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Thursday, Nov. 15, 2012 06:56 am

Answers, please

Federal officials seek information on Carlinville mine

Federal environmental regulators have joined the Illinois attorney general’s office in asking why the Illinois Environmental Protection Agency transferred a pollution permit in Macoupin County, enabling continued coal mining near Carlinville.

When Macoupin Energy, a division of Foresight Energy that has invested heavily in Illinois coal in recent years, purchased the then-idle Carlinville mine from Exxon in 2009, IEPA transferred a pollution discharge permit from Exxon to the mine’s new owner, which restarted operations.

However, the pollution discharge permit originally issued in 1996 includes a clause stating that the permit cannot be transferred or assigned. The attorney general’s office first raised questions last April in a letter to Julie Armitage, IEPA’s acting chief legal counsel.

“The issue I am primarily concerned about is whether Macoupin Energy properly obtained Illinois EPA authorization to commence active mining,” wrote Thomas Davis, chief of the attorney general’s environmental bureau. “Please explain how the June 2009 permit action complied with the permit condition prohibiting permit transfer and assignment.”

Now, the feds are asking the same question.

In a letter sent last week to Armitage, Alan Walts, director of the U.S. EPA’s regional office of enforcement and compliance, asked for a copy of Macoupin Energy’s application for a renewal of the transferred permit and the state agency’s draft of the permit when it is made public. Walts also referenced Davis’ letter sent last spring.

“(The regional EPA) shares these concerns, and would like to receive a copy of your reply to Mr. Davis to consider while reviewing the draft permit,” Walts wrote.

Maggie Carson, state EPA spokeswoman, said that the agency considers the pollution permit valid and has told that to Davis. However, Davis said that doesn’t answer his question.

“How can you transfer a permit when it says you can’t transfer it?” Davis said. “We’re not contending that the permit had expired.”

Carson in an email said the seeming contradiction has triggered an agency-wide review “of processes such as this.” She said the review has taken longer than expected, but could not say when it would be complete.

Regulators have documented groundwater contamination near the mine, but Davis said he doesn’t necessarily have a concern with how the mine is operating.

“The mine, when it was acquired from Exxon, Macoupin Energy fully understood there were groundwater problems, and they’re working to correct those, so I can’t really say anything bad about the mine,” Davis said. “The mine does seem to be meeting its permit limits without any problems. … It’s just how the permit was handled by the state agency that seems to be the problem. It’s important to be precise, and that’s the situation here.”

Lisa Salinas, who owns property near the mine and has concerns about pollution, said that she believes Macoupin Energy, which has applied for a pollution discharge permit, should be required to get a new permit rather than operate under a transferred one. She said she believes that would result in more safeguards for the environment. She also says that she has no faith in IEPA to properly regulate the mine near her land, and so she’s counting on other agencies to hold state environmental regulators accountable.

“What I expect is correct monitoring and no offsite impacts to be occurring at that mine site,” Salinas said. “I am optimistic that with oversight by the U.S. EPA and the Illinois attorney general’s office that that’s possible.”

In addition to becoming a mining giant in Illinois, Foresight Energy, Macoupin Energy’s parent company, has become a financial force in political campaigns since it shifted focus from Appalachia to the Midwest and started buying coal reserves in the state a decade ago. All told, the company and its divisions have given more than $1.25 million to candidates and political committees in Illinois, most of it since 2010.

Foresight owner Chris Cline, who has an estimated worth of $1.2 billion according to Forbes magazine, has big plans for Illinois, according to a 2010 story in Bloomberg Markets magazine, which landed a rare interview with the normally media-shy magnate. In the Bloomberg article, Cline pegged the worth of his 4 billion tons of Illinois coal at $3 billion and said that Foresight could be worth as much as $6 billion after the privately held company goes public.

The company has filed paperwork with the Securities and Exchange Commission for an initial public offering. Moody’s Investors Service in September upgraded the company’s bond rating based on increased mining in Illinois and low production costs. The company is expected to sell 14 million tons of Illinois coal this year, an increase of five million tons in the space of a year.

Salinas, who has never given money to Illinois candidates or political committees, says that she has faith in attorney general Lisa Madigan and the federal government.

“As far as the Illinois attorney general’s office and the U.S. EPA, I believe they are apolitical and that their goal is to see that the laws are administered fairly,” Salinas said.

Carson said that campaign contributions hold no sway with EPA regulators.

“Political influences do not affect regulatory decisions,” Carson said.

Contact Bruce Rushton at brushton@illinoistimes.com.
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