An article in yesterday's Washington Business section provided contradictory information about how much coal environmental groups claim would be dumped into the Delaware Bay as a result of a proposed Norfolk Southern coal transfer facility. The correct figure is 250 tons per year.
A plan to operate an unusual coal-handling facility in the middle of the Delaware Bay has become the subject of a fierce legal battle pitting Delaware officials and environmental groups against Norfolk Southern Corp., the Virginia congressional delegation and the U.S. Justice Department.
Delaware officials and environmentalists contend the Norfolk Southern facility would dump millions of tons of coal into the bay, damaging the state's seashore and gutting in the process one of the nation's strongest coastal-protection statutes. Joining Norfolk Southern in defending the plan are a variety of government officials who fear that without the project or ones like it, slumping American coal exports never again will be able to compete effectively on the world market.
A classic case of big business interests versus environmental protection? Not necessarily. Norfolk Southern lawyers produce a number of studies purporting to show the project is environmentally benign. At the same time, industry experts suspect the time is fast passing when the planned facility would provide significant economic benefits to the nation's coal industry.
A federal judge in Wilmington, Del., is wrestling with these complicated issues, and lawyers say he is expected to hand down a decision soon on a suit brought by Norfolk Southern alleging that the Delaware law prohibiting the facility is unconstitutional. Oral arguments from both sides were heard last month, and U.S. District Judge Murray Schwartz could rule on the case himself or he could decide that a jury trial is necessary.
If upheld on appeal, Schwartz's decision would put an end to a controversy that has dragged on for more than two years, and that in a way has been brewing since the 1971 passage of the Delaware Coastal Zone Act, the first of 28 state coastal-protection programs adopted around the country.
The act barred manufacturing facilities -- such as oil refineries or steel mills -- from locating within two miles of Delaware's 115-mile coast line. The statute also prohibited construction in the bay of facilities for loading liquid and solid bulk materials, although oil-transfer operations already there were permitted to remain.
The second prohibition was significant because the Delaware Bay, while on the one hand an oft-used area for fishing, swimming, and watching wildlife, is also the only area south of Maine on the Atlantic Coast with waters deep enough to accommodate the supertankers that have come to dominate world shipping.
Many of the long-prominent East Coast harbors, such as Baltimore or Norfolk, have channels that are fewer than 50 feet deep -- and hence are unable to accommodate fully loaded supercolliers, as the 100,000- to 150,000-ton cargo vessels are known. Efforts to dredge these harbors so that they can receive these ships have been held up by political wrangling and the difficulty of obtaining federal funding.
Given the growing cost-effectiveness of shipping in larger vessels, coal and shipping executives began searching in the late 1970s for alternatives for handling the big ships. Their solution: "topping off" the supercolliers at the Big Stone Anchorage in Delaware Bay.
In a top-off operation, supercolliers are partly loaded with coal and then sent out to sea, where they reconnoiter with a barge also filled with coal. Cranes operating from the barge then "top off" the tanker, filling its cargo hull with the additional coal. The procedure now is performed on only a scatter-shot basis along U.S. coasts.
After a number of aborted efforts since the late '70s to develop the necessary facilities in Delaware Bay, a new proposal was advanced in the summer of 1983. Norfolk Southern Corp., the transportation giant, announced it would provide a coal top-off service in Big Stone Anchorage's 55-foot waters for ships loading at its Lamberts Point coal piers in Norfolk. The project would be carried out with the Coastal Barge Corp., a U.S. shipping concern that had conceived it. The total cost of the barges and tugs involved in the plan was projected at about $36 million.
The impetus for the project was clear: the desire to shave shipping costs by enabling the cost-effective supercolliers to pick up coal on the East Coast. It didn't hurt that the U.S. Maritime Administration agreed to guarantee a loan Norfolk Southern took out to purchase a 35,000-ton barge for the project.
In 1982, 37 million tons of coal and coke -- coal from which most of the gases have been removed by heating -- were loaded at Norfolk Southern's docks for shipment abroad and to other U.S. ports, and that total was expected to increase as a result of the increased capabilities that would be afforded by the top-off procedures. The company predicted the move would enable U.S. coal to become more competitive with other major coal-exporting countries, including Australia, Poland and South Africa. More concretely, officials projected that if the plans were realized, revenue from the top-off facility would amount to $10 million a year by 1986, according to court documents.
None of the plans materialized, however. In fact the whole project came to a screeching halt in the courts. Unexpected Objections
Prior to its announcement, Norfolk Southern had little reason to believe there would be any governmental objection to its proposed top-off service. Until 1983, the anchorage was reserved solely for oil transfers, but in May of that year the Coast Guard, which has jurisdiction over the area, ruled that other commodities could be transferred there, including coal. Norfolk Southern officials also have testified in court that they kept Delaware officials informed of their plans, and that these officials assured the company that its plans fell within the bounds of the state's Coastal Zone Act.
As soon as the company's plans became public, however, questions surfaced as to the operation's legality. Ultimately, state environmental officials ruled that the the top-off project constituted a "bulk-product transfer facility" of the type prohibited by Delaware's environmental statute, and the decision was upheld by the state Supreme Court.
In the meantime, Norfolk Southern pondered other options. In June 1984, almost a year after it first announced its plans, the company filed suit in federal court in Delaware, asking that part of Delaware's Coastal Zone Act be declared unconstitutional because it interferes with interstate and foreign commerce. This is the action now pending in Schwartz's court.
Although the case has come to be viewed by environmental groups as having a significance beyond Delaware, Norfolk Southern lawyers and officials say they are interested only in overturning a narrow part of the state's coastal zoning statute that they say can't pass constitutional muster. By placing a blanket prohibition on coal top-off operations, the company's lawyers have argued, the statute violates the constitutional principles giving the federal government the sole right to regulate foreign and interstate commerce.
Norfolk Southern has gathered powerful allies for this position. The U.S. Justice Department and a group of congressmen and senators from Virginia and West Virginia -- both coal-mining states -- filed briefs supporting their suit. Both briefs argued that the coal-topping operation is of vital national importance because it would help the country to regain competitiveness in the world coal-export market.
Explaining Norfolk Southern's position, Jeffrey S. Berlin, a Washington attorney for the company, says, "You can't have this level of exclusion of commerce if it serves no purpose. . . . Any benefit that is achieved is massively outweighed by the burden on commerce." Berlin says his contention is underscored by studies indicating that the coal top-off project would have a negligible environmental impact. A States' Rights Issue
This point, predictably, has aroused great dispute. Delaware officials and environmental groups cite a University of Delaware study showing that a transfer operation as large as Norfolk Southern's would spill more than 250 tons of coal dust into the bay annually. The study concluded that such emissions would pollute bottom waters in the bay, and thus threaten aquatic life.
Norfolk Southern's lawyers discount the Delaware study, saying it presents a worst-case scenario that bears no resemblance to the type of operation their company envisions. Studies conducted for the company indicate that dust emissions from the operation would be about one ton a year -- a "trivial" amount, they argued in a court brief filed earlier this year.
Citing operations already permitted in the bay, J. Patrick Dowd, vice president at Coastal Barge and one of the progenitors of the top-off plan, asks: "If oil lightering transfer is allowed, and it is more dangerous environmentally, then what's the matter with coal?"
As the state of Delaware and environmentalists see it, however, the issues raised by the Norfolk Southern project go beyond resolving the dispute over the environmental safety of the operation. The main question, they say, is whether a state should be allowed to manage its natural resources as it sees fit.
In rebutting the suit, Delaware officials have argued that Congress, by enacting the federal Coastal Zone Management Act of 1972, effectively ceded to the state -- as is constitutionally permissable -- the right to regulate commerce in the coastal zone. That statute is designed to assist states, with the help of federal funds, to establish their own plans for protecting resources in their coastal zones, the state's lawyers argued in their brief.
Whether Schwartz accepts this argument is of grave concern to the environmental lawyers who have joined the state and who worry that the decision may pose a larger threat to the nation's parks and waters.
"Norfolk Southern's challenge is a broad, bold attack on states' rights to prohibit further development in ecologically valuable areas," contends Lynne Edgerton, a lawyer with the Natural Resources Defense Council, a New York-based group that has joined forces on the case with National Audubon Society, the Sierra Club, and other environmental organizations.
Edgerton adds, "If such a principle of law were ultimately accepted, all state zoning and coastal protection schemes which prohibit new industries would be subject to constitutional challenge." Changing Coal Economics
Interestingly enough, the constitutional questions raised by attorneys almost as an afterthought now have assumed prime position in the case. This is because the economic forces driving the initial Norfolk Southern plan -- the same business considerations that prompted the company to go to court -- largely have dissipated.
Since the company first began considering a top-off plan, both the international shipping and coal markets have softened considerably. U.S. overseas coal exports tumbled from a total of more than 92,000 tons in 1981 to 60,000 tons in 1983. Though these figures have since recovered somewhat, analysts predict the United States will continue to have trouble taking market share away from its principal competitors, all of whom operate through deep-draft ports.
The shipping industry is so depressed that using supercolliers is not significantly cheaper than shipping in smaller vessels, industry officials said. And because foreign coal is so much less expensive than American -- as much as $10 per ton in some cases -- buyers are turning increasingly to other countries to meet their needs. (The price of U.S. coal fluctuates between $40 and $50 a ton.) Thus the economic benefits of topping-off don't amount to much, according to Joel Price, who follows the coal industry for Donaldson, Lufkin & Jenrette Securities Corp. "Whether Norfolk Southern tops off or not is one of the great irrelevancies of all time," Price says.
Other analysts are more optimistic, and company officials insist there are still benefits to topping off, even if U.S. market share does not increase substantially as a result. Allen B. Childress, Norfolk Southern's director of international coal and ore, says that "even in today's depressed market, top-off is still a viable alternative. In a normal market, there are more savings."
No matter the final disposition of the lawsuit, however, the question of what might have been haunts the project's officials.
"It would have created a lot of economic inducement for customers to buy coal here," says Coastal Barge's Dowd, looking back on the project. The lawsuit, he says, turned into "a very substantial roadblock to trying to keep America competitive in world trade."