Last Man Standing: Bob Murray and the War on Coal

May 30, 2014

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Last Man Standing: Bob Murray and the War on Coal

By Jennifer Jett

Bob Murray is angry, and he doesn’t mind letting you know about it. As one of the country’s most outspoken opponents of President Barack Obama’s administration and the U.S. Environmental Protection Agency (EPA), he’s now turning his words into action. In early April, he filed the first of three lawsuits in an attempt to block the EPA from what Murray says are illegal actions against the country’s coal industry.Murray is a product of Ohio coal. As the son of a coal miner, he got his start in the mines at the age of 17. Long hours and cross-country trips eventually paid off; by the age of 29, he was the vice president of Operations at North American Coal Corporation. Since then, he has built his own broad-reaching coal company, Murray Energy Corporation.Throughout his career, Murray has been witness to the positive side of coal mining, like the creation of jobs and the production of low-cost electricity for families and businesses. He’s also seen the dark side of the fossil fuel: mine fires, explosions and accidents that change lives—and families—forever; communities suffering from a drastic elimination of coal jobs and overextending regulations that can cripple a long-standing American industry. In Murray’s eyes, the single largest, most dangerous threat to the coal industry is the war on coal. He sees this ongoing attack as harsh and unnecessary, and every day, he battles on, speaking out against EPA regulations that he says are killing an entire industry, eliminating good jobs and hurting the families of his employees.

Recently, Murray sat down with West Virginia Executive magazine to discuss his passion for coal. In his executive office, surrounded by his treasured World War II model airplanes, we asked him about his climb up from the Ohio coal mines to the office where he runs Murray Energy Corporation, his decision to purchase five West Virginia mining complexes last year despite the struggling industry, what he sees for the future of coal and why, to him, the war on coal is not an environmental issue but a human issue.Here’s what he had to say.

The Price of Loyalty

Filing lawsuits against the EPA in April isn’t the first time Murray has stood his ground against authority. In 1987, as the CEO of North American Coal Corporation, he watched as the owners made plans to dissolve the company as an Ohio corporation and reincorporate in Delaware, walking away from $110 million in retiring medical benefits for 1,800 United Mine Workers of America pensioners. Murray, who disagreed with the plan, was given a year and a half to change his mind. With the dissolution going to litigation, as the CEO, he would have had to testify that he didn’t agree with the plan. After 31 years of service with the company, he was fired before he could take the stand. “It just wasn’t right to walk away from 1,800 pensioners at a time in their lives when they needed those benefits the most,” he remembers of the choice that cost him his job.

In 1988, Murray founded Murray Energy Corporation. The company has approximately 7,300 employees and operates 13 active coal mines in Ohio, Illinois, Kentucky, Pennsylvania, Utah and, most recently, West Virginia. In 2013, the company produced 30 million tons of thermal coal.

Murray made a surprising move in December 2013 despite the current struggles of the coal industry: he purchased Consolidated Coal Company from CONSOL Energy Inc., which consisted of five West Virginia mining complexes, 23 tow boats, more than 600 barges, additional coal reserves and other assets. Through the acquisition, he also assumed approximately $2 billion in retiree medical and pension liabilities for United Mine Workers of America workers.

Growing up the son of a coal miner and choosing the dangerous field for his own career, Murray can relate to his employees and their families. He has a strong desire to make sure they are taken care of and that their communities prosper. Penn State University conducts a regular study on the multiplier of coal mining jobs in a community. For other communities, that multiplier can reach up to 11:1, which means 11 jobs are created for every one coal mining job. In St. Clairsville, Ohio, the location of Murray Energy Corporation’s headquarters, that multiplier is always 11:1. “For every coal mining job that we have, there are 11 jobs in our communities that are created. Seventy-three hundred times 11 plus 7,300 is close to 90,000 people in one of the most depressed areas of the U.S. that are depending on me, and I take that responsibility very seriously.”

“No Pound of Coal is Worth Getting Hurt Over” 

Throughout the year, Murray visits all of his mine sites. During these visits with his employees, he tells them, “My goal for you is that we retire together because if we retire together, you will have worked safely and made it to retirement, and you will have worked—period.” As Murray fights for coal mining jobs on the political front, he’s also fighting to keep his employees safe.

Murray has personal experience with the potential for danger that exists in the mining industry. When he was 9, his father, a coal miner, fell at work and broke his neck. The accident left his father a quadriplegic. At the age of 16, Murray took on the responsibility of supporting both his father and his mother, who had cancer. Murray himself has been in three mining accidents and three mine fires. It’s the first-hand experiences like these that drive him to go above and beyond, even surpassing state and federal law requirements, to protect his employees.

“We’re mining in a fuel,” Murray explains. “We mine coal because it burns, and when you grind it small enough, it becomes gun powder. It’s explosive. And we’re mining it with human beings a thousand feet deep. At Murray Energy, we operate safe coal mines, and we emphasize fire protection and emergency preparedness.”

He has a saying when it comes to the safety of his employees: “No pound of coal is worth getting hurt over.” To ensure the safety of the miners, he has a group of men who teach fire training at the mines, and he has more than 400 volunteers for the company’s fire brigades in West Virginia alone.

Murray almost lost his life in a mine fire. “When I counted noses, I was supposed to have 17 men that night. I only had 16,” he remembers. “I crawled back in there to try to get him, and I went down. It’s scary when you’re crawling around on your hands and knees and you can’t see anything. You’re trying to find air to breathe, and the only air is way down on the bottom, and you’re breathing coal dust and rock dust.”

He also remembers standing vigil one night with a mine foreman whose son was trapped in a burning mine. “I stayed with him all night as he watched his son burn up in there. A thousand feet in was all he was. With that man that night—you just don’t forget these things.”

The War Rages On

While the acquisition of the West Virginia mining complexes has been a transformative event for Murray Energy, there’s another transformative event taking place that has the company’s CEO up in arms: what he refers to as the deliberate destruction of the United States coal industry by Obama and his supporters.

“Thousands of American coal mining and related jobs and the livelihoods of these folks’ families have been brutally stamped out,” says Murray. “This devastation, this destruction of the coal industry, is a human issue to me because these are my employees. I know the names of the miners and their families whose livelihoods are being destroyed for no benefit at all.”

According to Murray, the Obama EPA has, since 2009, issued rules and regulations that are instrumental in the shutdown or scheduled closure of 392 coal-fired power plants in America, which is a loss of about 100,000 megawatts (MW) of the lowest-cost electric power across the country. Murray calls this war on coal “unjustified, illegal and downright evil with virtually no environmental benefit whatsoever.”

The Obama EPA’s claims of global warming are hard to swallow, says Murray, given that the earth’s temperature has cooled over the last 17 years. As for the agency’s plan for carbon capture and sequestration, he says it just can’t be done.

To understand why he thinks this, one must first understand why coal’s carbon emissions are viewed as a threat, what carbon capture and sequestration is and why the theoretical process of controlling greenhouse gas emissions has been deemed a priority of the Obama EPA and environmental groups around the world.

Greenhouse gases are gases said to trap heat in the atmosphere, and one such greenhouse gas is carbon dioxide (CO2). The EPA’s Web site, www.epa.gov, defines CO2 as a gas produced from burning fossil fuels like coal and natural gas, as well as solid waste, trees and wood products. The release of greenhouse gases like CO2 has been blamed for causing an increase in the planet’s temperature, which, according to Murray, is the basis for the theory of climate change and global warming.

The EPA’s Web site describes the process of carbon capture and sequestration as the capture of CO2 from power plants or industrial processes and the transportation of that CO2, usually through pipelines, followed by the underground injection and geologic sequestration or storage of the CO2 into deep underground rock formations that are often a mile or more beneath the surface.

The first red flag Murray sees with this plan is the use of pipelines to move the captured CO2. “I spent 15 years of my life building the Great Plains Coal Gasification Project in North Dakota, and our biggest problem was sequestering the carbon dioxide from the plant, even though the oil fields to which we could pump the carbon dioxide underground and improve the viscosity of oil wells were only 200 miles away,” he says. “No rancher would allow us to pump the carbon dioxide under his land, nor would his next door neighbor, because the gas migrates both vertically and horizontally. When that CO2 comes up out of the earth, everybody around dies because there’s no oxygen to breathe. That’s why NIMBY, or not in my backyard, became NUMBY, not under my backyard.

“How can you take carbon dioxide off of a power plant in the East, where there’s no formation to pump it underground, and pump it thousands of miles? We don’t have the pipelines to do it—it would take more pipelines than the country already has. Carbon capture and sequestration has not been proven; it’s not been done, and yet they’re passing regulations depending on it, and they’re getting away with it.”

Murray is also concerned with what will happen to the reliability of an already fragile power grid with the closing of 392 coal-fired power plants, explaining that renewable energy resources will not be enough to meet the population’s energy demand because energy sources like wind and sunshine are not abundant like coal.

“I worked on the Great Plains project with Mike Morris, the chairman of American Electric Power, the largest coal-burning utility in the country. Mike told me that the Utility Commission of Ohio has him connected to 3,800 MW of wind and solar. We had a cold snap sometime back, and the rivers were frozen. We couldn’t get coal into the coal-fired plants, and he had other difficulties, so he called on his wind and solar energy sources. Of that 3,800 MW that the Utility Commission of Ohio, by law, tells him he has to be connected to, he had 15 MW. The wind wasn’t blowing. And that’s where Obama is taking America.”

In a speech Murray recently gave to the North Carolina Coal Institute, he shared these points with regard to this past winter’s recent polar vortex cold snaps, the resulting higher demand for energy and the impact this had on the power grid:

• During the polar vortex cold snaps, American Electric Power had the coal-fired power plants that are scheduled to be closed in April 2015, a total of 7,150 MW, running at 89 percent to battle the frigid temperatures, raising concerns of what will happen when the reliability and cost of that power supply is not available next year when the plants are closed.

• A New England utility was asked by the regional grid operator to operate its entire generation fleet in order to meet heightened demand. The utility was also forced to employ rarely-used combustion turbine facilities, several of which relied on the use of very expensive jet fuel.

• The PJM Interconnection, which controls electric transmission for West Virginia and 12 other states, as well as the District of Columbia, came within 700 MW of a major system disruption. Around the same time, the interconnection barely avoided a system-wide crisis by offering to pay customers to not use power in certain circumstances, and it even considered rolling blackouts in order to avert grid failure.

In his speech, he also quoted Phillip Moeller, a member of the Federal Energy Regulatory Commission, as saying “We got a lot of power plants that are going to be shutting down in one year and five weeks, April 16, 2015. Almost all of them were running as best as they could during the cold snap. If that isn’t a sobering wake- up call to policymakers, nothing short of a massive blackout would be.”

Coal’s Counteroffensive 

When it comes to coal and his employees’ livelihoods, Murray doesn’t pull any punches. The lawsuit he filed in April, which is the first of three, states that the EPA is supposed to take job losses into consideration when regulations are promulgated, and, according to Murray, they have not done this. “The law is crystal clear that they are obligated to do that,” he says, “and the Obama EPA has not.”

The second lawsuit to be filed will focus on the Data Quality Act. “Under the act, they are obligated to tell the truth, and they are not telling the truth about global warming. They are not telling hardly any truth about the science. The earth has actually cooled over the last 17 years, so under the Data Quality Act, they’ve actually been lying about so-called global warming. This lawsuit will force them to not just take data from the environmentalists and publish it, as they have been doing, but to review that data and make sure it’s accurate.”

The third lawsuit will focus on the greenhouse gas regulations themselves on the basis that there is no connection between the emissions of carbon dioxide from manmade activity and the so-called heating of the earth, or global warming, especially in light of the earth’s cooling over the last 17 years.

The Future of Coal

Murray has already seen within his corporation the results of a fragile and shrinking coal industry, and with those, he says, comes a glimpse of the future of coal.

When he purchased Consolidation Coal Company, he assumed approximately $2 billion in retiree medical and pension liabilities for United Mine Workers of America workers. In the stock purchase agreement, he also agreed to maintain the medical benefits for Consolidated Coal’s salaried, nonunion retirees for at least one year, a benefit that is not available to Murray Energy’s salaried retirees. The move, Murray explains, was intended to create a window for the former company’s retirees to explore other coverage options.

In April, the corporation announced that the medical benefits will cease at the end of the year. The affected retirees will still get their full pension and will be able to make up more than 80 percent of the lost benefits through Medicare with options for additional coverage. According to Murray, the decision to drop the benefits was driven, in part, by the war on coal’s impact on his company.

Murray Energy Corporation is not the first to feel the backlash of the EPA’s stringent and ever-expanding regulations. In fact, Murray believes the war on coal is bankrupting coal companies all across the nation, and this reduction or elimination of benefits will become more common as companies try to stay afloat.

“The Obama administration’s disastrous war on coal has destroyed coal markets and has made it absolutely impossible for us to provide these benefits beyond what is outlined in our stock purchase agreement,” says Murray. “We coal companies are competing for a much smaller coal market, which has been referred to as road kill. Virtually no coal companies with which we compete now provide retiree medical benefits. Indeed, this is a sad reality, and it is one of the many reasons that this administration’s war on coal is a human issue to me.”

Even if Obama’s EPA is reigned in, America’s coal industry is still in trouble. According to Murray, 43 percent of the coal mining industry in Southern West Virginia is now gone, a change that he says is permanent: those mines and those jobs cannot come back.

What, then, is the future of coal? If the war continues, he believes coal companies will have to turn to exporting in order to find a market for their product and protect the industry’s remaining jobs. Exporting can be a rather tricky endeavor, though. The exportation of coal is not a physical sale but an arbitrage sale in which a good or service is bought in one place for one amount and immediately sold in another place where it’s worth more. This is a lesson he learned quickly.

Last year, Murray Energy Corporation loaded a ship with coal in New Orleans with the intended destination of Spain. When the ship reached the high seas, though, it was sent to Brazil instead. “The broker got the coal out of Russia to fill my Spanish order because, by doing it this way, he could make money on it,” says Murray. “When you get into the international market, you have the railroads to deal with, the ports to deal with and then you have the broker. Who makes the money on the international sale? The guy who’s doing the arbitrage. Exporting isn’t a perfect solution for the loss to the domestic markets because not everybody can play in the world market. If you want to export coal in the world market, you’ve got to be set up to do so.”

While the transition from domestic sales to international exporting may seem daunting, it appears that the aggressive regulations of the EPA may have left few options for the continued operation of America’s coal mining industry. In order to stay in business and keep Americans working, coal companies may need to reassess their capabilities, expanding into areas that will better position them for success in the world market.

Last Man Standing

The odds may seem to be stacked against the coal industry under the current Obama administration, but Murray isn’t giving up, not by a long shot. You see, coal runs as deep in Murray’s roots as its seams in the mountains of Appalachia. This connection has driven his advocacy of the use of the low-cost fuel source since he began his career in 1962, and as the war on coal continues, he has no intention of backing down from the fight.

“I like producing a product that is good for society, and coal is the key to low-cost electricity in America. More importantly, I like to see people have an opportunity to not just work but work safely and retire. We only go through this life one time. As you get older, there are two words that become more critical and more important than any other two words: credibility and integrity. Nobody is going to get mine. I’ve lost a lot of deals and I’ve lost a lot of opportunities, but I never put my credibility or integrity out there, and I absolutely won’t do it. That’s the legacy I want to leave behind.”

For Murray, the challenges are simply that—challenges, and the 16-year-old Murray who cared for and financially supported two ill parents surely overcame what, at times, must have seemed much more daunting than arbitrage. As for coal, Murray’s long-term strategy is simple: he intends to be the last man standing, and as long as coal is still in demand, whether in the U.S. or abroad, he intends to supply it.

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(2) Readers Comments

  1. Tom Harris
    June 12, 2014 at 2:38 am

    There are many scientists expert in climate science who would agree that the EPA are distorting the science. In a space of a mere three days, here is a list of experts that we at ICSC were able to attract to publically endorse our statement that disputes the EPA's confident, and largely erroneous, assertions about climate change: http://tinyurl.com/p7bwkpq Many more scientists agreed with the assertion which was, "“We, the undersigned, having assessed the relevant scientific evidence, do not find convincing support for the hypothesis that human emissions of carbon dioxide are causing, or will in the foreseeable future cause, dangerous global warming." But these skeptics were too frightened to publically endorse the Register statement because climate campaigners have so poisoned the debate that the scientists feared for their job security and personal safety. The statement in the article above that "97 percent consensus among scientists that global warming is real and primarily driven by humans" is a complete red herring logical fallacy since it has nothing to do with the issue at hand. The only question that matters in a policy sense is, 'do the majority of climate scientists who study the causes of climate change agree that our emissions of carbon dioxide are causing dangerous global warming and other problematic climate change?' If it is not dangerous then it should not be a public policy issue at all, let alone worth the hundreds of billions of dollars being wasted on the issue right now. No worldwide survey of experts has been conducted on this question, so the 97% assertion is simply an urban legend.

  2. Joe Scovel
    September 9, 2014 at 6:27 pm

    Any young man that cares for his parents at 16 and then rises to the pinnacle of his industry must be one hell of a man. I hope his kids are like the father.

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