Students fight mining investment

By Allison Sundaram

A group of students is working to end Santa Clara's investment in Massey Energy Company, a mining company they say has questionable environmental practices in its removal of coal.

Chief Investment Officer John Kerrigan said the university owns a "small fraction of 1 percent" of stock in Massey. The university's investment portfolio is paid for by a $600 million endowment fund. Though Kerrigan would not release actual figures, he agreed that $600,000 was a fair estimate of the university's investment.

Thirteen students are in the group led by sophomore Kyle Ozawa, who met with Kerrigan to try to convince the university to sell its shares in Massey.

Ozawa and the others became interested after a spring break immersion trip to the Appalachian Mountains in West Virginia where they visited areas affected by Massey and other mountaintop removal mining operations.

Waste from the mining operation forms a coal sludge, which can pollute local rivers and contaminate communities. Coal slurry contains heavy metals like arsenic and mercury and carcinogenic chemicals used in the process.

"It's not just environmental destruction," Ozawa said. "People have to move, to relocate. It's endangering the health of a lot of people."

Mountaintop removal is a method of surface coal mining where a layer of ground is removed from the mountain to reveal the coal seam beneath. This is an alternative to the underground mining, which uses tunnels to access the coal.

"You're standing and looking down, when a year ago you have been looking up," Emory Lynch, an immersion group member, said.

The practice is controversial because of its environmental impact. A mountain targeted for mountaintop removal is first deforested, and then explosives are inserted into the ground to destroy the layer of earth covering the coal seams.

Santa Clara's investments are governed by the university's "socially responsible" investment policy, which seeks to maintain Jesuit values in investing.

The investment policy offers general guiding principles for investing, including the environment. The policy states it should protect and preserve the environment "by not investing in corporations that have been cited for repeated or gross ecological violations."

Kerrigan said investment portfolios "may not have 100 percent compliance with the policy." While this is especially true with index or hedge funds that do not allow the buyer to control the stocks they are investing in, Kerrigan said the Massey Energy stocks were chosen by one of the university's portfolio managers.

Ozawa's group is staking their objections to university investments in Massey on the social responsibility policy.

However, in order to have the university divest from Massey, he said they were told by Kerrigan that they must provide them with an argument for selling, not just an example of apparent unethical behavior, as well as an alternative for the funds.

For Kerrigan, the burden of proof is on the students.

"I'm not here to criticize Massey," Kerrigan said. "On the basis of the research these students have done, I think that's not fair."

Ozawa and his group presented Kerrigan with articles from Vanity Fair, National Geographic, and literature from anti-mountaintop mining groups.

Kerrigan said he sees the students' concerns as a learning opportunity.

He said he would like to see research by the students on the West Virginian economy, Massey's political base, its lobbying efforts and an examination of energy sector practices in light of rising oil prices.

"I don't want this to be a binary process," Kerrigan said.

Still, students in the group emphasize the environmental damage the process causes.

Shovels and trucks remove the debris from the mining, often leaving it in the surrounding valleys. The exposed coal is then mined, with any extra debris usually sent into the valleys, creating "valley fills."

The government reclassified this debris as "fill material," in 2002, exempting it from federal regulations that previously prevented dumping the material where it would contaminate water.

The valley fill side effect of mountaintop removal had been twice previously ruled illegal by federal judges as a violation of the Clean Water Act.

A team of managers maintain the university's endowment fund in individual portfolios of 50 to 100 different stocks. They are provided with a copy of the social investment policy to guide their choices in stocks.

"We talk about social responsibility with the managers we hire," Kerrigan said.

Contact Allison Sundaram at (408) 554-4546 or asundaram@scu.edu.