New push for state takeover of coal regulation gains steam

A renewed push to have state government take over regulation of Tennessee coal mining after 31 years of federal oversight has won approval in state House and Senate committees where similar legislation died last year.

The bill sponsored by Republicans with coal mines operating in their district, Rep. Dennis Powers of Jacksboro and Sen. Ken Yager of Harriman, advanced last week with the sponsors assuring colleagues that the transition from federal to state oversight can be accomplished with no new cost to Tennessee taxpayers.

Environmentalists are skeptical of that contention and many oppose the bill in general, arguing the Tennessee Department of Environment and Conservation (TDEC) is not prepared to replace the federal Office of Surface Mining (OSM) and the change will lead to less effective protection from coal mine pollution.

The bill, HB833, was approved 8-1 by the Senate Energy and Natural Resources Committee last week and by an apparently unanimous voice vote in the House Agriculture and Natural Resources Subcommittee. Federal law requires that states regulating coal abide by federal environmental standards and, in general, the proposal puts into state law all relevant provisions of federal law.

That should eliminate concerns for any lessening of environmental protections, according to proponents. It does not, say opponents.

The bill was drafted by the Tennessee Mining Association and the organization’s lobbyists — Chuck Laine and Roxanne Reiley — say passage will mean more efficient and faster processing of permits, leading to expansion of mining and more jobs in rural areas of East Tennessee facing economic problems.

OSM now sometimes takes “four or five years” to approve a permit, Laine said, while neighboring Kentucky, where the state is in control of the permitting, typically processes a permit in half that time or less. Tennessee is now the only coal-producing state where OSM has control over coal regulations.

Powers told the House subcommittee last week there could potentially be “thousands” of new jobs. He said there was one recent case where a company, after delays in getting a Tennessee permit, opted instead to open a mining operation in Kentucky. That eliminated the prospect of 300 mining jobs in Tennessee, he said, that would have meant far more jobs as well in related industries.

Tennessee gave up “primacy” in coal regulation in 1984 at the urging of then-Gov. Lamar Alexander, now a U.S. senator. Alexander is neutral on the current move, according to spokesman Brian Reisinger, who explained Alexander’s decision as governor three decades ago, in an email when last year’s bill was pending:

“In the 1980s, the federal government was continually second-guessing state inspectors, creating a bureaucratic nightmare. Then-Gov. Alexander recommended, and the state Legislature agreed, that if the federal government wouldn’t stop interfering with state decision-making, Tennessee would turn it back over to the federal government, which state leaders did.”

Current Gov. Bill Haslam, as Yager told the Senate committee last week, has no problem with a state takeover, reversing Alexander’s decision, as long as it does not add to state expense in a time of tight state budgeting.

That matter is in dispute, apparently providing the biggest problem for passage as the measure heads to the House and Senate Finance Committees, which rule on all bills involving state expenditures.

Under current laws, the federal government basically provides half the money needed by a state government to oversee coal mining operations when the state is in charge. That leaves the other half to be covered by the state.

The bill sets up a fee structure that the coal industry lobbyists say will cover the state share at no increased cost to state taxpayers. Environmentalists including Brian Paddock, legal chair of the Sierra Club in Tennessee, dispute that proposition.

Under the amended version of the bill approved last week in committees, coal miners would pay in three ways for the state program:

Basic administrative permitting fees.

A new state severance tax of four cents per ton of coal mined underground, nine cents per ton for surface mining.

An “annual acreage fee” of $40 per acre for active mining and $20 an acre for inactive mines that are still under oversight for mandated cleanup operations.

The Legislature’s Fiscal Review Committee, in its most recent “fiscal note” on the impact of the bill, estimates the result of passage would be an increase of $1,216,100 in state revenue from coal companies and an increase of $1,270,300 in state spending — or roughly a break-even situation. But the fiscal note also says that, in subsequent years, state spending would grow to about $2.5 million annually with no increase in revenue.

The fiscal note does not take into account the latest revisions to the bill via amendment, the coal industry representatives say, and when it does, the industry will be paying its own way at no new cost to the state overall.

Paddock says that’s not the case. The severance tax revenue, he said, can fluctuate dramatically depending on ups and downs in coal production. Lately, coal production generally has been down and, when that happens, the state still has built-in costs for keeping up the oversight operations even though not as much money is coming in.

In a critique of the bill, Paddock also contends Tennessee “is a costly place to enforce mining laws” because of geographic considerations — citing OSM memos that say Tennessee sites can require almost twice as much staff time as in other areas — and that TDEC will face a learning curve in assuming oversight that puts protection of the environment at risk

The bill assigns development of state coal-mining regulatory rules that are not part of the new law to a state board, currently known as the Board of Water Quality, Oil and Gas, though it would be renamed as the Board of Natural Resources and given two new members.

Paddock says OSM officials have indicated they would continue to keep about 20 staffers on hand at the Knoxville office to oversee the state regulators if the bill passed, making sure federal rules are enforced and watching the transition of federally-issued permits to state-issued permits, and that, as he understands things, TDEC would have 34 employees in the new state oversight program.

When Alexander as governor surrendered state oversight to the federal government decades ago, Paddock said, he did so with Republican President Ronald Reagan in office and a federal administration “very sympathetic” toward leaving things to the states whenever possible. But Tennessee’s oversight was so inept, he said, that federal regulators supported Alexander’s move to abandon state primacy.

Today, Paddock said, OSM under the Obama administration “takes its job seriously” and there is a strong possibility of federal-state conflict with federal officials “looking over the shoulder” of state officials who are inexperienced in coal industry oversight.