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Settlement agreement reached in Seward coal terminal lawsuit

December 10, 2015

ANCHORAGE, Alaska (AP) — The Alaska Railroad and the company that transfers coal to ships at Seward have reached a settlement with environmental groups that sued over coal falling into Resurrection Bay.

The settlement requires the railroad, which owns the Seward coal-loading facility, and Aurora Energy Services LLC, which operates it, to make improvements and pay $10,000 for a watershed conservation project.

Still pending is an application by Aurora Energy Services, an affiliate of Usibelli Coal Mine, for a federal Clean Water Act permit regulating spilled coal at the facility that has loaded coal onto ships bound for Asia and South America. The permit, administered by the state, would require the facility to control spills.

The Alaska Community Action on Toxics and the Alaska chapter of the Sierra Club sued the railroad and Aurora Energy Services in December 2009, claiming that coal falling during loading operations harmed the bay, which extends past Seward to Kenai Fjords National Park.

U.S. District Court Judge Tim Burgess ruled that the railroad’s federal stormwater permit shielded the railroad and the operator of the coal-loading facility from liability.

A three-judge panel of the 9th Circuit Court of Appeals reversed that decision in September 2014, ruling that coal is not on the list of permitted non-stormwater discharges, such as those used by certain timber-product facilities.

The U.S. Supreme Court in June declined to hear an appeal by the railroad and Aurora Energy Services.

A drip pan was installed under part of the conveyor system following the lawsuit to keep coal from falling into the water. As part of the settlement, the companies agreed to install additional skirting.

The railroad and Aurora will pay $10,000 to Kachemak Heritage Land Trust for land or watershed conservation projects to improve water quality in Resurrection Bay. They also agreed to pay $362,500 to the environmental groups for attorney and expert witness fees.

The railroad and the loading facility did not admit to any alleged violations. Usibelli spokeswoman Lorali Simon said the loading facility has operated within the law under a government-issued permit since it opened.

“The government changed its mind and decided we needed a new permit,” she said.

She acknowledged that less coal is reaching the water but said upgrading the facility and using new technology has always been in the company’s best interest.

“Certainly we want as much as possible to go into the ship,” she said.

The railroad doesn’t normally comment on lawsuits, its president, Bill O’Leary said.

However, he says in an email to The Associated Press that the railroad “has invested well over a million dollars in environmental improvements to our facility in Seward and we continue to be committed to environmental stewardship in all of our operations. We are happy to have reached a mutually acceptable agreement to settle this case and look forward to future export operations in Seward with the anticipated new permit from ADEC.”

Arora Energy Services in January applied for the Clean Water Act permit in January. A first draft allowed coal to spill within a specified “zone of deposit.” A second draft has shrunk the size of that zone and would require annual inspections on the ocean floor, Sierra Club activist Russ Maddox said.

“The devil’s in the details for the permit,” Maddox said.

Pamela Miller, director of Alaska Community Action on Toxics, said in a statement that the settlement agreement is a big win for Seward but only part of the story.

“We are committed to working with state and federal regulators to make sure the final permit includes meaningful protections for Resurrection Bay and the Seward community,” she said.

The deadline for public comment on Aurora’s permit application is Dec. 21.

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