Coal Age

APR 2017

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48 April 2017 legally speaking The Trump Transition by jason c. moore Recent actions by President Trump and Congressional Repub- licans strongly indi- cate that the president intends to make good on repeated promises to take dramatic ac- tion to revitalize the coal industry. Perhaps most important among these recent steps, last month President Trump signed legisla- tion to kill the so-called Stream Protection Rule. The action permanently revokes the U.S. Interior Department's Office of Surface Mining's Stream Protection Rule (SPR), a regulation finalized in the last days of the Obama administration, which sought to protect waterways from coal mining waste. Congress approved the killing of the rule via the Congressional Review Act (CRA), a 1996 law seldom used until re- cently, which allows Congress to end ad- ministrative restrictions placed by exec- utive agencies in a prior administration. The CRA further prohibits Congress from passing similar legislation in the future. Although the demise of the SPR does little to directly bolster coal production, it does provide welcome relief from burdensome regulatory requirements for an industry already suffering from regulatory pressure and a market downturn. The rule was among the most con- troversial environment regulations the former administration promulgated. The rule — intended to create a buffer zone between mining activities and waterways — would have required companies to re- store streams and to return mined areas to the uses they were capable of supporting prior to mining activities. The rule would have also required mining companies to test and monitor the conditions of streams that might be affected by mining activity. The coal mining industry has said the rule will be costly to implement and lead to job losses across the sector, which is already suffering from a market-driven downturn in demand for coal. At the signing, Trump called the regulation "another terrible job-killing rule" and said ending it would save "many thousands American jobs, es- pecially in the mines, which, I have been promising you. The mines are a big deal." There are additional signs that Presi- dent Trump and Congressional Republicans will waste no time in taking action to help increase coal production. This month, the Trump administration approved the sale of a coal lease in central Utah from which 56 million tons of coal will be extracted. Interi- or Secretary Ryan Zinke said the $22 million Greens Hollow lease sold to Kentucky-based Canyon Fuel Co. "is a sign of optimism for the Trump administration and the pro-en- ergy and pro-growth economic policies to come." Zinke's language suggests that the ad- ministration will try to ramp up coal produc- tion on federal lands, an activity the Obama administration had stopped under a tempo- rary moratorium in January 2016. President Trump is widely expected to soon sign an executive order canceling that moratorium. Although the lease was among the last to be approved under the Obama ad- ministration before the moratorium was imposed, the fact that the lease was sold quickly with only one bidder further under- scores that the Trump administration wants to act quickly to bolster coal production. In addition, Trump's proposed infra- structure plan, if realized, could provide a boon for U.S. coal producers. President Trump has pledged to use American-made steel as part of his $1 trillion infrastructure plan. In January, Trump issued a memo di- recting the Commerce Department to write a plan in six months to mandate the use of American-made steel for all new, expand- ed and retrofitted pipelines. The Trump memo doesn't specify that only U.S. coal can be used to make the steel, but most do- mestic steel producers use domestic coal. Although the details of the plan have yet to be worked out, some industry watchers estimate that the plan could boost U.S. steel demand by 20% for five years, translating into a boost in coal-min- ing activity by as much as 5%, to the extent that the plan results in increased demand for construction equipment, which uses coal as a raw material. And of course, President Trump and Congressional Republicans have vowed to kill the Clean Power Plan (CPP), a rule widely expected to wreak havoc on the coal industry. The CPP, made final last year, was the centerpiece of President Obama's climate change agenda and mandates a 32% cut in the power sector's carbon emis- sions by 2030. The rule has been the sub- ject of legal challenges and is currently un- der review by the Court of Appeals for the District of Columbia. The U.S. Supreme Court has stayed enforcement of the rule pending review by the D.C. Circuit. According to the U.S. Energy Informa- tion Agency, U.S. coal production is project- ed to decline by about 26%, or 230 million tons, between 2015 and 2040 assuming the CPP is implemented due to lower demand for coal in power generation. If the CPP is not implemented, U.S. coal production is estimated to remain close to 2015 levels through 2040, according to the EIA. Thus, jettisoning the CPP would have a profound- ly positive effect on the coal industry. As of the writing of this column, Presi- dent Trump is expected to sign an executive order any day now requiring administra- tion officials to rewrite the CPP, undoubted- ly to ease the requirements to curb carbon emissions from new and existing power plants. While the exact timing of the exec- utive order remains unknown, administra- tion officials are under pressure to address the pending lawsuit before the D.C. Circuit. The directive would presumably instruct Attorney General Jeff Sessions to ask the D.C. Circuit to hold the lawsuit in abeyance while the EPA revisits the CPP. Taken together, these actions taken by the Trump administration — all within Trump's first 60 days in office — signal the president intends to take aggressive action to move forward on his promises to bring back coal. It would not be surprising to also see the new administration take on other regulations impacting the coal in- dustry, mine safety for example. However, given that we are still without a confirmed Secretary of Labor, we are likely months away from having an Assistant Secretary for Mine Safety in place. So stay tuned. Jason C. Moore is senior counsel for Husch Blackwell LLP.

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