COAL:

Embattled industry wages multifront lobbying war

A sweeping climate bill might be the most immediate threat to the coal industry, but it's just the peak of a mountain of worries for a business fighting for its future.

Mining permits have become nearly impossible to obtain. New limits are coming on where companies can dump debris dynamited off mountaintops. And Democratic leaders in Congress want to shrink how much coal Americans use. Coal sees itself under attack from Congress, the Obama administration and the courts. Environmentalists call it a long-overdue correction after eight years of the coal industry operating with lax federal oversight.

Potentially huge effects on the industry have accelerated lobbying by both coal and its opponents.

But getting the attention of Congress is a challenge, as lawmakers wrestle with myriad energy issues. Because many states use coal or rely on coal-burning power plants, the industry likely will gain concessions in some areas, analysts said. But there are plenty of places where it faces intense battles.

"Their strength in terms of persuasion comes when they can make an economic case, where they can speak to jobs and economic benefits," said Kevin Book, a managing director for ClearView Energy Partners, an energy research and consulting firm. "They tend to have some leverage. When the issues are framed as environment issues or labor issues, then they tend to lose those."

Coal is pressing the economic argument. When its lobbyists speak to members of Congress, they are talking about miners who live in poor areas and earn more than the average U.S. wage. As President Obama and Congress work to reignite the economy, coal lobbyists are arguing, policies that kill jobs are not a smart approach. Coal advocates also emphasize the country's reliance on coal for cheap electricity generation. Cut coal, they say, and power prices will surge.

"People on both sides of the aisle understand what's at stake here," said Luke Popovich, spokesman for the National Mining Association. "It isn't just about jobs. Coal generates half of our electricity.

"The whole point ought to be to make coal cleaner to use, not to eliminate its use," Popovich added.

Environmental groups, meanwhile, are working to counter coal's lobbying.

"Coal is in very serious trouble," said Bruce Nilles, director of the Sierra Club's Beyond Coal Campaign. "It can't operate in an even playing field world. It operates in a world of loophole and subsidies."

Both sides are talking with their congressional allies and with moderate Democrats who are swing votes on climate and energy issues.

"There is a battle going on for those moderate senators who are heavily dependent on coal" in their states, said Scott Segal, co-head of the federal relations and strategic communications groups at Bracewell & Giuliani LLP, which represents electric utilities and coal and energy companies. "You're not going to win every battle," he added, but in terms of power prices, "the country can't afford for you to lose every battle."

Environmentalists, meanwhile, say during visits to lawmakers they are trying to shoot down what they consider misinformation presented by coal lobbyists.

In terms of jobs, Nilles said, there is stagnant growth in coal states, while new energy sectors like wind are creating jobs. He gives lawmakers and aides information about states that have promoted renewable energy and are seeing new jobs, including Colorado, Illinois, Iowa, Kansas, Minnesota, Oregon, Texas and Washington.

Regulatory shifts

On regulatory matters, coal is seeing what analysts and government officials describe as a boomerang effect.

Federal judges have tossed several environmental regulations enacted by the Bush administration. At the same time, the Obama administration's EPA and Interior Department are re-examining Bush-era rules. It is the same kind of action that happened when President George W. Bush arrived in the White House and began reversing or halting the Clinton administration's rules.

Coal lobbyists and advocates call the Obama administration's reviews unfair, saying that the industry has played by the rules, and now those rules are changing midstream. Nilles with the Beyond Coal Campaign said coal benefited from Vice President Dick Cheney's 2001 energy task force and a plan to build at least 150 new coal-fired power plants. To accomplish that, he said, EPA essentially streamlined and sidestepped regulations.

"We shouldn't feel sorry for coal," Nilles said. "They've had eight years of doing whatever they want."

Among the rules that courts have ordered re-examined is a regulation on when power plants that are adding equipment must submit to an EPA review. The Bush administration put a rule in place saying the Clean Air Act's New Source Review provision would only kick in if upgrades were greater than 20 percent of the cost of replacing the equipment. But in March 2006, the U.S. Circuit Court of Appeals for the District of Columbia vacated that rule. The Obama administration's EPA now will write a replacement.

EPA also is rewriting regulations on mercury emissions by power plants. Under rules established by the Bush administration, mercury emissions were capped, but power plants could trade emission credits with other plants across state lines.

There also are a series of moves to tamp down mountaintop mining.

Lobbyists representing mining companies say no new permits for mining are being issued, even when they follow all existing regulations. There has been one permit issued under the Obama administration, Nilles said. EPA has said it is reviewing about 250 permit applications and that it needs to look at whether the mining, if permitted, would threaten water quality.

At the same time, EPA is re-examining a Bush-era regulation that allows mountaintop mines to dump rock and other debris dynamited from mountaintops into valleys, even if it is atop a stream.

"What's happening is that the Congress and the U.S. EPA don't want surface mining," said Jeff Speaks, lobbyist for Coal Operators & Associates, a trade association in Kentucky. His message to Congress: "We as the coal industry are following the law. We're doing what we're supposed to do. Please give us the permits when we follow the law."

The result of having no new permits is coal shortages, he said. For example, he said, a Louisville, Ky., utility needed to buy 4 million tons of coal on the spot market because it could not get enough from Appalachian mines to meet its needs. The utility uses about 30 million tons a year, he said.

Legislative battles

On Capitol Hill, there are a number of legislative moves coal wants to fight off.

In addition to proposing a cap-and-trade plan for greenhouse gas emissions, the House climate bill has a provision that for the first time would regulate carbon dioxide emissions in new power plants. Coal users also oppose legislation that would require utilities to generate a portion of their power from wind, solar and other renewable sources. And there is talk of an efficiency standard, which would mandate that power companies get their customers to reduce how much electricity they are consuming.

"If you start all of a sudden eliminating coal [through regulation], the economic impacts are huge," lobbyist Speaks said. Rep. Henry Waxman (D-Calif.), the chairman of the House Energy and Commerce Committee, is out of touch, Speaks said, because his district includes Beverly Hills and will not feel the effects of higher electric bills. But in Kentucky and other states that rely on coal, he said, "utility bills will double or triple if the provisions talked about are enacted."

"The current draft of the 'American Clean Energy and Security Act' provides the roadmap and resources to make coal a key part of a clean energy economy," Waxman said in an e-mailed response. "The draft removes the regulatory uncertainty that is stymieing investments in new coal plants now, sets clear standards for new coal plants to meet and provides substantial funding to make every new coal plant we build a clean coal plant. This combination of certainty, standards and financial support is critical to building clean coal plants and ensuring the future of coal as the world moves to cleaner energy."

"Given the importance of coal to the U.S. economy, and the number of states with coal interests," ClearView Energy Partners' Book said, "I would suspect [lawmakers] have multiple coal lobbyists in their offices every day."