One of the challenges inherent in regulating the production of coal is the physical and geographical diversity of the conditions under which coal is mined and the methods used to mine it. Coal is actively mined in twenty-four states. There are five principal coal basins: Appalachia (Northern, Central, and Southern), the Illinois (Interior) Basin, Gulf Lignite (Texas and Louisiana), Western Bituminous (Colorado and Utah), the Powder River Basin (Wyoming and Montana), and numerous minor and subbasins within these principal basins. The principal methods of mining—underground and surface—have very different environmental and safety challenges. The diversity of conditions and mining methods in the various regions would suggest that local or state-level regulation of mining would be the best approach; experience has proven otherwise. Historically, mining states have been reluctant to enact and enforce stringent regulation, the effect of which would be to increase production costs and thereby put the particular state at a competitive disadvantage in relation to other states or regions. Other political considerations may be at work as well: a desire to protect local employment and businesses and to keep electricity costs low. This article explores current developments in regulatory federalism under the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. § 1201 et seq. (SMCRA) and the Clean Water Act, 33 U.S.C. § 1252 et seq. (CWA), in the context of the original congressional intent in enacting SMCRA to “strike a balance between protection of the environment and agricultural productivity and the Nation’s need for coal as an essential source of energy,” 30 U.S.C. § 1202(f).
An early case upholding its constitutionality, Hodel v. Virginia Surface Mining & Reclamation Ass’n, 452 U.S. 264 (1981), characterized SMCRA as “a program of cooperative federalism that allows the States, within limits established by federal minimum standards, to enact and administer their own regulatory programs, structured to meet their own particular needs.” SMCRA is based on the premise that because of the physical diversity of mining operations, states should have primary regulatory responsibility over surface mining and reclamation, subject to minimum standards to prevent a competitive “race to the bottom” by the various states or, in the words of the statute, to “insure that competition in interstate commerce among sellers of coal produced in different States will not be used to undermine the ability of the several States to improve and maintain adequate standards on coal mining operations within their borders.” 30 U.S.C. § 1201(g). SMCRA is implemented through the Office of Surface Mining Reclamation and Enforcement (OSM) in the U.S. Department of the Interior. Under SMCRA, OSM functions in partnership with state permitting and regulatory authorities; once the Secretary of the Interior has approved a state regulatory program, as including the minimum required standards under the statute, a state can grant and enforce surface mining permits. State permits must meet all of SMCRA’s performance standards, including environmental protection standards specified in SMCRA Section 515, 30 U.S.C. § 1265. SMCRA thus affords states comprehensive, but conditional, regulatory jurisdiction within their own borders (excluding federal and tribal lands), to encourage the states to adopt minimum national standards, as well as any more stringent, but not inconsistent, standards they might desire. A state with an approved program is known as a “primacy state.”
Twenty-four states are primacy states. In states without approved programs (federal program states), as well as on Indian reservations and federal lands, the OSM carries out permitting and enforcement functions directly under SMCRA. As to federal lands, which in the West contain a substantial fraction of the nation’s coal reserves, OSM has entered into cooperative agreements with primacy state programs. Of the federal program states, only two, Tennessee and Washington, as of the latest OSM annual report (2009) had active coal mining. No tribes have as yet attained primacy status, although OSM reported (2009) that it is currently working to this end with the Crow and Hopi Tribes and the Navajo Nation.
Under SMCRA Section 521(b), 30 U.S.C. § 1271(b), the federal government can, however, assume control over a regulatory program by withdrawing its previous approval, on the basis of a state’s demonstrated incapacity or intent to enforce its program. In such an instance, OSM assumes exclusive jurisdiction over the regulation and control of surface mining and reclamation operations in the particular state and adopts a federal program for the state.
SMCRA has engendered litigation since its enactment, reflecting the conflicting viewpoints of the coal industry, environmental groups, and state and federal regulators. An excellent synopsis of the battles of SMCRA’s first two decades is E. Green, “State and Federal Roles under the Surface Mining Control and Reclamation Act of 1977,” 21 S. Ill. U.L.J. 531 (Spring 1997).
One of the principal battlegrounds has been rulemaking, both by OSM and by state agencies in primacy states. Early cases, reflecting perhaps the newness of the statute, and its invasion of what had long been an exclusive province of the states, typically involved state and/or industry challenges to OSM regulation as exceeding the secretary’s mandate under SMCRA, undermining the “cooperative federalism” design of Congress entrusting primary regulatory responsibility to the states. For example, in In re Permanent Surface Mining Regulation Litigation, 653 F.2d 514 (D.C. Cir. 1981), the District of Columbia Circuit confronted a challenge to the scope of the secretary’s authority to promulgate regulations dictating minimum information requirements for permit applications submitted to state regulators. The D.C. Circuit, en banc, reversing an earlier panel decision, found that the secretary had rulemaking authority to require state permit applicants to submit items of information beyond those enumerated in the statute itself. The court held that notwithstanding the “primacy” of the state’s role in regulation under SMCRA, the secretary’s duty to disapprove state programs the secretary deemed ineffective “may not be obstructed by a policy of judicial deference to the state agencies proposing those programs.” 653 F.2d at 523.
More recently, the shoe has been on the other foot. State rulemaking, required to be approved by the secretary under section 503(b) of SMCRA, 30 U.S.C. § 1253(b), and regulations at 30 C.F.R. § 732.15, has been challenged as conflicting or inconsistent with SMCRA, by environmental organizations and others. For example, in Ohio River Valley Environmental Coalition v. Salazar, 2011 WL 11287 (S.D. W. Va., 2011), environmental organizations challenged amendments to West Virginia’s mining regulations regarding a “cumulative hydrologic impact assessment,” in accordance with SMCRA’s requirement that state program permit regulations address the probable hydrologic consequences of a proposed mine both at the mine site itself and on the surrounding area. 30 C.F.R. § 780.21(f). West Virginia amended its program regulations to delete a comprehensive definition of “cumulative impact” and add a shorter definition of “material damage to the hydrologic balance outside the permit areas,” not found in federal regulations. In an action against the secretary, in which the West Virginia Department of Environmental Protection intervened on the side of the secretary, the environmental plaintiffs sought to have the amendments set aside, and the prior definition of “cumulative impact” restored, on the basis of the provision of SMCRA Section 702(a)(3) that “[n]othing in [SMCRA] shall be construed as superseding, amending, modifying, or repealing” the CWA “or with any rule or regulation promulgated thereunder.” 30 U.S.C. § 1292(a)(3). Among the claims asserted by the plaintiffs was that the amended regulations, under § 1292(a)(3), should have expressly incorporated CWA water-quality standards as “material damage” criteria.
In response, the secretary submitted a letter to OSM from West Virginia regulators representing that “material damage” in a permitting evaluation would be evaluated with reference to CWA water-quality standards, on which OSM explicitly relied in determining regulatory conformity with the CWA. This state agency promise was apparently enough for the district court. Accordingly, and despite its own “reservations” regarding the amendments, the court found that OSM had articulated an adequate basis for the secretary’s approval and, thus, the state’s material damage definition did not “supersede, amend, modify, or repeal the Clean Water Act.” The Fourth Circuit affirmed, per curiam, 2012 WL 50635 (4th Cir. 2012).
State vs. Federal Enforcement Under SMCRA
As noted, the other unique facet of SMCRA’s dual regulation system is enforcement. Just as it authorizes states to develop their own regulatory programs, SMCRA confers on the states primary responsibility for enforcing SMCRA and state programs approved under it. The federal government’s intended role under SMCRA is primarily one of oversight, with intervention only if the state fails to perform its obligations. Here, too, the battle lines have shifted back and forth between state and federal enforcement efforts.
In addition to the ultimate sanction of withdrawal of approval of a state program, under SMCRA Section 521(b), OSM has authority under section 521(a) of SMCRA, 30 U.S.C. § 1271(a), to enforce any part of a state program not being enforced by that state in the instance of a specific violation. The process is triggered by the issuance by OSM of a ten-day notice (TDN) to the state regulatory agency (not required in cases of imminent environmental harm), if OSM has reason to believe that a permittee is in violation of a state regulatory program. If OSM finds the state has failed to take “appropriate action” to have the violation corrected or to show good cause for its failure to do so, SMCRA requires OSM to immediately conduct a federal inspection of the facility. If inspection discloses “imminent danger” to public health or safety, or “significant environmental harm,” OSM must also issue a cessation order and otherwise require the permittee to abate the condition; in all other cases, OSM issues a ninety-day notice to the permittee requiring abatement of the violation and for a public hearing.
The most contentious issue under section 512(a) has been what does or does not constitute “appropriate action” by a state agency or “good cause” for agency failure to take action. “Appropriate action” is not defined in section 512(a) itself, and implementing regulations unhelpfully define it in the negative, as “an action or response by a State regulatory authority that is not arbitrary, capricious, or an abuse of discretion” under the state program. 30 C.F.R.§ 842.11(b)(1)(ii)(B). Given that what is or is not “appropriate” is highly contextual, such vagueness is unavoidable. “Good cause” is more comprehensively defined, however, in 30 C.F.R. § 842.11(b)(ii)(B)(2), as including, among others, a determination by the state that the possible violation does not exist, that the state authority is precluded by administrative or judicial order from acting, or that it is diligently pursuing or has exhausted all appropriate enforcement provisions of its state program.
A corollary issue is whether the state or OSM is the ultimate arbiter of the “appropriateness” or “good faith” of state agency action. Stated otherwise, what, if any, deference does OSM owe to state decision making on either issue? Both issues—what constitutes “appropriate action” by the state agency, or good cause for agency nonaction, and who gets to decide either one—were squarely presented in a decision by the U.S. Department of Interior Board of Land Appeals (IBLA), the administrative appellate board within the Department of the Interior that hears appeals of administrative law judge (ALJ) decisions on OSM enforcement actions, in Al Hamilton Contracting Co. v. OSMRE, 172 IBLA 83 (2007).
In Hamilton, OSM issued notices of violation (NOV) to a mine operator for violating state effluent discharge standards, on the basis of the failure of the state agency, the Pennsylvania Department of Environmental Resources (PADER), to take “appropriate action” on the alleged violation. A prior administrative enforcement action brought by PADER had met with reversal at the state Environmental Hearing Board (PAEHB) on the basis that PADER had failed to meet its burden of proof that the discharges were hydrologically connected to the permittee’s mine site. PADER appealed the PAEHB decision to the Pennsylvania Commonwealth Court, where it was affirmed. The Pennsylvania Supreme Court denied review. While PADER’s appeal was pending, Hamilton, the mine operator, ceased treating the discharges at issue. After an OSM ten-day notice to PADER (to which it did not respond) OSM conducted its own investigation of ongoing discharges and issued NOVs to Hamilton. Hamilton contested them on the basis, among others, that PADER had, in fact, taken “appropriate action” in the form of its own administrative enforcement. In the subsequent proceeding before the ALJ, OSM presented its own evidence linking the discharges to the state permit. Sustaining the NOVs, the ALJ rejected Hamilton’s argument that the PAEHB decision and the state appellate court decision affirming it constituted “good cause” for PADER’s failure to take action. The ALJ also ruled, on the evidence, that OSM had good reason to believe there was a violation of applicable effluent standards.
A three-judge IBLA panel affirmed the ALJ, in a 2–1 decision. It reviewed the state procedural history and, like the ALJ, found that the failure of PADER to institute new enforcement proceedings, even during the pendency of its appeals, amounted to a failure to take “appropriate action.” It similarly reviewed the evidence before the ALJ and found the issuance of the NOVs to Hamilton justified on the merits. The dissent concluded that by appealing the adverse decisions, PADER had taken “appropriate action” and had good cause for not undertaking further enforcement for the same violation then on appeal. It criticized the ALJ’s (and the appellate majority’s) de novo review of the evidence before the state tribunals, arguing that because the federal government’s role is one of oversight, “[t]he due deference Congress intended the states be accorded under SMCRA is analogous to the deference accorded executive agencies given primary responsibility for the implementation of particular statutes. In such instances, the standard of review of the agency’s action is arbitrary and capricious.”
Hamilton points up a conflict at the heart of SMCRA. If SMCRA means what it says, OSM should allow states broad discretion in enforcement matters, including giving deference to state administrative and judicial decision making—even if the outcome of a particular enforcement is not the one federal regulators themselves would want. On the other hand, if permit violations are patent and ongoing and state regulators with ability to act fail to do so, as PADER could have done by continued enforcement while the court appeals were pending, how far should SMCRA’s cooperative federalism structure shield such inaction? As Hamilton illustrates, there are no easy answers.
Despite these state government vs. federal government tensions, it still must be recognized that SMCRA appears to be a successful experiment in joint state-federal regulation. Statistics show the evolution of the relatively limited role of the federal government in directly regulating surface coal mining. In 1985, OSM performed about 2,666 inspections in states that had primacy. In 2009, the first full year of the Obama administration, there were 1,469 inspections. It appears that the implementation of SMCRA over a thirty-year period has ultimately resulted in the state-federal balance that Congress intended when it enacted SMCRA in 1977.
The Clean Water Act
As noted, the list of laws that SMCRA does not implicitly repeal, supersede, or amend includes the CWA, the statute providing that “[n]othing in this Act shall be construed as superseding, amending, modifying, or repealing . . . (3) The Federal Water Pollution Control Act . . . , the State laws enacted pursuant thereto, or the Federal laws related to the preservation of water quality.” 30 U.S.C. § 1292(a). The nexus between the CWA and SMCRA has generated considerable litigation centered on the relationship between state and federal regulatory programs, both in enforcement matters and in permitting.
Most litigation has involved the regulation of “valley fill” operations in Appalachia, an integral part of the practice commonly called “mountaintop removal mining,” which has become widespread there over the last twenty years. To reach coal deposits that are layered horizontally in steep-sloped areas, miners blast away soil and rock on a mountaintop to expose the coal seams. After the coal is excavated, to meet SMCRA’s requirement that the approximate original contour be restored, the displaced spoil is positioned back on top of the mountain in an effort to recreate its original shape. Due to stability issues on steep slopes, the excess spoil, known as “overburden,” is placed in valley fills at the headwaters of streams. This process buries intermittent and perennial streams. According to a recent report by the Inspector General of the U.S. Environmental Protection Agency (EPA), nearly 2,000 miles of streams have been filled in Appalachia as a result of mountaintop mining, at a rate of 120 miles per year. EPA, Office of the Inspector General, Congressionally Requested Information on the Status and Length of Review for Appalachian Surface Mining Permit Applications, at 2 (Nov. 21, 2011) (Inspector General Report).
Regulatory oversight of the valley fill process is governed by section 404 of the CWA, 33 U.S.C. § 1344, under which the U.S. Army Corps of Engineers (the Corps) is authorized to issue permits for the disposal of “dredged or fill material” into “waters of the United States.” The Corps’ issuance of such permits has been challenged as failing to follow the mandates of the CWA. For example, in Ohio Valley Environmental Coalition v. Aracoma Coal Co., 556 F.3d 177 (4th Cir. 2009) (OVEC), environmental plaintiffs challenged issuance by the Corps of four section 404 permits to coal mining operations in West Virginia from July 2005 through August 2006. The plaintiffs contended, among other things, that the Corps wrongly interpreted the EPA regulatory exclusion of “waste treatment systems” from section 404, (and thus not requiring permitting under it), 40 C.F.R. § 232.2, as including stream segments linking the fill areas to downstream sediment ponds. They also claimed that the Corps’ environmental analysis, under the National Environmental Policy Act (NEPA), wrongly excluded impacts resulting from the entire valley fill, beyond the area permitted under section 404.
Reversing a district court vacation of the permits and grant of an injunction, the court of appeals held that for NEPA purposes the Corps was not required to consider environmental impacts of the filling of the entire valley and that its conclusion that the stream segments and sediment ponds, as waste treatment systems, were not “waters of the United States” was, under a standard of deference to agency decision making, not arbitrary or capricious. The court acknowledged what it termed “the statutory tightrope that the Corps walks in its permitting decisions” between the goals of the CWA in protecting the nation’s waters and the balance struck by SMCRA between protection of the environment and the nation’s need for coal as an energy source. On the NEPA issue, it observed that a state program, like West Virginia’s, approved under SMCRA, already provided for state-level environmental review; just as SMCRA provides, as noted above, that its provisions are not be construed as “superseding, amending, modifying, or repealing” the requirements of NEPA or the CWA, by the same token, NEPA should not be construed to require the Corps to federalize an environmental review process previously delegated to the state.
Largely in response to controversies like OVEC, in June 11, 2009, the Corps and EPA signed a Memorandum of Understanding, which provided for an Enhanced Coordination Process (EC Process), utilizing a Multi-Criteria Integrated Resource Assessment (MCIR Assessment) to screen pending section 404 permit applications to determine which required the EC Process and which could go through standard review. In September 2009, the EPA announced that seventy-nine pending surface coal mining permits would be required to go through the EC Process. On April 1, 2010, the EPA issued a detailed interim guidance memorandum for surface coal mining operations. The guidance described how the agencies will review section 404 permit applications, as well as NPDES permits under section 402 of the CWA, state certification under section 401 of the CWA and provided recommendations related to NEPA and the Environmental Justice Executive Order (E.O. 12898). The guidance was made final on July 21, 2011.
Later, in July 2011, in National Mining Association v. Jackson, coal industry plaintiffs filed suit challenging the EC Process, the MCIR Assessment and the Guidance Memorandum. The gist of the industry’s complaint was that in issuing the challenged documents EPA had exceeded its authority under the CWA and that the use of the challenged criteria without public notice and comment violated the Administrative Procedure Act, 5 U.S.C. § 702 (APA). On October 6, 2011, the federal district court ruled that in adopting the EC Process and the MCIR Assessment, EPA exceeded its statutory authority under the CWA and violated the APA. The court held that EPA’s authority under section 404 was limited to (1) developing guidelines under section 404(b)(1) and (2) exercising its veto authority under section 404(c) to prohibit the Corps from issuing a specific permit. The court reasoned that the challenged EC process and MCIR Assessment went beyond these two statutorily limited EPA roles in the section 404 permitting process. The court also ruled that EPA violated the APA in that the EC Process and MCIR Assessment rules were, in effect, legislative in nature and had not been properly promulgated. National Mining Association v. Jackson, 816 F. Supp. 2d. 37 (D.D.C. 2011). The case continues.
The decisions in the Fourth Circuit in OVEC and the U.S. District Court for the District of Columbia in National Mining Association v. Jackson may yet prove of only illusory benefit to the mining industry. EPA’s veto authority under section 404(c) of CWA permits still remains, although the scope of that authority is disputed. The current litigation arising from EPA’s veto of Arch Coal Company’s Mingo Logan subsidiary’s Spruce No. 1 permit is illustrative. The Spruce No. 1 permit was one of the section 404 permits challenged in OVEC case in the U.S. District Court for the Southern District of West Virginia. As discussed above, the Corps approval of the permit was vacated by the district court and the decision of the district court later reversed and remanded by the Fourth Circuit. On remand, the permittee moved for summary judgment. The United States obtained a stay of the proceedings while EPA considered exercising its veto authority. On January 13, 2011, EPA issued a “Final Determination” pursuant to section 404(c) of the CWA, pursuant to which it vetoed the Spruce No. 1 permit—an unprecedented step. This was the first section 404 permit veto of the Obama administration, the thirteenth in Agency history, only the second since 1989, and the first for a project already granted a permit.
Mingo Logan filed suit in the U.S. District Court for the District of Columbia challenging the veto of the Spruce No. 1 permit. Mingo Logan Coal Co. v U.S. Environmental Protection Agency, Case No. 1:10-cv-00541-ABJ. The company raised multiple issues, including the power of EPA to exercise its veto authority after the issuance of the section 404 permit, the scope of the EPA veto authority under CWA Section 404(c), whether the exercise of the veto by EPA usurped West Virginia’s regulatory authority under section 402 of the CWA and under SMCRA, and whether EPA demonstrated the alleged adverse downstream impacts that were the basis of its veto decision.
On March 23, 2012, Judge Amy Berman Jackson, an appointee of President Obama, granted Mingo Logan’s motion for summary judgment, 2012 WL 975880. The court concluded that EPA exceeded its statutory authority when it attempted to invalidate an existing section 404 permit by withdrawing its specification of certain areas as disposal sites after a permit had been issued by the Corps under section 404. The court evaluated EPA’s contention that section 404(c) of the CWA gave it authority to veto a section 404(a) permit previously issued by the Corps by “withdrawing” the specification of the disposal areas using the two-part test established in Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984). Under Chevron the court first looks to determine whether Congress has directly spoken to the issue. In doing so the Court looks to the statute itself using the “traditional tools of statutory construction” to determine whether Congress has clearly expressed its intent. If the court can ascertain Congress’ clear intent, no further inquiry is required. However, if there is ambiguity or silence on the issue in dispute, the second step is to determine whether the agency’s interpretation is reasonable, and, in doing so, it must accord the agency’s interpretation considerable deference.
The district court ruled that EPA’s contention that section 404(c) gave it the power to revoke or modify a section 404 permit issued by the Corps failed both prongs of the Chevron test. Applying the first Chevron test the court found that while there were some ambiguities in section 404(c) regarding EPA’s ability to “withdraw” a specification, there was no clear authority for the assertion of EPA’s after-the-fact veto authority. Moreover, the entire statutory scheme in which heavy reliance is placed on the necessity and finality of permits and the legislative history of the CWA all led the court to the conclusion that Congress did not intend EPA have the authority to veto or modify already issued permits. The court went on to say that even if it applied Chervon’s second test and gave EPA some deference in the interpretation of the statute, EPA’s assertion of authority in this case was unreasonable. It found EPA’s interpretation to be “illogical and impractical.”
While some may see the case as a significant defeat for EPA, Mingo Logan, even if it is not appealed, will be of little use to mining companies seeking new section 404 permits. If the decision stands, it will provide a greater degree of certainty for coal operators who currently have section 404 permits, as well as projects and industries beyond the surface coal mining industry who were threatened by the prospect of a post hoc veto of their section 404 permits, as noted by the court in Mingo Logan in response to briefs filed by amici.
The cumulative impact of years of litigation and shifting regulatory actions have created a far less efficient and predictable permitting process. In its November 21, 2011, report, the EPA Office of Inspector General found that of the 185 surface mining permit applications it studied more than half took longer than one year to process, with 40 percent exceeding two years. Inspector General Report, at 12–14.
Regulation of Mountaintop Mining in Broad Perspective
In the case of regulating mountaintop mining, the question of how to balance the preservation of the CWA requirements with the general policy in SMCRA of deference to the states with federal oversight, takes on sharp focus. Section 404 of the CWA clearly makes the Corps, with input from the EPA, the lead agency. SMCRA, however, is not silent on the issue of mountaintop mining. Subsections 515(c) and (d) of SMCRA create environmental performance standards, which must be incorporated into state program standards for mountaintop mining. Other SMCRA requirements may apply to mountaintop mining operations. For example, a provision in SMCRA subsection 515(b)(3), 30 U.S.C. § 1265(b)(3), states that
in order to achieve an ecologically sound land use compatible with the surrounding region * * * [mining] overburden or spoil shall be shaped and graded in such a way as to prevent slides, erosion, and water pollution and [the site] revegetated in accordance with the requirements of this chapter * * *.
To qualify for primacy over nonfederal, nontribal lands within their borders, states must adopt performance standards that are consistent with and no less stringent than the federal performance standards. SMCRA Section 503, 30 U.S.C. § 1253.
Under SMCRA, the regulation of surface coal mining was conceived as a state-federal partnership with the state taking the leading role with strict federal oversight. The CWA approach, at least as it relates to section 404 permits, is one of federal primacy, with the Corps and EPA dividing responsibility. This sets up a conflict between the policies and approaches of two important and overlapping regulatory programs. Consideration, however, ought to be given to how this authority is exercised. If there is still a belief that a cooperative state-federal partnership is the best means to ensure that mining is done in an environmentally responsible way, and that because of the diversity of conditions, the states are best suited to have regulatory primacy (subject to federal oversight), the current conflicting approaches of SMCRA and the CWA should be resolved. Normally, this could be done through legislation. With national politics as polarized as it is now, however, the likelihood of a reasonable compromise seems remote.
While a resolution of the uncertainty and conflict between SMCRA and CWA may be of direct interest to a limited number of regulators, mining companies, and public-interest groups, one may ask, does it really matter to the larger public? How important is the continuation of mountaintop mining? The answer will affect more than the immediate stakeholders, as a decline in the industry could be reflected in the rising cost of electricity to consumers. Until recently, coal-fired generation accounted for about 55 percent of the nation’s electric generation. Now, historically low natural gas prices have made substantial inroads. For example, according to the Energy Information Administration of the U.S. Department of Energy (EIA), in 2009, coal generation accounted for 45 percent of electric generation. In addition to low-cost natural gas, new regulations under the federal Clean Air Act, once finalized and implemented, will continue to make coal-fired generation less competitive, compared with other generation options. The EIA predicts that between 19 and 70 gigawatts of coal generation will be retired by 2020. Others see even greater potential reduction in coal generation. Moreover, the coal industry is not monolithic. Inter-basin competition will produce winners and losers. Once virtually all coal-fired generation is scrubbed, low-cost, relatively high Btu Illinois Basin coal will overcome the disadvantage of its higher sulfur content. The use of sub-bituminous coal from the Powder River Basin in Wyoming has grown since the enactment of the 1990 Amendments to the federal Clean Air Act.
The coal basin facing the greatest challenges will be Central Appalachia (CAPP). Much of the lowest-cost coal reserves in CAPP have already been mined. If CAPP is to remain economically relevant, mining companies must be able to mine the lowest cost reserves possible. To a large extent, mountaintop mining represents the most economic reserves available in CAPP. Given the current environment, if these relatively low-cost reserves cannot be mined on a predictable timetable, if at all, CAPP coal production will further decline. The coal industry has predicted that this decline in production will result in reduced coal employment. While this may have only minimal short-term impact on electricity consumers, the long-term impact may be different. While natural gas or coal from other basins may replace the CAPP coal, there is no guarantee that natural gas will remain as inexpensive as it is currently. Not all CAPP generation coal-fired power plants can be easily replaced by switching over to Illinois Basin or Powder River Basin coals without very substantial cost. U.S. generation may compete with world demand for these Illinois Basin and Powder River Basin coals, and even domestically produced natural gas may find its way to the world market, if development plans for Liquefied Natural Gas (LNG) export facilities go forward. In short, it is by no means certain that limitation on mountaintop mining will not affect electric consumers in the future.
The coal industry contends that mountaintop mining can be done in a responsible way that protects and enhances the environment. Public-interest groups that focus on the issue do not agree. The groups point to thousands of miles of damaged streams and the increased pollution of streams, impacted by large valley fill operations. They contend that rather than improving the economies of communities where mountaintop mining takes place, the practice actually hurts them economically and environmentally in the long run.
To some, the benefits of restricting mountaintop mining, environmental or otherwise, may be worth the potential additional energy costs to consumers and the economic losses that certain areas will suffer. A national, public dialogue on the costs and benefits of restricting mountaintop mining must take place and a coherent national regulatory framework developed that will provide legal and economic certainty, regardless of the policy choice made. Ideally, whatever the decision, it should be implemented in a way the preserves the state-federal balance that is the centerpiece of SMCRA’s regulatory scheme. In the meantime, regulatory predictability and certainty are goals that should be pursued. Unfortunately, it would appear that continued uncertainty will remain the norm for the foreseeable future.