim Final Guidelines were provided by EPA—(B.M. Jarrett's memo of August 27, 1975, Effluent Guidelines Project Officer, Appendix A). These represent neutralization costs, allowing suf- ficient retention time for completion of the neutralization reaction and stabilization of pH for model plants in the Appalachian region. We have used these costs in the assessment of impact. The compliance costs have been summarized in Tables 22 and 23. F. COAL PRODUCTION COSTS Numerous factors, often interacting complexly, affect the cost of coal production. These factors vary between mining regions, between mines in the same region, and even within a given mine. Of the physical factors, seam thickness and depth below the surface dominate since they largely determine the system used in mining the deposit. Some of the other factors influencing coal production costs are mining technology, mine size, opera- ting conditions and labor productivity. Since conditions vary from one mine/region to the other, no single production model will be applicable to all coal mines. In this section, we have derived model mining costs by type of mining—underground or strip— and by mine size for the Appalachian region. The actual costs experienced 45 ------- TABLE 24 SUMMARY OF ESTIMATES OF INVESTMENT AND OPERATING COSTS FOR MODEL UNDERGROUND COAL MINES IN APPALACHIA (December 1974) Size (10° tpy) Seam Thickness (inches) Investment Cost ($/annual ton) Capital Investment 1.0 66 26.68 Medium 0.1 48 11.42 Small 0.05 48 12.32 Operating Cost ($/ton) Direct Costs Indirect Costs Insurance and Taxes Subtotal Depreciation TOTAL 9.74" 0.94! 7.05 1.07* 0.18 8 8.30 1.14 10 6.18 1.10f 0.21 7.49 1.23 8 10 9.44 8.72 Average mine life - 20 years. Average mine life - 10 years. Based on a union labor rate $11,890 of mine life per man-year and super- visory labor rate of $16,100 per man-year. 4 Based on a non-union labor at $9,500 per man-year and salaried rate of $12,825 per man-year. At 15% of labor and supplies. 6At 25% of labor and supplies. At 2% of initial capital investment, does not include Federal Income Tax. 8 At 2% of initial mine investment, does not include Federal Income Tax. 15-year straight line depreciation of initial investment. 10 10-year straight line depreciation of initial investment. Source; ADL estimate, Phase II Report Industry Charactrization, Economic Impact of Proposed Effluent Guidelines on the Coal Mining Industry. 46 ------- TABLE 25 SUMMARY OF ESTIMATES OF INVESTMENT AND OPERATING COSTS FOR MODEL SURFACE COAL MINES IN APPALACHIA e (106 tpy) e of Mine (December 1974) Large1 Medium2 Small2 1.0 0.1 0.05 Contour Contour Strip Investment ($/annual ton) Capital Investment 30.64 9.55 7.51 Operating Costs ($/ton) Direct Costs Indirect Costs Insurance & Taxes Subtotal Depreciation Total 6.29' 0.49- 5.29 0.38f 5.29 0.52* 0.61 7.39 2.049 9.43 0.19 5.86 0.9610 6.82 0.15° 5.96 0.7510 6.71 8 Average mine life - 20 years. 2 Average mine life - 10 years. 3 Based on an hourly labor rate of $9,700 per man-year and salaried at $13,200 per man-year. 4 Based on a non-union labor at $9,500 per man-year and salaried rate of $12,850 per man-year. At 15% of labor and supplies. At 25% of labor and supplies. At 2% of initial capital investment, does not include Federal Income Tax. 10 At 2% of initial mine investments does not include Federal Income Tax. 5-year straight line depreciation of initial investment. 10-year straight line depreciation of initial investment. Source; ADL estimate, Phase II Report Industry Characterization, Economic Impact of Proposed Effluent Guidelines on the Coal Mining Industry. 47 ------- by a specific mine will approach those synthesized in the model only to the extent that its operating conditions approximate those assumed in the derivation. Tables 24 and 25 present a summary of our estimates for costs in the Appalachian region for small, medium, and large underground and surface mines. For large underground and surface mines, capital requirements were derived from U.S. Bureau of Mines estimates with suitable revisions and escalations to December 1974. These are presented in terms of the capital investment to put a mine into operation (including items such as the cost of land acquisition, exploration and development, working capital and initial cost of equipment and their installation, preparation plants and loading facilities). We have hypothesized that medium and small mines operate under a different set of coal placement, availability, and market conditions. They are likely to lower their costs by using used and/or rebuilt equipment, employ fewer people (doing multiple jobs) and operate in coal seams rela- tively close to the point of entry such as into the high wall of former strip operations. In such mines one would not probably have extensive entries and elevators. This philosophy is also extended in the calculation of operating costs. The nature of these operations is reasoned to be such that they could not survive (except in unusual spot market conditions) unless their costs are less than (or at most equal to) those experienced by the large mines. Profitable operation would hinge on the use of minimal equipment, the ingenuity of the operator in devising practical mining short- cuts, the ability of personnel to perform a wide variety of jobs, and the existence of very favorable geologic and topographic mining conditions amenable to utilization of minimum equipment and personnel. Coupled with these factors lower wage rates have been assumed as well as a faster de- preciation schedule for purchased equipment. G. COAL PRICES In considering coal markets, we have to look at three commodities— metallurgical, low-sulfur, and high-sulfur steam coal—and whether coal is sold through long term contracts at specified prices or on the spot market. Until the mid-1960's coal contracts were generally fixed price and long term particularly for steam coal. In a market where consumption was declining, such contracts were acceptable both to the producer and the consumer. However, with increasing demand for coal and escalating costs such contracts have become unacceptable to the producer. Recent contracts are shorter term and generally include provision for pass-through of full costs on an annual basis. Presently, 80-85% of all coal is sold on long term contracts. Historically, coal price levels have been based on production costs, which vary greatly by type of mining and geography. The average f.o.b. price for all coal was $8.53/ton in 1973; that is, $10.84/ton for under- 48 ------- TABLE 26 State Alabama Illinois Indiana Kentucky Maryland Pennsylv Tennessee W. Virginia U.S. F.O.B. MINE WEIGHTED VALUE ($/ton) ! Underground 30.30 13.89 11.12 - 21.25 mi a : 13.70 da _ OF COAL FOR 1974 Strip Average 17.84 21.79 5.33 9.38 8.70 10.00 approx. 16.00 20.58 20.81 18.00 22.05 18.02 approx. 21.00 15.00 Source; USBM, preliminary figures. 49 ------- ground coal, $6.11/ton for strip and $7.39/ton for auger coal. The average f.o.b. price varied from a high of $13.37/ton in Arkansas to a low of $2.82/ton in Montana. The average f.o.b. price of coal in 1974 was $15.00 per ton according to Bureau of Mines preliminary estimates. The average f.o.b. price of coal in 1974, based on preliminary data from the Bureau of Mines, is listed in Table 26 for selected states. These average figures include coal sold under long term contracts and in the spot markets. Spot prices change in response to short term supply-demand imbalances. When demand exceeds supply, spot prices tend to rise quite quickly in re- sponse. Contract prices on the other hand are not as quickly influenced by such an imbalance. Should premium prices prevail in the spot market over a period of time, producers can renew long term agreements from a position of considerable strength. Since the oil embargo and the lifting of price controls in the spring of 1974, the spot price for coal has risen substantially due to shortages, higher price levels for competing fuels, and the anticipation of a long coal strike in November 1974. During 1974 spot price quotations advanced 149% for metallurgical in the low to medium volatile grades, 1562 in the high volatile grades, and 44% for utility grade coal. Around March 1975, prices for low-sulfur utility coal were around $20-25/ton compared to a high of $35-50/ton in 1974. Prices of metallurgical grades had declined except for low to medium volatile grades which were holding around $45/ton. H. IMPACT ANALYSIS We have considered the possible impact from two viewpoints: (1) Status of Current State Regulations (2) Impact based on model mines and treatment plants in Appalachia. Acid mine drainage is concentrated mainly in the Appalachian region of the country, principally Pennsylvania, West Virginia, Maryland, Ohio, and Kentucky and to a limited extent in Illinois. The coal industry is composed of a large number of mines that are widely distributed geographically. It was not possible to do a mine-by-mine analysis as costs by specific mines are not available. We have, therefore, decided to look at the impact of Interim Final Guidelines based on model mine/preparation plant and model treatment plants. We assumed that such a mine is not in compliance with the Interim Final Guidelines and would therefore have to incur additional capital expenditure and operating costs. 50 ------- TABLE 27 EFFECT OF INTERIM FINAL GUIDELINES ON ANNUALIZED OPERATING COST OF MODEL UNDERGROUND MINES Category Size (106tpy) PRODUCTION Capital Investment ($) 26 Direct, Indirect, Insurance Tax ($) 11 Depreciation ($) 1 Interest Expense^- C$) Annual Operating Cost C$) 13 Before Interim Guidelines ($/ton) WATER TREATMENT Capital: Mine ($) Prep. Plant ($) 2 Depreciation, Interest ($) 0 & M, Chemicals: Mine ($) Prep. Plant ($) Annual Treatment Cost ($) Annual Operating Cost After Interim Guidelines ($/ton) Water Treatment Cost _. inn fv* Large 1.0 ,680,000 ,210,000 ,780,000 711,000 ,701,000 13.70 61,250 15,000 76,250 11,401 60,600 3,500 75,500 13.78 n fi Medium 0.1 1,142,000 830,000 114,000 30,500 974,500 9.75 3,500 3,500 500 5,300 5,800 9.80 n A Small 0.05 616,000 374,500 61,500 16,000 452,000 9.04 3,500 3,500 500 2,900 3,400 9.11 n ft Production Cost B.I.G. Debt to equity ratio 1:2; interest rate 2 Amortized at 8% over 10 years. Source; Arthur D. Little, Inc. estimates and EPA estimates. 51 ------- TABLE 28 EFFECT OF INTERIM FINAL GUIDELINES ON ANNUALIZED OPERATING COST OF SURFACE MINES Category Large Medium Small Size (106tpy) 1.0 0.1 0.05 PRODUCTION Capital Investment ($) 30,640,000 955,000 375,500 Direct, Indirect, Insurance Tax ($) 7,390,000 586,000 298,000 Depreciation ($) 2,040,000 96,000 37,500 Interest Expense1 ($) 817,000 25.500 10.000 Annual Operating Cost ($) 10,247,000 707,500 345,500 Before Interim Guidelines ($/ton) 10.25 7.08 6.91 WATER TREATMENT Capital: Mine ($) 61,250 13,000-26,OOO3 6,000-12,OOO3 Prep. Plant ($) 15.000 — — 76,250 13,000-26,000 6,000-12,000 Depreciation, Interest ($) 11,400 1,950- 3,900 900- 1,800 0 & M, Chemicals: Mine ($) 3,500 Prep. Plant ($) 20.000 6.600 3.500 Annual Treatment Cost ($) 34,900 8,550-10,500 4,400- 5,300 Annual Operating Cost After Interim Guidelines ($/ton) 10.28 7.16-7.18 7.00-7.02 Water Treatment Cost (%) Q>3 2-1 5 1<3.1>5 Production Cost B.I.G, Debt to equity ratio 1:2; interest rate 8%. 2 Amortized at 8% over 10 years. 3 The upper range represents two treatment facilities over the life of the mine. Source; Arthur D. Little, Inc. estimates and EPA estimates. 52 ------- 1. Status of Current State Regulations Most of the states, where acid mine drainage is likely to occur, have some form of regulation limiting the pH of discharges either as a result of effluent limitations or water quality standards. The least stringent of these seems to be a pH limitation of 5-10 in Illinois. However, in writing permits in Illinois a more stringent standard such as pH 6-8.5 may be im- posed if the water quality standards are likely to be violated under the more lenient effluent standards. It is not clear if all effluents arising from coal mining and preparation are controlled, nor do we know the extent to which state laws are enforced. We feel that, if state laws are strictly enforced, the additional impact arising out of Interim Final Guidelines would be minimal. An analysis of such enforcement practices is beyond the scope of this study. 2. Impact Based on Model Mine/Treatment Plant on the "Soft" Coal Segment a. Effect on Mines—Annualized Operating Costs Tables 27 and 28 summarize the effect of meeting Interim Final Guide- lines on the annualized operating costs of model underground and surface mines for soft coals. In addition to the cost items presented in Tables 22 and 23, the annual operating costs before interim final guidelines in- clude interest expenses based on assumed debt to equity ratio of 1:2 and 8% interest rate. The large mine category includes a preparation plant and therefore water treatment costs associated with a preparation plant are included in this category. The capital costs for water treatment are assumed to be financed by loans that are amortized at 8% over a 10-year period. The annual costs after compliance with Interim Effluent Guidelines increase less than 12$/ton (1.5% maximum). These increases are not very significant, in comparison to the average price of all coal in 1974 of $15/ton. b. Capital Requirements Table 29 summarizes the capital requirements for meeting Interim Final Guidelines. In this table, capital requirements for water treatment are compared to the capital investment of each model mine. We find for deep mines that the capital needed for building treatment facilities to meet Interim Guidelines is small compared to the mine invest- ment (less than 1%). For surface mines in the medium and small category these ratios tend to become more significant (less than 4%). c. Mine Profitability In this section we have tried to estimate the profits of model medium 53 ------- TABLE 29 CAPITAL REQUIREMENTS FOR MEETING INTERIM FINAL EFFLUENT GUIDELINES BY MINE TYPE Size, Category Capital Investment($) CI Deep Surface Large Medium Small Large Medium Small 26,680,000 1,142,000 616,000 30,640,000 955,000 375,500 Ul Capital for ($) Meeting Interim Effluent Guidelines °WT 76,250 3,500 3,500 76,250 13,000 6,000 (26,000) (12,000) Capital for Water(%) Treatment to Capital Investment /C — x 100^ 0.3 0.3 0.6 0.25 1.4 (2.7) 1.6 (3.2) Figures in parenthesis include cost of two treatment plants over the life of the mine as surface mines are not fixed in location. ------- TABLE 30 ESTIMATED EARNINGS OF MODEL SURFACE MINES BEFORE AND AFTER INTERIM FINAL GUIDELINES Size, Category Size (tpy) Price of Coal ($/ton) Sales Revenue Annual Costs Gross Profits Tax (48% Gross Profits) After Tax Profits % Change in After Tax Profits Due to Effluent Guidelines (%) Medium 100,000 16.00 Before($) After($) Small 50,000 16.00 Before($) After($) 1,600,000 707,500 892,500 428,400 464,100 1,600,000 716,050 (718, OOO)1 883,950 (882,000) 424,300 (423,400 459,650 (458,600) 800,000 345,500 454,500 218,200 236,300 800,000 349,900 (350,800) 450,100 (449,200) 216,000 (215,620) 234,100 (233,580) 1.0-1.2 0.9-1.2 Figures in parentheses include costs of two treatment plants over the life of the mine as surface mines are not fixed in location. 55 ------- TABLE 31 EFFECT OF COAL PRICES ON THE AFTER TAX PROFITS OF MODEL SURFACE MINES BEFORE AND AFTER COMPLIANCE WITH INTERIM FINAL GUIDELINES Value of Coal f.o.b. Mine Medium Small ($/ton) 16. 15. 14. 13. 00 00 00 00 Before($) 464 412 360 308 ,100 ,100 ,100 ,100 After 459, (458, 407, (406, 355, (354, 303, (302, ($) 650 600)1 650 600) 650 600) 650 600) Change (%) 1.0 (1.2) 1. (1. 1. (1. 1. (1. 1 3) 2 5) 4 8) Before($) 236,300 210 184 158 ,300 ,300 ,300 After($) 234,100 (233,580) 208,100 (207,580) 182,100 (181,580) 156,100 (155,580) Chang e(%) 0.9 (1.2) 1.0 (1.3) 1.2 (1.5) 1.4 (1.7) Figures in parenthesis include costs of two treatment plants over the life of the mine, as surface mines are not fined in location. 56 ------- TABLE 32 EFFECT OF INTERIM FINAL. GUIDELINES ON CAPITAL REQUIREMENTS AND ANNUALIZED OPERATING COSTS OF MODEL PREPARATION PLANTS Size (106 tpy) 1.0 Coal Preparation Capital, CI($) 6,700,000 Operating Cost($) 550,000 Depreciation, Interest ($) o26,000 Annual Operating Cost before Interim Guidelines($) 1,126,000 ($/ton) 1.13 Water Treatment Capital, CWT($) 15,000 0 & M, Chemicals 3,500 2 Depreciation, Interest 2,250 Annual Treatment Cost($) 5,750 Annual Operating Cost after Interim Guidelines($/ton) 1.13 Water Treatment Cost -,nn/<>/\ n c Production Cost B.I.G.X 100U) °'5 Capital for Water Treatment to Capital Investment (%) 0.2 Debt to equity ratio 1:2, interest rate 8% 2 Amortized at 8% over 10 years. Source; Arthur D. Little, Inc. Estimates and EPA Estimates. 57 ------- and small surface mines—mines whose capital expenditure for pollution control as a percent of capital requirements was around 1-3%. Based on preliminary statistics from the Bureau of Mines, the average value per ton f.o.b. mine for Pennsylvania and W. Virginia coal for 1974 was $18 and $21/ton. We estimate the strip coal value for Pennsylvania and W. Virginia at $16/ton. Table 30 summarizes our estimates of earnings of model surface mines. The possible change in earnings arising out of compliance with Interim Final Guidelines, assuming that all treatment costs are passed on, is be- tween 0.9-1.2%. Based on estimated 1974 earnings it would not be difficult for such operations to raise the capital for pollution control. If the prices were $3/ton lower, the change in earnings due to compliance with Interim Effluent Guidelines would still be small (less than 2%). The ef- fect of price on profits is presented in Table 31. 3. Impact on Anthracite Segment In the United States, anthracite is mined predominantly in Pennsylvania. According to the memorandum of July 2, 1975, by Mr. B. M. Jarrett (Appendix B), "drainage from active mines is treated to meet Pennsylvania effluent stan- dards of less than 7 mg/1 Fe, alkalinity greater than acidity, pH6-9; or is effectively not discharged to a receiving stream with drainage going to abandoned mines; or the mine is located in one of ten water sheds covered in the Pollution Abatement Escrow Fund, Pennsylvania Act 443, 1968 in which case the mine can discharge to a receiving stream untreated mine drainage and pay $0.15 per saleable ton mined." Consequently, there would be no additional expenditures necessary to comply with the Interim Final Guidelines. 4. Impact on Coal Preparation Plants For the "soft" coal segment, the large mine category was a mine with a preparation plant. In the analysis of this category, the cost of coal preparation and effluent treatment cost associated with compliance with Interim Final Guidelines was taken into account. In this section we have examined the effect of compliance with Interim Final Guidelines on an "independent" preparation plant (one that is not associated with a mine), both from the standpoint of increased operating cost and capital requirements. The results have been summarized in Table 32. The increase in annualized operating cost is less than If/ton, compared with a cost of preparation of approximately $1.00/ton. The capital requirements for water treatment compared to preparation plant investment is about 0.2%. We did not have information on effluents and treatment costs for an- thracite preparation plants and therefore excluded them from our analysis. 58 ------- 5. Summary The analysis of model mines and treatment plants shows that the effect of the Interim Final Guidelines would be to increase operating costs around 12/ton. The capital costs requirements vary from $3,500 to $77,000. The impact on an individual mine would be relatively modest. Our analysis was based on models and site specific factors can alter the economics of the situation. Whether medium and small mines can raise capital required to comply with Interim Final Guidelines depends on the profitability of these mines in the future. Should the earnings be similar to the situation in 1974, the raising of capital should not be a problem. If, however, the profits are marginal, the small and medium categories are likely to face hardships and would have to fight for survival. In such a case, the Interim Final Guidelines may carry sufficient weight in a decision to close a mine. Based on B.M. Jarrett's memo, (Appendix B), there would be no impact on the anthracite segment as a result of the Interim Final Guidelines on existing mines. The effect of Interim Final Guidelines on independent preparation plants is quite small (less than lC/ton increase in annual operating cost due to compliance with Interim Final Guidelines, compared with cost of preparation of approximately $1.00/ton). The capital requirement for water treatment is $15,000 (less than 0.2% of preparation plant investment). We could not analyze anthracite preparation plants because of a lack of information. 59 ------- APPENDIX A 60 ------- UNITED STATES ENVIRONMENTAL PROTECTION AGENCY SUBJECT: Coal Mine Effluent Guidelines FROM: BM Jarrett, Project Officer Effluent Guidelines Division (WH-452) TO-. Gail Coad, Project Officer Economic Analysis Division (PM-220) DATErAUG 2 V 1975 You requested an estimate of capital expenditure to meet the interim final effluent limitations proposed for the mining industry subcategory which includes coal preparation plant ancillary areas. This capital investment would only be for meeting pH limitations 6-9. A telephone survey was made of 6 representative coal preparation plants in Pennsylvania, Ohio, and West Virginia. These plants have a capacity of from 225 tons/hour to 800 tons/hour clean coal. These ranges in capacity do not reflect the total area included in the preparation plant ancillary area. As example, a preparation plant with a 250 ton/hour capacity reported the largest area affected: 10 acres; and a larger preparation plant with the capacity of 800 tons/hour reported a total area of less than 4 acres. In that the interim final regulation to be promulgated has no limitation on suspended solids, only neutralization with an alkali would be required to meet the pH limitation of 6-9. It is recommended that sufficient time be allowed for the reaction between the alkali and the acid mine drainage to go to completion and for the pH to stabilize. A stipulation in the regulation is "any untreated over- flow from facilities designed, constructed, and operated to treat the process waste water and the runoff from the coal preparation plant ancillary area resulting from a 10 year/24 hour precipitation event shall not be subject to the limitation set forth" (i-e. pH limitation). With this consideration, any treatment facilities for the runoff from preparation plant ancillary areas would normally be designed for containing considerably less than the total flow re- sulting from a 10 year/24 hour precipitation event as the requirement is for treating and not containing this volume. Heavy rainfall events would create a natural dilution of the pollutants associated with the coal and coal refuse. Therefore, it would seem logical that any treatment facility designed only for pH control of the runoff from coal preparation plant ancillary areas would be designed to treat a limited flow. The areas primarily affected by pH control are the Northern Appalachian States. For the purposes of estimating flow to be treated, the largest average rainfall in any month is used. This occurs in June. This average monthly precipitation is something less EPA Form 1320-6 (R.v. 6-72) ------- than 5 inches. On this basis, there would be a requirement to treat approximately 5,000 gal/day/acre included in the coal preparation plant ancillary area. Tor flow? of 50,000 gal/day, and periodic operations assuming 10 acres included in the coal preparation plant ancillary area, the obviour. method of treatment would be with sodium hydroxide, or lime, plus a settling basin. The cost of such a facility is less than 53000. In a previous memo, you were furnished an estimate of $11',000 for lime feeders which might be required to treat the surface runoff from a refuse storage area associated with a coal preparation plant producing one million ton/year with a 25 year life and 20% reject. This preparation plant would have a capacity of 350 ton/hour to 400 ton/hour assuming two shift operation. Estimation for larger or smaller preparation plants can be proportioned from $12,000. Also, in a previous memo you were furnished costs for meeting requirements of BPT, BAT, "and NSPS as initially suggested in the contractor's draft development document for models in your industry segmentation. Your request for costs to meet a BPT limitation of pH 6 to 9 only would apply to those Bituminous mines located in Northern Appalachia primarily. Below are costs for meeting a BPT limitation of pH 6 to 9 for the models in your industry segmentation in Northern Appa- lechia. The following assumptions are made: For ease in costing a package, which can be supplied by either MSA or Butler Silo Company, is used for estimating cost of the control building, lime storage, lime feed and mixer, and pH controls. This package is available at $60,000 tc $00,000. In addition to these facilities a settling basin is required of sufficient size to allow reaction tetween the alMli ,and the acid mine drainage to go to completion -and the pH to stabilize. This size is based on a four hour retention of a Mow attributable to a 10 year/24 hour precipitation event. Cost of uikaii (lime) is a function of the total acidity in the raw mine drainage. This cost is based on the aocui-ionted costs at. ei^glit AiC treatment facilities in the development document. The cost used is $8000 per year per 1000 cum/day of AMD treated. This cost is most probably high as the eight AMD plants are treating not only to meet a pH limitations, but also to meet total iron and an alkalinity limitation. For mine drainage of less than 100,00- gal/day (378 cum/day), it is assumed a sodium hydroxide feeder would be used in conjunction with a settling basin. ------- Northern Appalachia (Maryland, Pennsylvania, Ohio, Virginia, West Virginia) Mines of this region can generally be categorized as being Acidic or Ferruginous in Maryland, Pennsylvania, Ohio, and the northern part of West Virginia. It should be noted, howevers that 2/3 the production of West Virginia and the mines cf Virginia can be categorized as alkaline, which requires either no treatment for deep mines or only settling for deep mines and settling for surface mines. This region also has over 50;x of the total mines in the U.S. in your small deep mine (50,000 ton/yr) category with most of these mines in the alkaline mine drainage category requiring no treatment of mine drainage, or the mine is dry. 1. Deep Mines a. Large Mine (Total in category - 225, visited - 56) Mine life - 25 years; 1 million ton/yr; 70% recovery; 60 in. thick seam; 7000 ton/acre recoverable; 143 acres mined/year; 18137 acre mined in 13 yrs; 400 ft of cover (below drainage); 600 gal/acre AMD; 1,114,000 gal/day; design 1 1/2 million gal/day (5700 cum/day). Plant $60,000 Settling Basin 1,250 WT7250 Chemicals $45,600/year O&M $15,000/year incl. sludge removal In that state law in the areas affected by AMD presently require treatment of mine drainage and this universally consists of lime neutra- lization (with or without aeration) and precipitation, additional capital to meet Interim Final BPT v;ould be negligible. b. Medium Mine (Total in category - 227, visited - 3) Mine life - J5 years; 100,000 ton/yr; 70°; recovery; 40 in. thick seam; 42/0 ton/acre recoverable: 23.4 acre/yr; 187.4 acres mined in 8 years; 200 ft cover (above drainage); 300 to 600 gal/acre AMD; 113,000 gal/day; design 150,000 gal/day (568 cum/day). $ 500 for settling basin for either sodium hydroxide or lime 3,000 holding tank, pump. $3,500 ------- Chemicals - $4,000/year O&M - $l,300/year incl. sludge removal As with large mines, existing state law requirements would at feet no capital expenditure to meet BPT. c. Small Mine (Total in category - 439, visited - 10) Mine life - 10 years;f50,000 ton/yr; 75% recovery; 36 in. thick searn; 3920 ton/acre recoverable; 12.8 mined acre/yr; 64 acres mined in 5 years; 200 ft of cover (above drainage); 600 gal/acre AMD; 38,400 gal/day; design 50,000 gal/day (190 cum/day). $ 500 for settling basin for either scdium hydroxide or lime 3000 holding tank, pump. 13500 Chemicals - $1600/year O&M - $1300/year incl. sludge removal As with large mines, existing state law requirements would affect no capital expenditure for BPT. 2. Surface Mine a. Large Mine (Total in category - 101, visited - 10) Mine life - 20 years; 1/2 million ton/yr; 90% recovery; 60 in. thick- seam; 7840 ton/acre recoverable; 64 acre/yr; 320 acres mined in 5 yrs; design 64.5 million gal/day (1890 cum/day). Plant $60,000 Settling Cos in J_,J?-Jl S61.250 Chemicals HB.&OO/year OSK t F, ,000/year incl. sludge removal As with deep mines producing AMD, state lews require treatment of AMD froi'i surface mints. Additional capital to meet Interiu Final BPT would b£ minimal. ------- b. Medium Mine (Including auger) (Total in category - 290, visited - 13) fvine life - 10 yrs; 100,000 ton/yr; 42 in. thicl' seam; 80'- recovery (with auger); 4880 ton/acre recoverable; 20.b acre/yr; 5 yr in mine area 10?. 5 acres; design 120,000 gal/day AMD. I1! ant $12,000 Settling basin 1.000 $13,000 Chemicals $5,000/year O&M 51,600/year incl. sludge removal Additional capital to meet Interim Final BPT would be minimal. c. Sinall Mine (Total in category - 101, visited - 10) Mine life - 5 years; 50,000 ton/yr; 90% recovery; 36 in. thick seam; 4705 ton/acre recoverable; 10.6 acres/yr; total in mine area 53 acres. Plant $5,000 Settling basin 1,000 $6,000 Chemicals $2,500/year O&M $l,000/year incl. sludge removal Additional capital to meet Interim Final BPT would be minimal. If you need any additional information or clarification of information in this memo, please contact me. ------- APPENDIX B Excerpts from Mr. B.M. Jarrett's Memo entitled "Coal Mining Effluent Guidelines" of July 2, 1975 66 ------- II - ANTHRACITE MINING Anthracite mining is included with bituminous coal and lignite mining as it was determined that rank of coal did not effect the chemical characteristics of raw mine drainage. Anthracite coal is found to some extent in four states: Pennsylvania, Colorado, New Mexico, and Washington. However, approximately 90X of mineable anthracite with present day mining technology is found in Pennsylvania; and all current anthracite mining operations are found in Pennsylvania. Comments on anthracite mining are limited to mines in Pennsylvania. Mining methods for anthracite include deep mining, strip mining, and culm bank. For purpose of developing effluent limitation guidelines culm bank mining is included with strip mining. Mining methods for anthracite are influenced to a great extent by past mining in the area with most mines doing a second and third pass at mining in some locations plus culm bank recovery. Mines and seams of anthracite are most often interconnected and are inundated. Water drainage tunnels established in the 1800's convey large quantities of mine drainage from abandoned mines. Currently operating mines often must handle large quantities of drainage. This drainage from active mines is: treated to meet Pennsylvania effluent standards of less than 7 mg/1 of Fe, alkalinity greater than acidity, pH 6-9; or is effectively not discharged to a receiving stream with drainage going to abandoned mines; or the mine is located in one of ten water sheds covered in Pollution Abatement Escrow Fund, Pennsylvania Act 443, 1968 in which case the mine can discharge to a receiving stream untreated mine drainage and pay $.15 per saleable ton mined. For the purpose of developing effluent limitation guidelines only mines discharging to a receiving stream are considered, and these mines would be located most generally in the Northern and Eastern Middle Anthracite Fields. Mines not discharging to a receiving stream are not covered. Mines discharging to one of the ten ------- watersheds are not covered as the drainage of the water shed is treated in a state owned treatment facility. Unlike bituminous and lignite mines where mine drainage is fundamentally related to precipitation with side concerns from adjacent or abandoned mines, anthracite mine drainage is primarily from abandoned areas, seams or mines. There is literally no relationship between mine drainage volumes and tons mined, area mined, roof exposed, depth of cover, or permeability. In 1973 there were 82 mining companies listed by Pennsylvania as deep anthracite mine operations of which 12 showed no deep mine production for the year, and 21 had a deep mine production of less than 500 tons for 1973. Two deep anthracite mines had a production of over 50,000 tons in 1973. In 1973 there were 115 mining companies listed by Pennsylvania as surface mine operations of which 9 operations were back filling with no production; UU operations were operating in culm banks; and 27 operations had a production of less than 500 tons in 1973. Thirty-four surface mining companies had a production of over 50,000 ton/yr. 1. Deep Mines a. Large (Visited 1) One large deep mine is located in the Northern Fields, This mine had no discharge with drainage returned to abandoned mines. The mine visited mines approximately 90,000 ton/yr and contributes $.15/ton to the State of Pennsylvania. In order to operate the mine visited pumps 1500 gpm 2<4 hr/day, or approximately 2.2 million gal/day. A primary consideration in opening a new large deep anthracite mine is cost of pumping. This consideration is quite aside from cost of treating AMD. Facilities to meet current Pennsylvania effluent requirements would be adequate to meet NSPS. b. Small (Visited 0) Five small deep mines are located in the Northern or Eastern Middle Field of which two had no production for 1973. A telephone survey indicated that the remaining three mines had an effective no discharge. ------- As with larqe deep mines facilities for a small deep mine to meet current Pennsylvania effluent requirements would be adequate to meet NSPS. 2. Surface Mines a. Larqe (Visited 2) Included in this cateqory are 14 culm bank mines. Twelve larqe surface mines are located in the Northern or Eastern Middle Fields. A mine visited in the Northern Field consists of three pits with an annual production of 1.5 million ton/yr. This mine has no discharge with all mine drainage going to abandoned areas and mines. As with deep mines, facilities for large surface mines to meet current Pennsylvania effluent requirements would be adequate to meet NSPS. b. Small (Visited 0) Included in this category are 30 culm bank mines. Twenty-five small surface mines are located in the Northern or Eastern Middle Fields of which 18 had no production for 1973. As with large surface mines, facilities for small surface mines to meet current Pennsylvania effluent requirements would be adequate to meet NSPS. ------- |