Illinois's Subsidy to Coal's Bob Murray, Wilbur Ross and Exxon

The demand for coal is going through the roof.  Do giant U.S. energy companies really need a handout?

Apparently, the Illinois Department of Commerce and Economic Opporunity thinks so. Yesterday, Governor Rod R. Blagojevich announced the awarding of millions of dollars in economic development aid to some of the biggest coal mining companies in the country. 

Illinois is subsidizing the coal mining activities of Murray Energy (owner of the Crandall Canyon mine in Utah), Peabody Energy (self-proclaimed "world's largest private-sector coal company"),  Wilbur Ross' International Coal Group (owner of the now-abandoned Sago mine near Buckhannon, West Virginia), and ExxonMobil (the largest corporation in America, with profits in 2006 exceeding $36 Billion) are among the mining companies being subsidized by Illinois taxpayers. [Governor's news release here].

Although the Governor's annoucement of $10 million proclaims the grants will help create jobs, modernize the mines and develop clean-coal technologies, I also see substantial sums of money going to large corporations that certainly don't need to be susidized to meet new federal and state requirements for more breathing devices, communication systems and lifelines.

According to the Governor's news release, ExxonMobil's Monterey No.1 mine will receive $332,000 to help them "comply with new state and federal mine safety laws," including purchasing a communication and tracking system.

Three mines owned by Peabody Energy [NYSE: BTU] (with 2006 sales revenue of $5.3 Billion) are receiving more than $1.5 million "to purchase mandatory safety equipment needed for compliance with new Illinois and MSHA regulations."

International Coal Group (ICG)  [NYSE: ICO] is receiving nearly $375,000 for improvements at its Viper mine, including installing a tracking and communication system, and refurbishing a facility to serve as a mine rescue training facility. This all sounds very nice to me, but shouldn't ICG have gotten on the ball after the Sago disaster and done this on their own?  What happened to ICG's promise of becoming the safest coal mining operation in the country?  Seriously, I recall ICG's corporate officials promising that their Viper mine was slated to receive high-tech communication and tracking equipment. (Anyone else remember that?) If they fulfilled that promise as their act of contrition after Sago, why are they getting money to just do it now?

Another recipient of the generous grants from Illinois is Alliance Resource Partners [NASDAQ: ALRP]. Its Pattiki mine is receiving nearly $726,000 to help purchase new shuttle cars. You may recall earlier this year at one of this firm's coal operations in Indiana, three men died when they fell 500 feet down a shaft.

And finally, there's Murray Energy's American Coal Company. It's receiving a $900,000 grant to help expand an underground coal mine in Galatia, Illinois. This is the very same mining operation that had been assessed more than $1 million in penalties by MSHA for health and safety violations cited from May 1 through mid-August. (More here). I realize that the Crandall Canyon disaster happened in Utah, but awarding nearly a million dollars to Murray Energy, just two months after 9 men died in one of this company's coal mines?

Yes, I understand this Illinois program is about economic development...job creation...investing in Illinois' coal industry, but, does a firm like ExxonMobil need a grant? Are we rewarding firms with troubled safety records, and subsidizing the purchase of safety equipment which they seem only motivated to buy now because it's required by law? 

Our nation has an insatiable appetite for coal-powered energy--more than 50 percent of our electric power comes from coal.  Developing "clean-coal" technology has merit, but we need to expand the definition to include "clean" processes for the coal miners who extract it.  Economic development grants, like those provided by the State of Illinois, could merge the goals of "good jobs," "clean-coal" and "modernization" of the coal industry, while rewarding mine operators who propose projects which go above and beyond what is required by law.  For example, what about awarding a generous grant to a coal operator who:

• designs and implements a mining plan which will keep miners' exposure to black-lung causing respirable dust to half the permissible exposure limit; or
• orders a supply of person-wearable continuous dust monitors (to be worn by underground miners) and advances this technology as a new "best-practices" for U.S. coal mines.**

When I read Governor Blagojevich's announcement that ExxonMobil was being awarded more than $300,000 to help them comply with new mine safety requirements, and similiar funds would be given to other large companies, I thought: 'what a missed opportunity.'  Let's not reward corporations for doing the bare minimum.  Let's reward firms who set their bar higher for better "cleaner-coal" jobs and safety measures that far surpass what is simply required by regulations.

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**Note: Millions of dollars in federal funds have been spent over the last two decades to develop continuous coal-dust monitoring systems to measure miners' exposure to respirable coal mine dust and hopefully prevent new cases of black-lung disease.  But, because there is no federal requirement for coal mine operators to use these devices, there is no market demand for them.  If there is no market, the manufacturer doesn't produce them.