(Over) Burdensome Regulation

Greg Pulliam, Vice President Government and Community Affairs NAM Public Affairs Conference, Dana Point, California March 31, 2014

Agenda

 Lack of Principled Approach?

 Sage Grouse

 Lifting the Veil  A New Coalition?

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Cloud Peak Energy Operations 2013 by the numbers:

■  Approx. 1,700 employees

■  4th-largest U.S. coal producer

■  86.1 million tons produced

■  Approx. 4% of U.S. electricity generation

■  4.7 million tons exported to Asia through British Columbia

■  $360 million in taxes/royalties, plus $79 million in leases*

Billings

*includes 50-percent, non-operating interest in Decker Mine

Big Metal Project Youngs Creek

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Coal Opponents What’s Their Position??

  On Coal: “While coal is the country’s largest source of greenhouse gases…and produces copious amounts of soot and smog throughout the state, natural gas burns more cleanly…Gas provides an opportunity to lessen America’s dependence on oil…” – Michael Brune (Sierra Club) and Jeff Schmidt, Pittsburgh Gazette, October 2010

  On Coal: The Sierra Club brought its “Beyond Coal” campaign to Vancouver last week on the eve of Earth Day…Citing a new report projecting the region’s power needs and generation capacity over the next 20 years, “The coal could be replaced by natural gas that is available right now.” – Doug Howell, Sierra Club, The Columbian, April 2010

  On Natural Gas: “When these environmental impacts are considered, it is clear that natural gas needs to stay in the ground, and the administration needs to double down on clean energy like wind and solar that would protect us from the worst effects of climate disruption while putting Americans to work.” – Sierra Club Press Release, Sept. 11, 2013

Administration vs…Administration

  “The president made clear that we anticipate that coal and other fossil fuels are going to play a significant role for quite some time on the way to a very low carbon economy.”

– DOE Sec. Earnest Moniz, AP, June 27, 2013

  “So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.”

– Pres. Obama as a then-candidate, Jan. 17, 2008

  "I certainly don't want to give them the impression that EPA is in the business to create jobs." (when asked about impact of EPA regulations on jobs)

– EPA Administrator Gina McCarthy, testimony before Congress, Sept. 8, 2011

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Sage Grouse Fowl vs. Economic Security?

▪  1996 USFWS Biological Opinion: SMCRA/state regs sufficient

▪  2010 following NGO lawsuits, USFWS: warrants “Threatened” but listing precluded by other species more in need of protection; currently state regulatory frameworks insufficient

▪  2011 following NGO lawsuits: USFWS deadline 9/15

▪  Currently under state management; if “Threatened” management / industry restrictions under purview of USFWS

▪  What would/could happen? THINK “Spotted Owl”

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Double Standards???   “U.S. To Allow Killing of Eagles by Companies to Aid

Wind Power: Under pressure from the wind-power industry, the Obama administration said Friday it will allow companies to kill or injure [bald and golden] eagles without the fear of prosecution…” – Associated Press, 12/6/13

  “Green Killing Grounds: Over the past several months, one of the companies behind the Ivanpah [solar power] plant…has been finding dozens of dead birds in the area—falcons, hawks, warblers, sparrows, grebes—some of which suffered burns to their feathers”— National Review Online, 2/14/14

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Lifting the Veil

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“No matter what we do, Asia is going to get their coal, and continue to grow,” said Darrin Old Coyote, chairman of the Crow Tribe. “We want to be part of that market ... This (Cloud Peak coal) project would double our budget and help us to meet a lot of unmet needs for social services and health care.”

In the Northwest, rising coal exports to Asia stir huge fight By HAL BERNTON April 27, 2013

DECKER, Mont. — At Spring Creek Mine, a broad black seam of coal, reaching depths of 80 feet, runs like a subterranean river through arid, sagebrush-covered hills. This is a world-class seam formed from the remnants of ferns, grasses and other plants that flourished here more than 50 million years ago, when this part of Montana was a humid marsh. Cloud Peak Energy, operators of this mine, and other companies have proposals that could eventually double the state’s coal production — part of the push for a big expansion of U.S. coal exports. “There has been more activity in Montana in the last three years than there has been in a generation,” said Todd O’Hair, a senior manager at Cloud Peak. Standing on the knoll where George Armstrong Custer made his last stand, you can watch the coal trains that already rumble north en route to British Columbia, where coal is now shipped to South Korea, Taiwan and Japan. To boost overseas sales, Cloud Peak also has secured rights to ship coal through Washington terminals proposed for Cherry Point near Bellingham and for Longview. The industry’s export push has put Montana on the front lines of what is shaping up as one of the Northwest’s biggest environmental battles in a decade. With coal-burning power plants a major contributor to global warming and ocean acidification, environmental groups and their allies have mounted a major campaign to try to restrict shipping coal overseas. Last fall, thousands of people turned out at public hearings on the proposed export terminal at Cherry Point. More than 100,000 people sent comments — many citing concerns about the impacts of increased coal-train traffic — to the county, state and federal agencies that will conduct environmental reviews…

At the Cloud Peak mining operation at Spring Creek, restoration is an ongoing effort as huge quantities of rock rubble are piled into pits that have been stripped of coal. Topsoil, set aside during the initial excavations, is layered over the rock and eventually seeded with greasewood, sagebrush and other native plants prescribed by state regulators who enforce the federal Reclamation Act.

This reclamation is intended to create habitat for sage grouse and other wildlife. On a recent tour of the mine, nine deer could be spotted browsing in a restored tract that was planted last year.

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Lifting the Veil

The Crow Nation chairman, Darrin Old Coyote, insisted that coal was a gift to his community that goes back to the tribe’s creation story. “Coal is life,” he said. “It feeds families and pays the bills.”

“We understand the issue of global warming, but at the same time, because of the economy of the tribe, we are dependent on coal,” said Cedric Black Eagle, the former chairman of the Crow Nation, who began contract negotiations with Cloud Peak.

Coal Industry Pins Hopes on Exports as U.S. Market Shrinks By CLIFFORD KRAUSS June 14, 2013

CROW AGENCY, Mont. — Every few hours trains packed with coal pass through the sagebrush-covered landscape here in southern Montana, some on their way north to Canadian ports for shipment to Japan and South Korea. If the mining company Cloud Peak Energy has its way, many more trains will cross the prairie to far larger proposed export terminals in Washington State. It’s part of a push by the nation’s coal industry, hobbled by plummeting demand as Americans turn to cleaner natural gas, to vastly expand what it sends to Asia and Europe. But the aggressive effort to rescue the $40 billion industry is running into fierce opposition from environmental groups, who say pollution caused by burning coal should not be exported. The two sides have engaged in an increasingly pitched battle, in regulatory arenas and on the airwaves, scaring off some investors and raising concerns about the fate of the industry, which is seen as a key to economic growth in Western states like Montana and Wyoming. “The future of the U.S. coal industry is at stake,” said Richard Morse, managing director at SuperCritical Capital, an energy consultancy. “Their future domestically is dim and demand growth internationally is very robust, so it is fair to say that a resuscitation of the industry has to come overseas.” The future of the impoverished Crow Nation may also hang in the balance since it owns an enormous deposit of up to 1.4 billion tons of coal — more than the United States produces in a year. But before Cloud Peak can mine the land and send the coal to energy-hungry nations in Asia, it needs more export terminals to be built in the Pacific Northwest, and those have been delayed or, in some cases, scuttled after investors grew weary of the continued opposition from environmental groups…