RPT-FEATURE-Pennsylvania town fights big coal on mining rights

* Challenge over corporate rights in small towns

* Control of Pennsylvania's coal and gas reserves at stake

By Jon Hurdle

TAYLORSTOWN, Pennsylvania, June 15 (Reuters) - A small Pennsylvania town is trying to ban coal mining in a battle being played out across the state as rural communities try to assert control over mining, gas drilling and other businesses.

Blaine Township, a community of 600 about 40 miles (65 kilometers) southwest of Pittsburgh, hopes to trigger a legal battle that could determine the rights of municipalities throughout the United States to control corporate activity.

Some legal experts say the township is highly unlikely to win that fight. For now the dispute is in federal district court, where major energy companies have sued the township over three ordinances that would ban coal mining and require companies in any business to disclose their activities to local officials.

Penn Ridge Coal LLC, a unit of Alliance Resource Partners (ARLP.O), and Allegheny Pittsburgh Coal Co., a unit of Allegheny Energy (AYE.N), say Blaine's laws violate their corporate rights.

The companies say the ordinances would prevent them from mining 10.6 million tons of recoverable coal beneath the township -- enough to supply electricity for 2 million people for a year.

The township has gone further than any of the 120 U.S. municipalities -- most of them in Pennsylvania -- that have passed ordinances to curb corporate activity such as factory farming or spreading sewage sludge, said its lawyer, Tom Linzey of the Community Environmental Legal Defense Fund.

Of three townships sued by corporations over their ordinances, only Blaine has refused to back down, Linzey said.

Elsewhere in Pennsylvania, towns are resisting efforts by energy companies to extract natural gas from the massive Marcellus Shale formation amid fears that toxic chemicals used in drilling are contaminating ground water and endangering human health.

CREEKS DIVERTED

In Blaine, residents are seeking to prevent coal mining -- which they expect to begin there in 2011 -- because they fear it will ruin their houses and disrupt water supplies, as they say it has in surrounding areas.

They want to block longwall mining, a technique that rips tons of coal from underground without putting anything in its place, causing the land above to sag. The practice, which has been used in coal-rich southwest Pennsylvania since the 1970s, has cracked the walls, roofs and basements of homes and opened fissures in the land, diverting or draining creeks and ponds.

In neighboring Morris Township, Tammy Bowman pointed to a pile of broken wood and concrete -- all that's left of an outbuilding she said was destroyed by shifting ground from mining beneath her 19th century farmhouse.

"It just started to drop and drop," she said. "It got so bad, you couldn't even walk in the door."