The Washington Post

Environmentalists sue Export-Import Bank over loan guarantee to domestic coal broker

Above the harbor in Baltimore’s industrial Curtis Hill district is a one-acre urban farm. Jason Reed, a community organizer who works there, described the view. “I can look out over the harbor, and you can see the piles and piles of coal,” he said.

That coal is the subject of a lawsuit filed Wednesday by a coalition of environmental groups against the Export-Import Bank of the United States. The groups are challenging the federal agency’s financing of fossil fuel exports from ports in Baltimore and Hampton Roads.

The suit, filed in a federal court in California, targets a $90 million loan guarantee that the Ex-Im Bank made last year to Xcoal Energy & Resources, a Pennsylvania coal broker, to sell coal from Appalachian mines to customers in Asia and Italy. The plaintiffs claim that the bank failed to conduct a required environmental review before providing the guarantee. They want to block a portion of the $90 million that hasn’t yet been disbursed through Xcoal’s intermediary, PNC Bank.

The Ex-Im Bank makes loans and loan guarantees to private companies to encourage the export of U.S. products by assuming the financial risks involved in international trade. The bank has been increasing its support for domestic and foreign fossil-fuel projects, according to Doug Norlen, policy director for Pacific Environment, one of the plaintiffs. Norlen attributes the increase to an effort to meet President Obama’s stated goal of doubling U.S. exports by 2015.

In a speech on climate change last month, Obama announced that the bank would no longer support the construction of new coal-fired power plants overseas. Fumes from coal combustion are particularly heavy in carbon dioxide, which contributes to global warming. In the lawsuit, the plaintiffs argue that the financing ban should also apply to domestic coal exporters.

“What we see with this case is a clear problem in coherence between the administration’s ending of support for overseas projects, but a lack of oversight for projects, specifically export projects, here at home,” the Sierra Club’s Justin Guay told reporters Wednesday.

The Ex-Im Bank declined to comment on the lawsuit, noting in a statement that it is trying to balance “the need to protect the environment” with its mission of “supporting U.S. exports and American export-related jobs.”

Phil Smith, communications director for the United Mine Workers of America, said the union has “thousands of members whose jobs depends on that coal, at least in some part, being exported. Their families depend on that, their communities depend on that, their school districts depend on that.”

Coal exports have increased rapidly in recent years for several reasons, including high demand in China and Europe and a glut of cheap natural gas from domestic shale, which utilities have been substituting for coal. Traffic at the Hampton Roads ports, which are the country’s busiest coal export terminals, has nearly doubled in volume since 2009, according to census data. Exports from Baltimore have tripled in the same period.

Environmentalists say that the increase is harmful not only to the global climate, but also to residents who live near shipping facilities and railroads. Coal dust, which can contain mercury and arsenic, is everywhere in Curtis Point, said Reed, the community organizer. Some residents have to wash their windows every few days, he said, and the dust is so fine that it accumulates inside cars.

After noticing that many of the children he works on the garden with seemed short of breath, and worrying about the acrid, metallic smell that seemed to cling to the back of his tongue there, Reed began to feel “a moral prerogative” to try to improve ecological conditions in Curtis Point. He joined the Chesapeake Climate Action Network, another plaintiff in the lawsuit.

Xcoal plans to use the loan to move $1 billion in coking or metallurgical coal, which is used to manufacture steel. If the suit succeeds, the company would still be able to seek commercial funding for its venture, though a loan at the market rate would presumably be more expensive than borrowing from the federal government.

Xcoal did not respond to a request for comment on Wednesday.

Max Ehrenfreund writes for Wonkblog and compiles Wonkbook, a daily policy newsletter. You can subscribe here. Before joining The Washington Post, Ehrenfreund wrote for the Washington Monthly and The Sacramento Bee.

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