The Stream Protection Rule: A Final Blow to America’s Coal Industry

Stream

The Office of Surface Mining Reclamation and Enforcement (OSMRE) is expected to publish the final Stream Protection Rule in the coming months.  Despite the controversy, congressional hearings and substantial number of comments the draft rule received, industry and states expect that the rule will be finalized with little change from the published draft rule.  So what exactly does this mean for America’s coal mining industry?  In a nutshell, it will create additional obstacles to obtain permits and place additional costs on both industry and regulatory authorities.  The end result will be little environmental benefit at significant cost to those who depend on mining to make an honest living.  The most significant job and production impacts will be felt in Appalachia, a region already stricken by unemployment and poverty.

Coal mining is one of the most highly regulated industries today, right below firearm manufacturing and nuclear power facilities.  To a layperson unfamiliar with the current regulatory scheme, this Stream Protection Rule may seem to be a much needed change to the current laws.  After all, the Surface Mining Control and Reclamation Act (SMCRA) has been on the books since the late 1970s.  Is SMCRA so antiquated that a re-write of the regulations is necessary?  The short answer is no.  SMCRA has been interpreted, litigated and reinterpreted for nearly four decades by the courts and the regulatory authorities.  The Stream Protection Rule is such a significant change from the current regulatory environment that it will require another 40 years of interpretation, litigation and reinterpretation at great cost.  Since the passage of SMCRA, the mining industry has made great strides in implementing environmental protection measures and there are many mechanisms already in existence to enforce the laws.

The key provisions of the Stream Protection Rule include: defining “material damage to the hydrologic balance outside the permit area”; significant additional baseline data gathering for the mine site and adjacent areas; additional surface and groundwater monitoring requirements; specific requirements for the protection or restoration of perennial and intermittent streams; and additional bonding and financial assurance requirements.

While the provisions identified above may appear to have noble intent, the end result will decimate what is left of the coal industry for three basic reasons: additional costs will be placed on an industry already operating on extremely slim margins; uncertainty will abound for mining companies on the ability to obtain a permit and stay in compliance with the permit; and the surety industry will not issue reclamation bonds when there is a likelihood that those bonds will never be released even if reclamation is performed to specification.

One final point is that OSMRE has gone about this rulemaking in a “one size fits all” approach.  While nobody in the federal government will likely admit this, the SPR was designed to significantly reduce or eliminate Mountaintop Removal Mining in Appalachia.  But rather than looking to the states (who have “primacy” or primary responsibility for implementation and enforcement of SMCRA) that host Mountaintop Removal operations for regulatory solutions, OSMRE is attempting to impose these regulations nationwide.  A basic premise of the SMCRA program is states’ rights, the recognition of which is a clear directive of Congress in Title I, Section 101 of the Act:

“because of the diversity in terrain, climate, biologic, chemical, and other physical conditions in the areas subject to mining operations, the primary governmental responsibility for developing, authorizing, issuing and enforcing regulations for surface mining and reclamation operations subject to this Act should rest with the states.”

Interestingly, if one takes the time to look over annual state oversight reports by OSMRE, it is difficult to find where OSMRE finds there are state regulatory program deficiencies.  Most states have implemented effective SMCRA programs tailored to meet the needs of the physical and regulatory landscape that is unique to each state.  OSMRE has demonstrated no need for a modification to the federal standards, and this attempt to impose such sweeping new standards without such a demonstration undermines the statutory scheme crafted by Congress four decades ago.

For more information on the Stream Protection Rule visit http://streamprotectionrule.com.

Mining Around The World: An Industry in Turmoil

It has been a whirlwind year. Having served as President of the Society for Mining, Metallurgy and Exploration in 2015, I was fortunate enough to have the opportunity to travel to many of our local SME section meetings over the past year as well as several international meetings. SME helped form the Global Minerals Professional Alliance (GMPA) which includes AUSIMM (Australia), SAIMM (South Africa), CIM (Canada), IMPP (Peru), and hopefully soon IOM3 in Great Britain. GMPA held meetings in Hong Kong, Canada and the US during my term that I had the distinct opportunity to attend.  I look forward to continuing to attend SME and GMPA meetings in a member capacity as I travel around the world for my “day job” as President and CEO of ECSI, LLC, a consulting engineering firm that offers expertise across a multitude of service areas including mining.  In light of the downturn in the mining industry, I am committed to aiding SME in leading an effort to devise a strategy to improve the public perception of mining.

The University of Kentucky Mining Engineering Foundation has granted me the honor of speaking at their Distinguished Lecture on April 21, 2016 at the Lexington, Kentucky Marriott where I will be discussing my observations on Mining around the World in 2015.  It was a tumultuous year in mining – from the hollows of Appalachia to South America, Asia and Africa.  Hundreds of thousands of people lost their jobs as commodity prices plummeted and regulatory influences affected the ability of miners to turn profits.  Worldwide protests occurred against new mining proposals and the public perception of mining is at an all-time low.  Mining supplies virtually everything that modern society requires, from the raw materials for cell phones to solar cells, the buildings we live in, the roads we drive on and the fertilizers to grow food to feed the world.

As a native of Appalachia, much of my career has been spent in the region. The past year has witnessed a flood of new proposed rules and regulations that will significantly curtail domestic energy production and make it more difficult for the United States to be competitive in the global marketplace.  Regulations from the Environmental Protection Agency limiting greenhouse gas emissions from coal fired power plants, better known as the Clean Power Plan (CPP), are causing a mass decommissioning.  The Office of Surface Mining (OSM) has published a proposed Stream Protection Rule (SPR) to limit environmental impacts to streams from coal mining. These rules are quite voluminous—in excess of 5,000 pages—and will certainly further diminish the nation’s use of coal. The SPR has been demonstrated to have been based on faulty assumptions and questionable science.

These regulations will have an impact on an industry that is already reeling from a historic downturn. We all know the various causes of the downturn: the very real “War on Coal”; other environmental regulations from the federal government; the slowdown in the global economy; competition from cheaper natural gas; growing competition from subsidized renewable sources. In a nutshell, the energy landscape is changing dramatically, and these regulations only serve to accelerate those changes.

Are these rules another nail in coal’s coffin? They appear to belie a stated “all of the above” policy for the nation’s energy portfolio. Given the Clean Power Plan is dramatically different in its final form compared to the proposed rule, and given the Stream Protection Rule is new to all of us, there will be quite a bit of scrutiny in the upcoming weeks and months regarding the impact of these regulations, not to mention years of litigation surrounding both of these regulatory actions.  Coal and the rest of the mining industry will be facing some big unknowns in the next few years.

Almost every mining sector is down economically with significant layoffs, but the coal industry has been hit extremely hard and most likely will not completely recover.  Other mining sectors have to rebound in time as we all know the importance of mining to society.  Due to this downturn, ECSI has diversified its service offerings.  While we will continue to be a leader in engineering and environmental services for all mining sectors, we are now expanding our focus to civil engineering, surveying, environmental, and litigation support services for the public, private and energy sectors.

Largely due to the importance of keeping mining and development in Appalachia a focal point of our business, the ECSI local partners were afforded the opportunity to repurchase stock owned by Ecology & Environment, Inc. in 2015 and establish itself once again as an employee-owned company. In light of this change and those within the industry, I believe this year is a new beginning for ECSI. With our dedicated staff and management team, I am excited to extend our reputation for excellent client service and satisfaction to our new service areas while expanding our geographic reach.

JSG Signature