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Lawsuit challenges federal financing of coal exports

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Environmental groups filed a lawsuit July 31 challenging the federal government's financing for the export of Appalachian coal from the United States.

The groups filing the lawsuit charge that the U.S. Export-Import Bank, known familiarly as Ex-Im Bank, violated federal law by providing a $90 million loan guarantee to Xcoal Energy & Resources without reviewing the environmental impacts as required under the National Environmental Policy Act, or NEPA.

The suit was filed by Chesapeake Climate Action Network, Center for International Environmental Law, Friends of the Earth, Pacific Environment, Sierra Club and West Virginia Highlands Conservancy with representation by Earthjustice.

It is the first lawsuit of its kind, according to the groups.

Ex-Im Bank has estimated that the financing, approved in May 2012, will help leverage a billion dollars in exports of coal mined in Appalachia, the groups said. The coal will be shipped from ports in Baltimore, Md., and Norfolk, Va., to markets in Japan, South Korea, China and Italy.

"The science is clear that mining has profoundly detrimental effects on the environment — including the human communities that are part of that environment," said Cindy Rank, who chairs the Mining Committee of the West Virginia Highlands Conservancy. "And it's never been more important for the government to comply with NEPA than when federal assistance facilitates the export of a commodity that leaves such a devastating legacy in its wake."

Ex-Im Bank disregarded the coal dust, heavy train traffic and disruptive noise that Diana Dascalu-Joffe, senior general counsel at the Chesapeake Climate Action Network, said are experienced by people living near ports and railways used to transport coal.

"People on the front lines of the U.S. coal export boom deserve to know the risks and to have a say over whether their tax dollars finance it," Dascalu-Joffe said.

While U.S. coal consumption has declined over the past 10 years, coal exports have risen — 40 percent from 2000 to 2010, to 82 million tons, and another 30 percent to 107 million tons in 2011 alone.

Air, water, safety, health, biodiversity and other impacts on local communities and ecosystems are unaddressed by state and federal regulators, the groups said.

"From the mine mouth to the smokestack, from Appalachia to Beijing, Ex-Im's failure to account for the environmental impacts of U.S. coal exports not only violates the law, but it flies in the face of the agency's own environmental policy and its Carbon Policy," said Michelle Chan, director of Economic Policy Programs at Friends of the Earth.

Annual Ex-Im Bank fossil fuel financing is up from $2.6 billion to over $10 billion over the past decade, the groups said, adding that the bank has failed to meet a Congressional directive to provide 10 percent of its financing to renewable energy and energy efficiency.

The plaintiffs are asking the court to order Ex-Im Bank to prepare an environmental impact statement for the Xcoal loan guarantee.

"The disbursement of the $90 million loan to Xcoal is not finished," said Abby Rubinson, associate attorney in Earthjustice's International Program, "so what we seek is that Ex-Im Bank be ordered to do environmental review and, if necessary, do whatever mitigation NEPA requires and withhold final disbursement until that's done. That would set a precedent for future decisions Ex-Im Bank makes."

The Export-Import Bank took the unusual step of making a statement in response to the filing of the lawsuit.

"The Export-Import Bank has been an environmental leader among the world's export credit agencies for decades, balancing the need to protect the environment with its mission of supporting U.S. exports and American export-related jobs," vice president Phil Cogan wrote in a release that appeared to have been e-mailed to media who covered the suit.

"Ex-Im Bank adheres to strict environmental guidelines, and has taken a number of actions since 1992 to address the impact on the environment related to its export financing," he wrote.

The lawsuit may be downloaded from Earthjustice's website.