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May 27, 2009 > Obama's mining approach leaves industry wondering

Obama's mining approach leaves industry wondering

By Tim Huber, AP Business Writer

CHARLESTON, W.Va. (AP), May 23 _ No one's particularly pleased with the Obama administration's early approach to regulating the U.S. coal industry.

The industry and big coal producing states are worried about stricter reviews of Appalachian surface mining permits by the Environmental Protection Agency that have contributed to a lengthy backlog and efforts to eliminate a pro-mining rule adopted by the Bush administration. That's atop broader concerns about efforts to curb greenhouse gas emissions from coal-fired power plants and talk of regulating carbon dioxide _ the chief greenhouse gas _ as air pollution.

Even the EPA's recent announcement that it had no objection to 42 surface mining permits has done little to assuage mine operators _ and certainly not environmental groups.

If anything, the industry is more leery of the new administration than ever, National Mining Association spokesman Luke Popovich said.

Environmentalists, on the other hand, are unhappy Obama hasn't issued an immediate ban on mountaintop removal coal mining. Along with many Appalachian residents, they've been fighting the particularly destructive and disliked brand of surface mining practiced across a broad swath of West Virginia, Kentucky and Virginia.

As the name implies, mountaintop mining involves blasting away ridgelines to expose multiple coal seams and, in many cases, burying mountain streams under tons of rock, dirt and other debris.

``Clearly they've signaled a new policy direction, but they have not yet taken any actions that are going to dramatically change what's happening on the ground in Appalachia,'' said Mary Anne Hitt, deputy director of the Sierra Club's Beyond Coal campaign. ``We would like to see mountaintop removal ended.''

Colorado State University political scientist Charles Davis, who has studied the contrasting approaches to surface mine regulation under the past two presidents, says Obama's approach is not surprising.

``I think he's a middle-of-the-roader by instinct on this,'' Davis said. ``They do recognize that 50-plus percent of all the power plants are powered by coal and that coal has to be part of the solution despite all the rhetoric.''

Obama also enjoyed support from the United Mine Workers, though the labor union largely stays out of the mountaintop removal debate.

Coal producers, however, are getting ever more wary, Popovich said.

``We are encouraged by what we see is continuing support for clean coal technologies, particularly carbon capture and storage, which underscores the importance of coal for the nation and the importance of technology to address global warming,'' he said. ``However, we remain very concerned about the actions of regulatory agencies.''

Chiefly, big coal is bothered by the EPA.

``Some mistakenly think the permits issue has been resolved satisfactorily,'' Popovich said. ``We would point not to the permits that have been granted but to the many, many more permits that are still threatened.''

The EPA's decision to scrutinize surface mining permits is a big concern looming over eastern U.S. coal producers. One after another they were quizzed about when they'll run out of surface mining permits during conference calls with Wall Street analysts after reporting first-quarter financial results.

That's a real fear for the industry _ and a possible trouble for electricity consumers. Appalachian surface mines produce somewhere in the neighborhood of 10 percent of the nation's coal, but most of the region's output goes to generating plants in the southeast. If mines can't get permits, they can't operate and the supply of coal goes down, forcing the price up.

Mountaintop removal mines need permits issued under the Clean Water Act to fill valleys with debris and those permits have been hard to come by. Just a handful of permits had been issued for Appalachian surface mines since a federal court decision in 2007. When that ruling was reversed on appeal earlier this year, mine operators were hoping to get long-delayed permits, but now they say the EPA announcement has made it difficult again.

Consol Energy, for instance, recently warned 54 workers at a West Virginia surface mine that they'd be laid off come July because the EPA is reviewing a valley fill permit the mine needs to keep going.

Consol thought the permit was going to be granted, but the EPA objected, leaving the company in limbo, spokesman Tom Hoffman said. The mine was not among those the EPA recently announced it would not challenge.

Concern about permits also contributed to Abingdon, Va.-based Alpha Natural Resources' decision to bid $1.4 billion for rival Foundation Coal. Officials with both companies said Linthicum Heights, Md.-based Foundation's surface mines in Wyoming, where regulatory pressure is less, made the company more attractive.

Not having permits causes various headaches for mine operators. Scott Depot-based International Coal Group, for instance, has been trucking material to distant valley fills at an eastern Kentucky mine since the U.S. Army Corps of Engineers suspended a Clean Water Act permit. That permit has since been reinstated.

``That will be a cost improvement,'' ICG Chief Executive Ben Hatfield said to analysts last week. ``As an ongoing matter, I think the industry just has to deal with the new reality that there are going to be challenges to virtually every new permit that is issued.''

Not everyone is displeased that the new administration has merely done away with old rules and not created new ones. Ohio Valley Environmental Coalition executive director Janet Keating says it's just nice that people who oppose mining have a voice after being ignored under Bush.

``We're not being ignored,'' Keating said. ``There has to be, whether we like it or not, a careful approach.

``We're not going to end coal today. We're not going to end mountaintop removal today.''

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