State takeover of coal mining regulation comes under fire from environmentalists

A proposal to have the state take over regulation of coal mining in Tennessee from the federal government, scheduled for its first legislative hearing this week, faces criticism as a drain on state financial resources and a weakening of environmental regulations.

Those contentions are disputed by proponents of the move, which would reverse a state decision made 30 years ago to let the federal Office of Surface Mining replace the Tennessee Department of Environment and Conservation in regulating the coal industry.

The Tennessee Mining Association and Republican sponsors of the bill, Sen. Ken Yager of Harriman and Rep. Dennis Powers of Jacksboro, provided copies of a new draft of the legislation (SB1998) last week to members of the Senate Energy and Natural Resources Committee.

The panel is scheduled to vote on the “Primacy and Reclamation Act of Tennessee” Wednesday at what is billed as the committee’s last meeting of the 2014 legislative session.

As written, the 42-page revised bill calls for a new 20-cents-per-ton levy on coal mined in Tennessee. Renee Hoyos, executive director of the Tennessee Clean Water Network, says — based on 2012 coal production figures, the latest available — that would generate just $218,000 per year, not nearly enough to cover the Tennessee Department of Environment and Conservation (TDEC) costs for overseeing the coal industry’s operations, even with federal aid.

“This would mean more cost for the taxpayer to provide a benefit to the mining industry,” she said.

Hoyos said that other states charge a higher effective tax to cover their coal regulation costs. Kentucky’s tax, for example, is 4.5 percent of the value of the coal, which is considerably more than a flat 20 cents per ton, she said.

Chuck Laine, lobbyist for Tennessee Mining Association, does not question the math on that point. But he said that the bill “is absolutely going to be revenue neutral” for the state when finalized, perhaps by raising the 20 cents to a higher level. He also said the amount of coal mined in Tennessee will likely at least double with the state in charge of regulations because permits will be easier to obtain.

The Legislature’s Fiscal Review Committee staff, tasked with assessing the impact on state government finances for every bill filed in the General Assembly, has not made an estimate yet based on the new draft bill. When it does, Laine said, the bill can be revised through amendments.

Some substantial portion of the cost is expected to be borne by the federal government. Federal law provides that when a state takes over coal oversight from the federal Office of Surface Mining, the federal government will pay 80 percent of first-year costs, 60 percent of second-year costs and 50 percent of the costs thereafter, said Roxanne Reiley, research analyst for the mining association.

OSM’s budget for coal regulation in Tennessee is about $2.5 million per year, Reiley said. Tennessee Clean Water Network, on the other hand, estimates OSM’s Tennessee costs at $4 million.

She said the move also provides a logical “holistic approach” toward coal regulation with a single agency. Currently, TDEC enforces water quality regulations that coal miners must follow while permitting is done by OSM. Putting the operations under one roof, it is argued, could bring more efficiency and save money.

But Hoyos and Stephanie Matheny, attorney for the Clean Water Network, said the federal law provides nothing toward “startup costs” and, further, there is a yearlong “gap” from the time the state spends the necessary money until it is reimbursed by the federal government.

Gov. Bill Haslam and officials of TDEC have taken no position on the bill. Haslam has said his initial concern is the possibility of an increased cost to the state in a tight budget year.

Hoyos said coal industry officials are otherwise “setting themselves up to get a lot of goodies” through the legislation.

For example, she cited a provision in the bill that would add two seats to the state Board of Water Quality, Oil and Gas for mining association representatives. The board would then have 14 members with even greater domination by regulated industries and less influence for the general public or environmental interests, she said. Laine said it is appropriate for the industry to have members with “expertise” in the coal industry once it comes under state regulation, and the move follows standard practice for many state regulatory boards.

Penalty provisions for violations of permitting rules are set at a maximum of $5,000 in the bill. Matheny notes that violations of water quality rules carry a maximum penalty of $10,000. Reiley notes the TDEC penalties remain for water quality violations, and the new provisions for permit violation penalties for “earth moving” are in line with current federal fines.

Hoyos also questions industry claims that state oversight will bring economic benefits to coal-mining counties with new jobs and investment. Coal consumption has been declining nationwide in recent years, she said, and much of Tennessee’s coal has a high sulfur content that is less marketable.

If there is an increase, it will come under oversight rules that are generally less stringent than those the state operates with now, Hoyos said. The bill incorporates much of the language now in federal law, which is said to be less exacting in some respects.

“Ramping up coal production to help fund this program would be environmentally damaging and likely lead to higher impact, more damaging types of coal mining to get at the hard-to-reach coal reserves that remain in Tennessee after more than a century of coal mining,” says the Network website.

Laine said many mining operations now actually improve the environment, especially in places that were mined many years ago before federal law required reclamation efforts. The industry in Tennessee has worked on environmental projects ranging from restoring American chestnut trees to restocking of elk and improving habitat for fish.