New administration brings sea change to regulations impacting industry

As the saying goes “elections have consequences.” That phrase could not have been truer for North Dakota’s lignite industry.  On November 7, 2016, North Dakota was looking at a number of federal regulations aimed at significantly restricting the state’s coal industry.  The Clean Power Plan and Stream Protection Rule sought to reduce generation from North Dakota’s coal plants production and from mines by approximately fifty percent.

With a new president inaugurated in January, one of the first acts taken by Congress was to pass a Congressional Review Act resolution of disapproval to overturn the Stream Protection Rule, which was promptly signed into law in February.  The resolution of disapproval not only overturns the regulation that was finalized in late 2016, but also prohibits a future administration from developing a substantially similar rule.

Following the demise of the Stream Protection Rule, the Clean Power Plan and New Source Performance Standard were eliminated with President Trump’s signing of the “Energy Independence Executive Order” on March 28^th.  While the EPA’s “endangerment finding” still requires the agency to regulate CO2 emissions in some form, the Trump Administration’s executive order allows the EPA to develop a new rule that is based on practical and cost-effective measures that can be implemented at a power plant without sacrificing its operation.

While these two rules were subject to most of the media attention, the Trump Administration has also moved on several other regulations that were going to impact the coal-based power industry.  The administration recently announced the formal withdrawal of these measures:

• Coal Combustion Residual (CCR) Placement at Mine Sites – The prior Administration was in the process of moving forward a proposed rule that would have significantly restricted the use of CCRs at mine sites by implementing a very narrow definition of “allowable use.” The rule under development was designed to place increased emphasis on baseline monitoring impacts to groundwater from CCR use and extend the period for which such impacts must be monitored. This would likely have impacted bonding periods for these projects as well.
• Temporary Cessation of Operations – A rule that would have required submission of an application to the Surface Mining Control and Reclamation Act (SMCRA) regulatory authority prior to suspending coal mining operations for longer than six months. The rule previously under development took the view that permits automatically expire after cessation of mining for more than three years and cannot be subsequently revived by regulatory authorities.

• Bonding Restrictions – OSM published its decision in September 2016 to grant the petition of WildEarth Guardians (WEG) to revise its regulations on self-bonding under SMCRA. Going well beyond the restrictions proposed by WEG, OSM was previously considering options to: modify eligibility standards; require independent third-party review of financial reports; establish the percentage of self-bonds that must be supported by collateral not subject to other liens; require diversification for financial assurance/reclamation bonds for each mine; and force self-bonded entities to complete reclamation and apply for release on an expedited schedule.

• Cost Recovery – OSM published a proposed rule in April of 2013 that would require coal companies to pay for the cost of processing permit applications. The proposed rule substantially increased fees for permitting, and added fees for inspections. The proposal indicated that OSM would second guess the bond calculations of state regulators and charge operators for the time and expense of this interference with state primacy. The proposal would have given OSM the ability to increase fees, and apply fees to new future activities (e.g. Permits for temporary cessation of mining), at any time without the need for further rulemaking.

• Toxic Gases and Blasting – In Dec. 2014 former OSM Director Joe Pizarchik announced his decision to pursue a rulemaking to revise regulations under SMCRA on blasting operations in response to a petition for rulemaking previously filed by WEG. Going beyond regulation of nitrogen oxide emissions covered in the WEG petition, OSM intended to broaden the scope of the rulemaking to all visible emissions resulting from mine site blasting.
• Dam Safety – Under the previous Administration, OSM was developing a proposed rule to require emergency action plans for impoundments at high hazard dams before a problem is detected. Approximately 300 dams were anticipated to be impacted by the rule. The rule would have required OSM to meet Mine Safety and Health Administration standards which do not consider Federal Emergency Management Agency standards.

Finally, President Trump also signed Executive Order 13777, “Enforcing the Regulatory Reform Agenda.”  As part of this initiative, the Department of the Interior recently solicited comments on regulations that may be appropriate for repeal, replacement, or modification.