By Lee Buchsbaum

On Election Day last November, Appalachia voted against Barack Obama in an attempt to stave off what many feared would be his administration’s war on coal mining, an industry still central to the struggling regional economy. Their fears thus far have been realized. In the midst of one of the deepest recessions and roughest coal markets since World War II, Obama’s Environmental Protection Agency (EPA), now helmed by a group of partisan environmental activists, is aggressively seeking to right perceived environmental wrongs, tighten up and roll back the alleged lax regulations of the Bush era. Squarely in their crosshairs is the practice of mountaintop mining and seemingly all forms of surface mining. Appalachian mines, particularly in eastern Kentucky and West Virginia, are going through an unprecedented legal, regulatory, media and public review. For a weary industry, long under assault and now down on its knees, survival is at stake and judgment day is certainly at hand. 

Change was in the air within months of Lisa Jackson’s swearing in as administrator of the EPA. In June, the EPA, along with the Army Corps of Engineers (corps) and the Federal Department of the Interior announced they would initiate an Enhanced Coordination Procedure (ECP) “that will evaluate pending surface coal mine projects that were initially coordinated prior to March 31, 2009,” stated the EPA. On September 11, the EPA released a list of 79 permits requiring further review. Then, at the end of the month, the EPA re-released the list, restating that all 79 would indeed be undergoing yet another review. In a statement by the EPA intended to clarify some of the lingering questions about the process, the EPA stated that “there are remaining water quality and/or regulatory compliance issues with all of the applications.”

“The administration pledged earlier this year to improve review of mining projects that risked harming water quality. Release of this preliminary list is the first step in a process to assure that the environmental concerns raised by the 79 permit applications are addressed and that permits issued are protective of water quality and affected ecosystems,” said Jackson. “We look forward to working closely with the Army Corps of Engineers, with the involvement of the mining companies, to achieve a resolution of EPA’s concerns that avoids harmful environmental impacts and meets our energy and economic needs.”

Through the end of September, the EPA further evaluated the preliminary list of projects slated for further review and transmitted a final list to the corps. Since all 79 permit applications were still being withheld, issues of concern regarding particular permit applications will now be addressed during a subsequent “60-day review process triggered when the corps informs EPA that a particular permit is ready for discussion,” said the EPA press release.

The enhanced coordination process between the EPA and the corps, announced in June 2009, was created by the new administration to strengthen the environmental review of pending mining applications and “to address the backlog of permit decisions that occurred as a result of various challenges, including litigation,” said the press release. Created under a Memorandum of Understanding (MoU), the administration is “confident that this collaborative effort will strengthen our environmental reviews while allowing sustainable economic development to proceed,” said Jo-Ellen Darcy, assistant secretary of the Army for Civil Works. “This administration made a commitment to be more collaborative, transparent, and efficient in how it executes its responsibilities. The enhanced coordination procedures in the MoU provide a path forward and certainty regarding how the projects will move through the process.”

While a change in governance styles and interests often follows a change in administrations, it has become clear that all things coal and carbon related are immediately coming under stringent review by the federal government. Given that surface mining, particularly in Appalachia, and especially any so-called “mountaintop mining” was controversial before President Bush left office, it should come as no surprise that the new sheriffs in Washington are bent on raining hell all over West Virginia, eastern Kentucky and anywhere they sniff a valley fill.

Though the continued evaluation of these particular permit applications doesn’t necessarily mean that all, most or even the majority of these 79 projects will be rejected, it does mean that the EPA is going to make these coal companies work for those permits and dance to their new tunes. In another press release the EPA stated that while they had “further concluded that some applications are clearly not ready for processing…others are likely to be readily resolved upon further discussion with the corps.” It remains to be seen how stringent the EPA’s new requirements will be, how any resolution will be made and to what extent these new regulations will drive up the costs of production—thus forcing an entire reevaluation of the worth of pursuing these projects.

Killing Off the Coal Industry
As of press time, just what those new requirements, regulations, and benchmarks will be remains unknown. For months, Appalachian operators have been struggling to figure out how to change their permit applications. “A typical response from the corps and EPA has been ‘what you have submitted is not acceptable. Go back to the drawing board.’ But you have no idea what was wrong to begin with. You take your best shot at an invisible target,” said Peter Lawson, executive vice president, Marshall Miller & Associates. 

Anger, frustration and confusion are definitely the norm as the industry tries to figure out what has happened, what may be next and how to adjust. “Right now, my belief is that they’re trying to kill off surface mining through regulation what they cannot get done through legislation,” said Joe Manchin, the Democratic Governor of West Virginia. “I was hoping they were looking for a better way and a better use that we could all agree upon. But that’s not their actions and that’s not what I see.”

Almost immediately following the EPA’s announcement, the organizations that represent the industry united to condemn the enhanced review process and its findings. “We cannot plan for the economic future of our operations absent a workable, transparent process that provides certainty,” said National Mining Association President Hal Quinn. “EPA’s answer of more delay and study is at cross-purposes with our nation’s need for affordable energy, investments and secure jobs.”

Bill Caylor, of the Kentucky Coal Association, railed against the “EPA’s hit-list” stating that it “was compiled by people in Washington who are entirely insulated from the consequences of their actions and far removed from the families and communities affected by them.” His counterpart from the Ohio Coal Association nearly begged the EPA to understand that they were “playing with people’s livelihoods. The implications of their delaying tactics will be felt throughout this state’s economy.”

Bill Raney, president of the West Virginia Coal Association, was equally apoplectic with frustration. “They don’t understand why Washington is willing to kill off good paying jobs when our economy is still on the ropes and the unemployment rate is still unacceptably high,” he said.

Not surprisingly, Mary Anne Hitt, deputy director of the Sierra Club’s Beyond Coal Campaign, praised the EPA’s move, saying her organization hoped the decision is indicative that the Obama administration would take further actions toward curtailing mountaintop mining. “An enhanced review of each of these pending permits will surely prove that this most destructive form of coal mining is incompatible with clean water,” Hitt said. She wants the EPA “to reverse the Bush-era rule changes that allowed coal companies to dump waste into waterways. We call on the Obama administration to reinstate the original intent of the Clean Water Act and to prevent mining waste from being used as fill material.”

A Twisted Legislative, Legal, and Regulatory Issue

When the Clean Water Act (CWA) was passed by Congress in 1972, the EPA was given administration of our nation’s waterways. Through legislation, however, the corps was tasked with regulating those waterways, and was given authority through section 404 of the CWA. When the Surface Mining Control and Reclamation Act (SMCRA) passed in 1977, “it was clearly the intent of Congress that this new act would supercede the Clean Water Act, and then SMCRA would regulate mining throughout all states,” said J. Steven Gardner, P.E., P.S., president and CEO, Engineering Consulting Services. “And within SMCRA there were provisions for mountaintop mining operations.” 

In the five years prior to SMCRA, the EPA had issued a series of Nationwide 21 permits under the CWA giving approval to a variety of surface mining methods. These permits were a way for the corps not to get bogged down by individual mine applications.

In the late 1990s, some environmental attorneys gained significant legal victories through a series of decisions made by West Virginia Judges Hayden and Chambers requiring the corps to exert more regulatory power over mining permits. “They didn’t want the authority as they were happy with the existing system, but they were mandated by courts to do more. These decisions created a whole new round of other litigation and a sense of uncertainty about the legal viability of large scale surface mining, especially mountaintop mining,” said Gardner. It wasn’t long after this decision that first Peabody Energy and then others, including Arch Coal, began to invest elsewhere, particularly in Wyoming. 

Since SMCRA passed, and up until the beginning of the Obama administration, the corps was responsible for permitting surface mines and they generally relied upon the issuance of other permits by the state where the mining would take place. For example, “West Virginia, as a sovereign state, is in charge of determining its own water quality standards and how these apply to any mine or other entity,” said Jason Bostic of the West Virginia Coal Association.

The truth is, however, that SMCRA gives the EPA veto power over permits issued by the corps. Over the nearly 30-year period prior to the Obama administration coming into power, the EPA has almost never exercised this option. What is new and different today is that the EPA, through letters they have written to the corps, has taken issue with West Virginia over these water quality standards. “These are standards that our government does not necessarily agree with. The EPA is trumping state law,” said Bostic. “There is another process whereby the EPA could challenge these permits, through Section 402 of the Clean Water Act. But rather than come at this directly, the EPA is instead taking a back door approach by writing these letters. In so doing, they are also revisiting issues that we thought were settled 12 years ago.” By issuing these letters, the EPA is in effect saying they have no faith in the last 12 years of policy, Bostic said.

The violations of the CWA in which the EPA’s objections are rooted, refers specifically to mine run off and the movement of headwater and other streams that would affect riparian communities, specifically benthic, or Mayfly, communities. “This comes down to bugs. The EPA is saying that while insects do return to streams, they aren’t the right kinds of insects. It would be funny if it wasn’t so damn serious,” said Bostic.

As the environmentalists increased their pressure on the industry, some companies moved back to large underground operations. “Really we’re facing a long-term decline in surface mining in Appalachia. Already, much of large reserves are mined out and fewer and fewer significant tracts are left,” said Gardner. Very recently, environmental groups have again been successful in West Virginia and now Kentucky as well.

Tilting at Windmills and Guessing
Currently the mining community in Appalachia is stuck in a twilight zone. “This is the first time we don’t have any established guidelines to follow,” said Lawson, who spent 25 years in the industry, most recently as general manager of Arch Coal’s Samples mine, at the time largest surface mine east of the Mississippi. “We’d love to see a poster child mine. We want a set of rules, clear, understandable guidelines to follow. We want to see the target.”

Virtually every mine requires new permits to sustain its operations. Mines generally add incremental permits to their operations as they mine. “Today folks are running the risk of having stranded assets, capital, and resources. They don’t know what to do tomorrow. People are looking to redesign their permits to comply with what they perceive might be the desires of the regulators, seen through the prism of the Clean Water Act, not SMCRA,” said Bostic, but given the lack of precedence of the new norm, mine planners are shooting in the dark. As of right now, Bostic said, he knows of “no mines that have shut down in West Virginia because of their 404s being held up though there are certain operations where folks are really close, like three months or less away. But certainly most of the held up permits will be needed in about six months to a year.”

Coloring the EPA’s recent decisions is an overflow of frustration with the long lack of certainty. “How many times have we been to court and we’ve gotten an answer and then had that decision overturned? From 1998 to 2009, we’ve been back in the courts, gotten favorable rulings only to have others overturn them. We don’t know whether the courts really resolved these situations or not,” said Bostic. 

“Everybody is looking for some final resolution for this issue,” said Lawson. “The turmoil has been seemingly going on forever. But companies have successfully operated under SMCRA for decades. The laws were passed and followed. Over the years, there have been many enhancements. Standards of mining and reclamation are much higher now than what they were a couple of decades ago and continue to progress as we understand new technologies. We just want
clarity.

Ominous Signs and Many Questions
Speculation is rampant in the absence of knowing the EPA’s overall desires. Operators and mine planners are  demanding to know why the mining industry is being singled out by the Federal government for creating fill material and disturbances in Appalachia when what they do is little different from other types of development or construction activities. “With highways and strip malls, you can make the same comments. If you disturb a stream to build a Wal-Mart is that ok, but if you disturbed a stream to mine some coal, that’s not?” asked Dennis Hatfield, president, Booth Energy, one of the largest independent operators in Appalachia.

“While mountaintop mining has been central to the challenge, we’d be a bit naive if we thought the same types of impacts don’t exist for underground mines and infrastructure,” said Hatfield. “What’s going on here is far greater and broader-reaching.  It’s much more than just mountaintop mining.”

The concerns raised by the EPA under the CWA are so broad that they equally apply to smaller scale contour-style mining, highwall mining, various underground operations of all sizes, coal refuse handling, and preparation plants operations. “It appears as if the media is engaging in an assault on mountaintop mining, and right now it’s obviously an assault on West Virginia, location of roughly one-third of the stalled permits, but this assault has already spread to other adjoining states. “Does the EPA have a wider agenda? It is everything in the East? Is it nationwide?” asked Bostic.

In their own defense, the EPA stated that their actions do “not prohibit any project, nor do they reflect a judgment about the likelihood that a project will or will not be authorized.  EPA’s action identifies projects that require additional coordination and review in cooperation with the corps and mining companies before a permit decision can be made.  Projects that the corps determines to be in compliance with Section 404 of the CWA may be authorized by the corps…the recommendations made as part of the ECP do not constitute a determination by EPA under its CWA Section 404(c) authority that surface coal mining cannot be permitted under CWA 404, nor does it represent a final recommendation from EPA to the corps on the proposed projects. Instead, EPA’s decision will help to ensure that mining projects approved under the CWA are fully consistent with the requirements of the law and will protect water quality and the environment.” 

And despite apparent contradictions, the EPA insists that it will not “usurp” the corps authority and that through September the corps had not “made any decisions on the proposals subject to the enhanced coordination procedures, and the MoU is not intended to alter the corps’ decision authority for CWA section 404 permits.”  

Despite such reassurances, “some are anticipating that as a worst case scenario, the EPA will restrict or completely outlaw further excess spoil disposal, meaning no more valley fills. In mountainous Appalachia, what do you do? Sure, if your operation is adjacent to a pre-law mine area with existing highwalls, maybe you could use that space as storage, but any surface mining requires some initial development. If it’s not a valley fill, you still have to find something that doesn’t impact the waters of the United States, and what is that? Do you truck your overburden to some distant site? Is that economic? How do you manage? And what about slurry impoundments? The environmental activists have lumped slurry impoundments in with mountaintop mining. Much of the surface mined coal does not require preparation, but virtually all underground mining requires preparation and thus slurry impoundments. This is really a disguised attempt at phasing out coal mining in Appa-lachia,” said Gardner.

Recently, in a more startling development, the EPA announced it is reviewing a permit already issued by the corps, that of Arch’s Spruce Fork mine, which raises an ominous sign that they could reach back and rescind already issued permits. “That’s unfathomable, to issue permits after exhaustive review and scrutiny and then seek to withdraw or amend them,” said Lawson.

Equally disturbing, since the EPA has clearly determined that these 79 new permits, which previously would have been issued by the corps are, in their view, actually in violation of the CWA, it’s not a giant leap to assume they believe permits already issued by the corps during the Bush and Clinton administrations are also in violation of the CWA. If that is the case, what kind of widespread havoc could the EPA create?

Buchsbaum is a Denver-based freelance writer and photographer specializing in industrial subjects. He can be reached through his Web site at www.lmbphotography.com or by phone at 303-746-8172.