Fill it up, please - with coal Pa. coal-to-diesel project mines bipartisan support.

Posted: July 21, 2006

GILBERTON, Pa. — From the top of a bank of waste coal the size of a small hill, John W. Rich Jr. surveys the heaps of ashen stone around him and challenges anyone to come up with a plan better than his to deal with the discarded remains of the mining industry.

Rich wants to use the waste to power what would be the nation's first plant to convert coal into diesel fuel. And his idea has the backing of a cast of political all-stars who usually are not on the same side: Republican U.S. Sens. Rick Santorum and Arlen Specter, Democratic Gov. Rendell, and a prominent GOP fund-raiser, Bob Asher.

All have thrown their weight behind the proposed $725 million plant in Schuylkill County, helping it win $147 million in state and federal aid.

Arguing that it would help trim the country's reliance on foreign oil, Rich and supporters are now pushing to overcome a chief hurdle in obtaining financing: landing a federal loan guarantee worth up to 80 percent of the project's cost.

Rich's more than decade-long effort to build the coal-to-fuel plant illustrates what it takes to move such a complex project from conception to reality. It is a road paved as much with a need to show a good, viable product as it is about hiring the right people and getting the right political support to get it through a lumbering government bureaucracy.

Some environmentalists and other advocacy groups have charged that proponents with deep pockets and political connections are pushing the project through. Rich, they noted, is a major political donor, having contributed thousands of dollars to Santorum's and Rendell's campaigns, as well as to Asher's political action committee.

But to those deeply involved in the project, the benefits are clear: It would clean up coal waste, create jobs, and establish a new - and secure - domestic fuel source.

"There are hundreds of millions of tons of waste coal here," Rich said during an interview in Gilberton, where he and his family also run a waste-coal power plant, among other ventures.

"We want to take it and produce sulfur-free diesel fuel, and do it domestically, and people say that is environmentally threatening? What can be more environmentally threatening than fighting for foreign oil?"

At a time of rising oil prices, the political benefit is not lost on elected officials.

Santorum on Tuesday began airing a campaign ad touting his work on securing federal money for Rich's project.

Rendell also mentions the project often. In September, he announced that Pennsylvania had created a fuel consortium that would purchase nearly all the facility's output.

But the bipartisan sentiment hasn't assuaged critics.

"This is not going to be the panacea that will replace our oil supplies," said Mike Ewall, founder of the Energy Justice Network, an environmental group in Philadelphia.

"And if they build enough of these plants to replace all the oil coming in from foreign countries, that would double the amount of coal mining that is going on in this country right now," he said.

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Tearing through the vast expanse of coal country he owns in Schuylkill County in his Jeep sport utility vehicle, Rich tells a story of the last 60 years: how his grandfather emigrated from Italy, worked in Pennsylvania's coal mines, and later launched his own coal business.

That company was passed on to John Rich's father, and afterward, to Rich and his two brothers, each generation building on the firm's coal foundations.

In many ways, Rich wants his legacy to be the coal-to-diesel plant, which would produce fuel for transportation.

The process involves a technology known as Fischer-Tropsch, developed and named after German scientists in the 1920s and used during World War II in Germany and several decades later in South Africa.

But building such a plant would involve enormous costs. And because Rich's proposal has no precedent in the country, banks are reluctant to loan the money without some guarantees.

So began the quest for public support. In 1999, the Pennsylvania legislature approved, and Gov. Tom Ridge signed, almost $47 million in tax credits for the proposed plant.

In 2000, Rich hired a Washington-based lobbyist to help navigate Capitol Hill. Within the next year, the lobbyist succeeded in getting language inserted into a bill calling on the U.S. Department of Energy to invest in clean-coal technology. A grant worth $100 million finally came through in January 2003.

Both Santorum and Specter were instrumental in pushing for the money.

But they had help. A year earlier, Rich had tapped a firm headed by Montgomery County GOP chairman Ken Davis to lobby in Washington at $10,000 per month.

Two weeks after the 2003 grant announcement, Bob Asher registered as a lobbyist for Rich's company, Waste Management and Processors Inc., which was his only federal client at the time.

Rich paid Asher $25,000 per month, for a total of $900,000 since his hiring.

The lobbyists have since focused on pushing the project forward. Calls have been placed to lawmakers and Secretary Kathleen A. McGinty of the state Department of Environmental Protection. Meetings have been held in Washington to push for the loan guarantee.

Obtaining it would go a long way toward convincing banks to lend money for the plant, financial analysts said.

The guarantee, which Santorum and Specter inserted into the Energy Policy Act of 2005, is now under review by the Department of Energy, which has to approve the backing. It is unclear when that might happen, but Rich hopes to begin construction in the fall.

But Rich's critics still question how much political ties and money have played into the equation.

Rich has donated $59,000 to Rendell since 2001, and $10,500 to Specter and $13,000 to Santorum since 1998. He and his father also have donated $300,000 since 2001 to Asher's PAC, which raises millions of dollars, mostly for Republican candidates.

Rich said there is nothing wrong with contributing money to political campaigns, and that all his donations are a matter of public record. "That's democracy," he said.

Santorum and Rendell, through spokesmen, said money has nothing to do with their support.

Santorum latched onto the project in the late 1990s, long before lobbyists came on board, the senator said.

"It has sort of been an uncomfortable thing between the two of us, to be very honest with you," he said of Asher, a supporter and fund-raiser for the state GOP's campaign this year to aid federal candidates, including Santorum. But, he added, "my track record is pretty clear on this."

For his part, Asher said his money ties play no role in whether the project is funded.

"I have been raising money for over 25 years in Pennsylvania and intend to continue to do the same," Asher said. "I believe this project stands on its merits."

Besides, Rich and others said, it takes more than connections. The concept has to be workable.

"If you're pushing an idea that doesn't make sense, it's not going to get the support. . . . To suggest that you can somehow buy your way to a result is ludicrous," he said.

In many ways, Rich takes umbrage at the criticism. In his eyes, his proposal would stop the flow of dollars to foreign countries for a very basic need.

"Do you have kids?" he asks. "Think about it - who would you want watching them? You and your family or some stranger? Because that's what we're talking about here - independence."

Contact staff writer Carrie Budoff at 610-313-8211 or cbudoff@phillynews.com.

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