1. Energy Law 2 – Coal Fall 2014 Sep 9, 2014 Alan Palmiter Not for distribution- for study purposes only

2. Topic roadmap 1.Coal in energy mix – Compared to other sources (including natural gas) – History of coal as energy source 2.How coal mining / transportation / combustion works – Underground and surface mining – Transportation: rail, truck, slurry – Coal-fired power plants 3.Regulation of coal – Mining: federal vs. non-federal lands – Transportation: railroad regulation – Emissions: CAA and EPA 4.Future of coal – EPA proposals to regulate GHG – Carbon capture and storage – Coal: global future?

3. http://www.eia.gov/totalenergy/data/annual/diagram1.cfm 2 2 Energy Flow, 2011 (Quadrillion Btu)

4. http://www.eia.gov/totalenergy/ 1 1 2 2

5. http://www.eia.gov/totalenergy/data/annual/pecss_diagram.cfm Energy Sources  Uses Coal is 42-46% of electric power sector Coal mostly used power generation

6. ANDRA GOODMAN & MICHAEL WALKER, E3 VENTURES, BENCHMARKING AIR EMISSIONS http://www.nrdc.org/air/pollution/benchmarking/2004/benchmark2004.pdf CO 2 Power Plant Emissions (2004)

7. Introduction to coal … Click for video (about 12 min. – stop at 6:48)

8. 2a.Coal mining Source: EIA, Quarterly Coal Report (Oct-Dec 2011 (Apr 2012) Powder River Basin

9. 2a.Coal mining Source: EIA, (Apr 2012) Powder River Basin

10. 204,412 tons 581,615 tons 26.0% 74.0%

12. Underground coal miningSurface coal mining Click for video (about 5 min.) Click for video (about 4 min.)

13. Mountaintop removal

14. 2b. Coal transportation Source: Wild Earth Guardians (Mar 2011)

15. 2c. Coal-fired power plant Click for video (about 9 min.)

16. Coal as CO 2 Source Source: EIA, “Coal Explained”

17. 1.True or false? Coal is now mined in 25 states. Wyoming mines the most coal, followed by West Virginia, Kentucky, Pennsylvania, and Texas. 2.Which is false – a.Eastern coal has higher heat + sulfur than Western coal b.Most coal used in the US is transported by railroads (around 2/3 of total) c.Trucks transport 1/3 of coal consumed in US d.Coal is sometimes transported in pipelines 3.Which statement is true about electric power production from coal -- a.Coal combustion produces fly ash, which can be safely buried b.Smoke stacks (using limestone) remove all SO 2 emission c.A byproduct of coal combustion is gypsum used in making drywalls 4. True or false? Surface coal mining can only be used when the coal seam is less than 200 feet underground. Pop Quiz Coal Mining, Transportation, Combustion Answers: 1-T / 2-C (only 1/6) / 3-C / 4-T

18. 3a. Regulation of Coal Mining State:  State property law: Ownership of subsurface mineral, which can be leased  Lease interpretation: subsurface lease (typically) does not include surface mining rights  State mining permits: non- federal lands (eg – Ohio Department of Natural Resources)  State surface mining permits: Colorado Surface Coal Mining Reclamation Act of 1979 / must meet federal minima (and be approved by BLM) Federal:  Federal Coal Mine Health and Safety Act of 1969 / enforcement Dept of Labor, MSHA  Black Lung Benefits Act of 1972: mining companies pay to health care funds for miners  Surface Mining Control and Reclamation Act of 1977 (SMCRA) / administered Dept of Interior, OSM  Federal mining permits: federal lands / Bureau of Land Management issues leases and licenses

20. 3b. Regulation of Coal Transportation State:  -- Federal:  Surface Transportation Board (STB), within the Department of Transportation (DOT), has regulatory oversight over railroads  STB: approves rates, service, and construction of rail lines  Courts: give STB broad deference

21. 3c. Regulation of Coal Combustion State:  -- Federal:  Clean Air Act (1971): “new source” permits  EPA administers CAA  “New source” NSPS apply to modified or reconstructed power plants  SCOTUS: EPA can define “modification” differently for NSPS / PSD permits

22. GAO study (2010) Pre-1971 power plants – generated 45% of carbon-generated electricity – produced 75% of sulfur dioxide emissions – Produced 64% of nitrogen oxides emissions – Produced 54% of CO2 emissions Pre-1971 power plants compared to new units (per unit of power) – emitted about 3.6 times more sulfur dioxide – Emitted 2.1 times more nitrogen oxides – Emitted 1.3 times more carbon dioxide CAA grandfathering encourages maintaining old plants rather than building new ones

23. Federal Coal Mine Health and Safety Act (1969) Surface Mining Control and Reclamation Act (1977) EPA - Carbon Pollution Standard for New Power Plants (2012) 197020101990 Coal regulation - timeline Black Lung Benefits Act (1972) Clean Air Act (1971) Clean Water Act (1973) 200019802020 Environ Defense Fund v. Duke Energy (US 2007) EPA - GHGs threaten US health/welfare (2009) Keystone Bituminous Coal Ass’n v. DeBenedictis (US 1987) Clean Energy & Security Act (2009) Federal Mine Safety and Health Act (1977) EPA Clean Power Plan (2014)

24. 1.True or false? MSHA safety standards include preventing unsafe concentrations of methane in underground mines (but include no regulation of mine methane once it leaves the mine). 2.Which is false – a.Bureau of Land Management (BLM) issues leases and licenses for coal mining on federal lands (initially 20 years) b.Subsidence is regulated only by state law, a power upheld by the Supreme Court c.Treatment of coal refuse is covered by the CWA and includes criminal penalties d.SMCRA duties of reclamation terminate after 5/10 years, despite performance bonds 3.Which is false -- a.Pre-1971 power plants are not subject to PSD or NSPS pollution standards b.The Supreme Court said the EPA must define “modification” the same for PSD and NSPS c.Repairs that allow power plant to run longer (increasing net emissions) is a “modification” for PSD purposes 4. True or false? Rates for coal transportation are regulated mostly by STB, based on cost of service Pop Quiz Coal Regulation Answers: 1-T / 2-B (shared) / 3-C (Act) / 4-F

25. Cap and trade First SO2  Next Co2 Click for video (about 3:30 min.)

26. 4. Future of coal … Click for video (re-start at 6:45)

27. Presidential Memorandum (June 25, 2013) Seeks new GHG rules – EPA to work ‘expeditiously’ – Finalize rules for carbon pollution standards for the power sector Sets deadlines – New power plants: rule by September, 2013 – Existing power plants: rule proposal by June 2014 and new rules by June 2015 Points EPA to authority under CAA § 111

28. EPA Carbon Pollution Standards Proposed Rule (March 2012) – Ensure new fossil-fuel fired facilities take advantage of clean technologies – Including carbon capture and sequestration (CCS). CCS three-step process : – Capture of CO2 from power plants or industrial processes – Transport of the captured and compressed CO2 (usually pipelines) – Underground injection and geologic sequestration of the CO2 into deep underground rock formations

29. EPA Carbon Pollution Standards Most power plants can meet the EPA’s proposed CO 2 emission rules using gas-fired generators -- though coal- fired generators would need CCS. So the proposal is “an empty gesture.” Low natural gas prices from fracking make coal plants uncompetitive. As EPA confesses the rule has no benefits and no costs. Richard L Gordon CATO Institute

30. Energy federalism CoalFederalState Coal mining DOI licensing DOI-OSM/SMCRA regs CWA, mining health laws State property law State subsidence law State SMCRA authority State CWA authority Coal transportationSTB oversight of rail ratesNone Coal consumption CAA (new – NSPS, PSD / existing grandfathered) Proposed state CAA (existing) Carbon storageResponse to CAA regsState property law

31. International Future for Coal Coal’s share of the global energy mix – will continue to rise – By 2017 coal: may surpass oil Reasons – abundant supplies and demand for power in emerging markets – China and India lead the growth next five years Forecast – China will surpass rest of the world in coal demand next 5 years – India will become largest seaborne coal importer, second-largest consumer (surpassing the U.S.). Assume carbon capture/sequestration not available next 5 years

32. EIA, Quarterly Report (July 2013) Sign of things to come?

33. Hypothetical The EPA is planning to regulate emissions of CO 2 in pre- 1971 power plants. Group #1: You represent the American Coalition for Clean Coal Electricity Group #2: You represent the Union of Concerned Scientists Group #3: You represent the Association of Coal State Governors Make your comments … EPA Power Plan In this action, the Environmental Protection Agency (EPA) is proposing emission guidelines for states to follow in developing plans to address greenhouse gas emissions from existing fossil fuel- fired electric generating units. Specifically, the EPA is proposing state-specific rate- based goals for carbon dioxide emissions from the power sector, as well as guidelines for states to follow in developing plans to achieve the state- specific goals. This rule, as proposed, would continue progress already underway to reduce carbon dioxide emissions from existing fossil fuel-fired power plants in the United States.

34. The end

35. http://www.epa.gov/captrade/captrade-101.html

43. Carbon Capture

44. 2a.Coal mining Source: EIA, Quarterly Coal Report (Oct-Dec 2011 (Apr 2012) Powder River Basin

45. Hypothetical The EPA is planning to regulate emissions of CO 2 in pre- 1971 power plants. Group #1: You represent the American Coalition for Clean Coal Electricity Group #2: You represent the Union of Concerned Scientists Group #3: You represent the Association of Coal State Governors Make your comments … CAA S 111 (42 USC S 7411) – Standards of performance for new stationary sources (b) List of categories of stationary sources… The Administrator shall [establish] a list of categories of stationary sources [and] publish … Federal standards of performance for new sources within such category. The Administrator shall, at least every 8 years, review and, if appropriate, revise such standards …..... (d) Standards of performance for existing sources. … (1) The Administrator shall prescribe regulations … under which each State shall submit to the Administrator a plan which (A) establishes standards of performance for any existing source for any air pollutant (i) for which air quality criteria have not been issued … but (ii) to which a standard of performance under this section would apply if such existing source were a new source, and (B) provides for the implementation and enforcement of such standards of performance. (2) The Administrator shall have the … authority—(A) to prescribe a plan for a State in cases where the State fails to submit a satisfactory plan …. and (B) to enforce the provisions of such plan in cases where the State fails to enforce them ….