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OAR Box 1837 

Prepped by Keeia Richards 

Document Number: 

183) IV-F-3 

Docket Number: 

A-84-33 

Printed 11/14/2008 3:48:12 PM Sheet 183 of 238 
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APR 1 8 1986 

SECTn/u :CT/O/M 

PRESENTATIONS 

BY NCA/AMC 

AT HEARINGS BEFORE 

THE UNITED STATES 

ENVIRONMENTAL PROTECTION AGENCY 

ON THE PROPOSAL TO LIST 

SURFACE COAL MINES UNDER 

SECTION 202(n OF THE CLEAN AIR ACT 

Apri l 9, 1986 
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! . 

STATEMENT OF PAUL D. PHILLIPS 

HOLLAND & HART 

AT U.S. EPA PUBLIC HEARING 

ON PROPOSAL TO LIST SURFACE COAL MINES 

UNDER SECTION 302(j) OF THE CLEAN AIR ACT 

Denver, Colorado 

April 9, 1986 

My name is Paul Phillips and I am appearing on behalf of 

the American Mining Congress (AMC) and the National Coal Association (NCA). The main subjects I will address are 

(1) whether surface coal mines are in fact "significant" 

sources with potential to degrade air quality; and (2) whether 

the "benefits" projected in EPA's Regulatory Impact Analysis 

(RIA) from additional controls and reduced production at surface coal mines would be realized. I will discuss these two 

issues in reverse order, because the negligible health or welfare "benefits" from listing surface coal mines is perhaps the 

truest indicator of their virtual insignificance. I will also 

touch on whether there should be a separate source category for 

mining activity. 

EPA's RIA on the listing of surface coal mines for new 

source review (NSR) concludes that the benefits of listing surface coal mines as Prevention of Significant Deterioration 

(PSD) sources would be negative for two of its three regulatory 

alternatives; namely, regulating mines with grandfathering 

(Alternative II) and without grandfathering (Alternative III). 

For the final regulatory alternative—regulating mines that 

impact Class I or mandatory Class II areas—the results of 

EPA's cost-benefit analysis are (at best) ambiguous. 
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While we agree with EPA's overall conclusion that "benefits" of less than zero generally result from listing surface 

coal mines, we also believe that the analyses purporting to 

show any "benefits" whatsoever from PSD regulation of surface 

coal mines are seriously flawed and considerably overstated. 

I. SURFACE COAL MINES DO NOT HAVE SUBSTANTIAL HEALTH OR WELFARE IMPACTS. 

A. There Are No Health Benefits To Be Derived From PSD 

Regulation of Surface Coal Mines. 

Fugitive dust from surface coal mining operations differs 

dramatically from the urban particulate matter ("PM") to which 

health and welfare impacts may be attributable. First, fugitive dust is overwhelmingly composed of large, coarse particles 

of natural substances produced by transport, grinding, 

fracturing and like processes. These particles are nonrespirable, non-toxic, not in the light-scattering range which 

reduces visibility, do not remain suspended for any substantial 

distance, and are, at worst, a very localized nuisance. The 

levels established to protect worker health from nuisance dust 

of this nature is 10,000 ug/m3. (Threshold Limit Values and 

Biological Exposure Indices for 1985-86; American Conference of 

Governmental Industrial Hygienists, p. 68, Appendix D.) None 

of the ambient air quality levels projected by the RIA or 

numerous other studies of surface coal mines approach these 

levels. 

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A second reason why there are would be no health benefits 

from PSD review of surface coal mines is that PSD review 

applies only in areas where air quality is better than the 

National Ambient Air Quality Standards (NAAQS) for particulate 

matter; and, therefore, PM levels are by statutory mandate 

below those at which there are any known or anticipated adverse 

health or welfare impacts of any kind. This is true not only 

for the coarse, non-respirable particles mines generate, but 

also for the small fraction of PMIO (and less) particles generated by mining. 

Medical and expert opinion on the potential health effects 

of fugitive dust at levels at or below the National Ambient Air 

Quality Standards is, with virtual unanimity, negative. The 

conclusion was perhaps best stated by Dr. Chatten Cowherd of 

Midwest Research Institute, who has performed many studies for 

EPA and others on fugitive dust emissions: 

"Fugitive dust emissions, whether from mining, agriculture, or from traffic on 

unpaved public roads consist largely of 

coarse particles which settle out of the 

atmosphere close to the source. These particles do not account for any known adverse 

effects to health or welfare other than 

localized nuisance problems usually associated with periods of dry, windy weather." 

Comment on Final and Proposed PSD Regulations by Dr. Chatten Cowherd, Midwest 

Research Institute (January 30, 1978). 

The same conclusion has been reached in past testimony 

presented to EPA by numerous physicians and other air pollution 

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experts, including Drs. Swift and Proctor, Dr. W.K.C. Morgan, 

Dr. David CF . Muir and Dr. David Natusch. There is no expert 

opinion to the contrary. 

In summary, fugitive dust from surface coal mining 

operations is not significant because of its coarse particle 

size, chemical composition, origin, and the failure to approach 

levels in the ambient air which could be harmful to health. 

There is general consensus on EPA's Clean Air Science Advisory 

Committee ("CASAC"), in the Congress, and in the scientific 

community that it is the fine particles resulting from 

combustion or chemical processes that, at sufficiently high 

levels, pose a potential threat to human health. 

The RIA has not controverted unanimous expert opinion on 

this subject and (to its credit) has conceded the dramatic differences in size and chemical composition between miningrelated fugitive dust versus the combustion-related PM analyzed 

in the London health effects studies. Nonetheless, constrained 

by its mandate to perform a benefit analysis, the RIA has taken 

the London studies, based upon British Smoke sampling in an 

urban atmosphere with high concentrations of both PM and S02, 

and applied them to American rural areas. 

This application of London data to the surface coal mining 

context is demonstrably invalid, a fact noted by independent 

peer reviewers of the RIA. As Dr. Ware of the Harvard School 

of Public Health states: 

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"... the studies cited were designed to 

investigate the health effects of particulate air pollution caused by the burning of 

fossil fuels. Fugitive dust is composed of 

large particles unlikely to be inhaled into 

the deep lung [and] primarily composed of 

chemically inert substances unlikely to 

cause toxic reactions." 

Extrapolation of British Smoke sample results to TSP concentrations is scientifically questionable. Also, the absence of 

S02, and the drastic differences in size and chemical composition of mining-related dust, means that whatever health effects 

occurred in London are simply not translatable to U.S. surface 

coal mining. 

Applying London data to Gillette, Wyoming, the San Juan 

Basin of New Mexico and like areas; and projecting health benefits in areas where PM levels are far below the ambient standards, stretches more than the imagination. We respectfully 

suggest that in its decision-making EPA recognize the 

overwhelming scientific consensus that mining-related fugitive 

dust does not result in adverse health effects. We likewise 

suggest that EPA recognize that there are no real-world health 

"benefits" to be derived from subjecting surface coal mines to 

PSD. 

B. There Is No Valid Basis For The Soiling "Benefits" 

Projected By The RIA. 

The work of Mathtech, Watson and Jaksch and Cummings, 

which serve as the basis for the RIA's projection of household 

soiling "benefits," has been thoroughly discredited by 

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Dr. James Lodge, Consad Research, and others. (See, e.g., 

Lodge, J.P., "Inadequacy of Support for a Separate Secondary 

Particulate Standard," August 29, 1983.) These studies are 

essentially theoretical economic modeling exercises, with 

little relation to real-world impacts or human behavior and 

even less relevance for policy-making purposes. We will not 

repeat our prior testimony here except to note that the basic 

data relied upon by Mathtech and the others--the 1970 Booz, 

Allen study of Philadelphia households—showed that there was 

no change in cleaning behavior or cleaning costs with 

increasing levels of particulate matter from 50 to 150 ug/m3 

TSP. Watson and Jaksch in effect "assume their conclusion" 

that there must be benefits with lower PM levels, even though 

the households Booz, Allen studied did not recognize such benefits or otherwise respond. That is a bit like telling your 

children how much they will benefit from having cleaner rooms. 

Quite apart from the conceptual defects of these "soiling 

benefits" studies, it is essential to recognize that the effect 

of urban PM in Philadelphia in 1970 is completely different 

from the effect of fugitive dust in rural Wyoming, New Mexico, 

Illinois or Appalachia. The coarse particles comprising fugitive dust travel very short distances; have a low potential to 

cover surfaces; lack the dark, carbonaceous color and chemical 

composition of combustion particles; and so do not discolor or 

"soil" surfaces as small particles do. (See American Mining 

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Congress Presentation to CASAC on Proposed Revised PM National 

Ambient Air Quality Standards, December 16-17, 1985.) Indeed, 

CASAC has recently reached consensus that fine particles are a 

better indicator of soiling than the coarse particles of which 

fugitive dust is mainly composed, and rejected TSP as a useful 

indicator of "soiling" or indeed anything else. 

In any case, there is simply no evidence that fugitive 

dust at concentrations below the PM NAAQS causes any soiling 

damage. Only a few particles the size of a grain of sand would 

violate the present Class II increment. There is simply no way 

such concentrations could conceivably cause soiling damage. 

We urge EPA to reject theoretical economic exercises based 

on pre-1970 urban PM concentrations, and recognize that there 

will be no discernible household cleaning benefits from making 

surface mines subject to PSD. The only conceivable benefit 

might result from abatement of very localized nuisances. While 

such benefits are theoretically possible, none have been, documented. Further, if they exist, current state air pollution 

control and local nuisance laws are fully sufficient to address 

them. Virtually every new surface mine is already subject to 

extensive new source review, including control requirements 

equivalent to Best Available Control Technology, under existing 

state air quality regulation. 

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In summary, soiling "benefits" are already projected to be 

very small in the RIA. In fact, they are virtually nonexistent and should not be considered in EPA's relative 

weighing of the costs and benefits of subjecting surface mines 

to PSD. 

II. MINES ARE NOT "SIGNIFICANT" SOURCES WITH POTENTIAL TO 

DEGRADE AIR QUALITY. 

The RIA concedes that mines are not a broad ranging 

national problem, but may have local significance (p. IV-2). 

In assessing the significance of fugitive dust emissions, it is 

essential to understand the difference in threshold between 

what constitutes a significant source of fine particle PM, and 

what constitutes a significant source of fugitive dust. For PM 

generally, the PSD regulations treat sources emitting 100 or 

250 tons of PM per year as significant or major. This is based 

on stationary combustion or process sources of small particles. 

By contrast, those amounts of fugitive dust are completely 

insignificant. For instance, a pickup truck traveling continuously on a gravel road, which produces 500 tons per year of 

particulate matter, is not a "major stationary source"; neither 

is tilling a farm of 620 acres, or a quarter mile of mine haul 

road. Yet all of these exceed the 250 ton per year "major" 

threshold. What is a "significant" or "major" fugitive dust 

source is completely different from that for combustion or 

other fine particle sources. 

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The same is generally true for ambient measurements. One 

fugitive dust particle the size of a grain of sand is sufficient to exceed the allowable Class I increment. Surely, few 

would contend that adding one particle of sand per cubic meter 

to a Class I area is a significant degradation. Thus, it is 

essential to shift one's perspective when considering fugitive 

dust, since clearly insignificant sources exceed the thresholds 

designed for stationary combustion and chemical sources. A 

source of hundreds of tons a year of fugitive dust can indeed 

be insignificant by any common sense reckoning. 

Also, as the following chart shows, surface coal mines are 

insignificant national sources of fugitive dust emissions, 

contributing well under one percent of total man-made fugitive 

dust emissions from open sources. 

, g l»7« Comnbmoaj 

to total emoBMt 

bufdtn in pcmi 

Constructioa J *«T r*r«m Km 03* 

vtmiof I 44* 

' latitat) lit * 

>urf*e* coal 0.0X» 

. diner iitifM 0.1t%) 

Mining i ww 

/latitat* l 2*% \ 

[ .urfac* coal 0.0J* I 

V diner titifasa 0.12%I 

Source: Evans, T.S., & Cooper, D.W., "An 

Inventory of Particulate Emissions 

From Open Sources," JAPCA, Vol. 30, 

No. 12, 1298-1303 (1980). 

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As the chart shows, some 46% of fugitive dust emissions from 

man-made sources are due to agriculture, while 48% are due 

almost entirely to unpaved roads. Together these two sources 

account for almost 95% of total fugitive dust emissions. Construction (3.7%) causes far more fugitive dust than surface 

coal mining, listed at .05%. Even forest fires (.3%) contribute more fugitive dust than surface coal mining. Inasmuch as 

surface coal mining operations rank dead last on the list of 

man-made fugitive dust emission sources, it seems inexplicable 

and arbitrary that EPA has chosen to propose them first for 

potential listing as PSD sources. 

If EPA does conclude that fugitive dust from open sources 

are a national environmental problem worthy of attention, the 

most important sources of that fugitive dust are agriculture 

and unpaved roads. These activities are pervasive and affect a 

far greater number of people than surface coal mining 

operations, which are typically in remote areas and do not 

affect major population concentrations. The contribution of 

fugitive dust from surface coal mining amounts to less than 1% 

of the 583 million tons total annual fugitive dust from open 

sources. Surely any environmental benefits from applying the 

PSD program to surface coal mining operations are insignificant 

and inconsequential in a national perspective, and are far 

outweighed by the drastic economic consequences which would 

result from listing them. 

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Finally, it is significant that surface coal mining is a 

temporary activity. Once the coal is mined and the surface 

reclaimed, its air quality impacts cease. This temporary character must also be considered in assessing the relative insignificance of mines as sources. 

III. THE VISIBILITY "BENEFITS" PREDICTED FROM SUBJECTING 

MINES TO PSD REGULATION ARE ILLUSORY. 

Particles in the range of•.1 to 1 micron scatter light and 

obscure visibility. Mines produce an minute amount of such 

particles, less than one percent. ("Characterization of PM-10 

and TSP Air Quality Around Western Surface Coal Mines," PEDCO 

and TRC, 1982). Therefore, surface coal mines have minimal 

potential to adversely affect visibility. Other speakers for 

AMC-NCA will elaborate on the consequences of this key fact, 

and on the fundamental shortcomings in the RIA's visibility 

analysis, including its omission of Appendix C. These factors 

further militate against any PSD regulation of surface coal 

mines, including those located in the vicinity of Class I or 

mandatory Class II areas. 

IV. MINES SHOULD BE A SEPARATE SOURCE CATEGORY. 

Mining operations are distinct and indeed unique sources 

of particulate matter. The fugitive dust from mining 

operations is different in size, weight, chemical composition 

and effects from all other stationary combustion and process 

sources currently subject to PSD. While the SIC Codes are a 

convenient source classification system, there is good reason 

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/ . 

to depart from them when they combine sources which are as disparate and distinct as mines are from stationary combustion and 

process sources. The SIC Codes were not devised for air quality purposes. Where, as is currently the case, they result in 

combining a surface mine with a stationary source, thereby prohibiting both without any substantial health or welfare benefit, the SIC Codes should not be rigidly adhered to. Indeed, 

we believe this would violate both the letter and spirit of the 

D.C. Circuit's decision in Alabama Power Co. v. Costle, 636 

F.2d 323, 369 (1979), where the Court ruled that EPA cannot 

subject fugitive emissions from any source category to new 

source review unless and until EPA conducts appropriate 

rulemaking under § 302(j) of the Clean Air Act. Instead, we 

believe EPA should grant AMC's March 15, 1985 Petition for 

Reconsideration (including the portions dealing with secondary 

fugitive dust emissions) and (1) rule that fugitive dust 

emissions from mining operations are not subject to new source 

review requirements as a component of any one of the listed 

sources; and (2) revise the new source review regulations to 

clarify that mining operations always constitute a separate 

source category which never is part of or combines with any of 

the listed categories for new source review applicability 

determinations. In the written submission we will make in the 

reopened comment period, we will include detailed discussion of 

this key issue, including a response to EPA's request for comment on what "administrative procedures and safeguards" might 

be appropriate if this course is followed. 

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V. CONCLUSION. 

All available, credible factual evidence demonstrates that 

fugitive dust emissions from surface coal mining operations do 

not cause or contribute to significant air quality degradation. 

Such emissions also do not cause detrimental impacts to the 

public health or welfare. Finally, the uncontroverted evidence 

before EPA, the courts, and Congress demonstrates that 

including fugitive dust emissions from all but the smallest 

surface coal mines would result in prohibiting the permitting 

of such mines and any listed sources of which they are deemed 

to be a part—a draconian effect not intended by Congress and 

not necessary or conducive to achievement of the air quality 

objectives of the PSD program. Therefore, NCA/AMC urges EPA to 

recognize and act upon the conclusion that there is no sound 

legal, factual or policy basis for listing surface coal mines 

under § 302(j) of the Clean Air Act. 

The next speaker is John Wootten, who will summarize for 

you the detailed technical and economic analyses prepared for 

the mining industry to quantify the socio-economic costs of 

listing surface coal mines. These analyses demonstrate that 

EPA has considerably underestimated the true societal costs of 

Alternatives II, III and IV, and that the substantial negative 

net benefits of each of these Alternatives dictates a "no list" 

decision. 

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Testimony of 

John M. Wootten 

at the 

Environmental Protection Agency 

Public Hearing 

On EPA's Proposal to List 

Surface Coal Mines 

under § 302(j) of the Clean Air Act 

Denver, Colorado 

April 9, 1986 

Good morning. My name is John M. Wootten and I am Director of Research & Technology at Peabody Holding Company, Inc., 

the parent of Peabody Coal Company. Peabody Coal Company is 

the largest producer of coal in the United States. Much of 

that production comes from surface mines. Peabody is a member 

of both the National Coal Association and the American Mining 

Congress and I am speaking today on behalf of both of these 

organizations. 

I. INTRODUCTION 

According to EPA, the sole prerequisite for its decision 

to propose to add a category of sources to the § 302(j) list is 

a finding that sources in the category "could degrade air quality significantly." Once this finding is made, the Agency 

establishes a "presumption" in favor of listing which can only 

be rebutted by a showing that "unreasonable costs would result 

taking into account all positive aspects of the listing." 

You have just heard Paul Phillips explain why there was no 

basis for EPA's initial determination that emissions from surface coal mines degrade air quality significantly. My remarks 
P.17 

today will address the second half of EPA's two part test for 

listing. 

We believe that the rulemaking record, including the 

Agency's February 18, 1986 Regulatory Impact Assessment (RIA) 

and studies performed for NCA and AMC, which we will submit 

during the reopened comment period, conclusively demonstrates 

that the socio-economic costs of subjecting surface coal mines 

to new source review and PSD regulation far outweigh any environmental or other benefits of doing so. In view of this fact, 

a decision by EPA to subject any surface coal mines to PSD 

review would be arbitrary and capricious and would constitute 

an abuse of the Agency's discretion. 

The bulk of my comments today will deal generally with 

EPA's RIA and an analysis of EPA's proposal to list surface 

coal mines and thereby subject them to PSD review that was prepared for NCA and AMC by TRC and ICF, Inc. NCA and AMC's written comments, which will be filed later this month, will 

address the Agency's RIA in more detail as well as a number of 

other issues raised by EPA's October 26, 1984 and February 28, 

1986 Federal Register notices. 

A. EPA's RIA 

The RIA prepared by EPA presents cost-benefit analyses for four different regulatory alternatives. The first, 

Alternative I, is the status quo. The second, Alternative II, 

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would list mines that commenced construction after promulgation 

of a listing decision, as well as modifications of existing 

mines. The third, Alternative III, would list all mines that 

commenced construction after January 6, 1975. And the fourth, 

Alternative IV, would list only those mines whose emissions 

would impact Class I and mandatory Class II areas. 

The scope of EPA's analysis of each of these regulatory alternatives differed for each alternative considered. 

The benefit analyses for Alternatives II and III consisted of 

assumed decreases in ambient air quality impacts, while the 

benefit analysis for Alternative IV focused on improvements in 

visibility related perception resulting from moving the hypothetical mines away from the Class I areas. 

EPA's RIA concludes that Alternatives II and III 

"would not be economically efficient since the net benefits 

estimates were less than zero." RIA, p.xv. However, for 

Alternative IV, EPA concludes that "the range of incremental 

net benefits spanned both positive and negative values." Id. 

In other words, EPA concludes that under certain circumstances, 

the benefits of subjecting surface coal mines which impact 

Class I and mandatory Class II areas to PSD review may outweigh 

the costs. 

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George Roope, who will speak next, will discuss the 

defects in EPA's Alternative IV analysis. Those defects make 

that analysis totally inadequate to support a decision to list 

mines locating near Class I and mandatory Class II areas. 

B. NCA-AMC Analysis 

The analyses of EPA's proposals prepared for NCA and 

AMC by TRC and ICF support EPA's conclusions on Alternatives II 

and III but differ considerably from EPA's analysis. Table 1 

summarizes the NCA/AMC approach to evaluating the impacts of 

listing surface coal mines. First, NCA and AMC asked TRC to 

examine the air quality impacts of six different hypothetical 

coal mines as shown in Table 2. TRC then estimated the 

reductions in the size of these mines that would be necessary 

to meet the allowable PSD increments in the respective coal 

basin. The engineering costs of the resulting mines were then 

developed by having individual coal companies with operations 

in the coal basins at issue prepare specifications for the 

mines as they would do if they were actually going to install 

and operate such a mine. This engineering cost data was then 

used by ICF to estimate the economic impacts of subjecting new 

and existing surface coal mines to PSD review. ICF separately 

examined EPA's Alternative IV, including EPA's conclusions concerning the net benefits associated with subjecting mines 

locating near Class I and mandatory Class II areas to PSD 

review. 

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II. EMISSION FACTORS AND MODELING UNCERTAINTIES 

Before turning to our analysis of the economic impacts of 

EPA's proposal, I believe that it is important to note a fundamental problem with EPA's proposal to list surface coal mines 

and thereby subject them to PSD review. EPA's current emission 

factors and models simply don't allow defensible calculations 

of the ambient impacts of fugitive emissions from surface coal 

mines. It makes no sense for EPA to propose to subject surface 

coal mines to new source review when the tools necessary to 

perform the analyses required by the Agency's rules are not 

available. 

Table 3 summarizes a detailed analysis which TRC performed 

for NCA and AMC and verified with field measurements. TRC's 

analysis demonstrates that the use of EPA's AP-42 emission 

factors and the ISCST model does not accurately predict actual 

particulate concentrations due to the model's failure to properly simulate particle deposition and pit retention. Moreover, 

EPA's emission factors and models introduce random uncertainty 

in predicted 24 hour TSP concentrations due to fugitive particulate emissions from surface coal mines of a factor of three to 

four. Perhaps equally as important is the fact that there are 

no established emission factors for use at eastern surface coal 

mines. The TRC reports which form the basis for these conclusions will be submitted to the Agency along with NCA and AMC's 

comments on April 29. 

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These deficiencies in EPA's current emission factors and 

models fundamentally flaw any real world analysis of the 

ambient air quality impacts of fugitive emissions from surface 

coal mines. Despite these deficiencies we have used EPA's 

factors and models in our analysis of the Agency's proposal to 

subject surface coal mines to PSD review since those factors 

would be applied under current EPA new source review 

guidelines. 

III. DIFFERENCES IN EPA AND NCA/AMC'S APPROACH TO 

MODELING AIR QUALITY IMPACT OF HYPOTHETICAL MINES 

A. NCA/AMC Approach 

The approach used by TRC for NCA/AMC to estimate 

emissions from the six hypothetical mines it examined and the 

reduction in the size of those mines that would be required to 

meet PSD increments can be summarized as follows. First, hypothetical mines were developed based on previous studies by 

PEDCo and TRC and from other sources. Once the activity 

parameters for each of the mines examined by TRC were established, the fugitive emissions of each of those parameters were 

calculated using the applicable AP-42 emission factors and 

assuming 50% efficient chemical dust suppressant control of 

haul roads and access roads, as well as 99.5% efficient 

baghouse control on emissions from coal crushing, screening, 

conveying, and silo storage facilities. Where emission factors 

were not established in AP-42, TRC calculated them using EPA 

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recommended methods. Western surface coal mine emission 

factors were used for eastern surface coal mines (as was done 

in the RIA) even though the development documents recommend 

against it. 

These calculations of emission rates from activities 

at each mine were performed by TRC. Using either the ISCST 

model, or the Valley model in the case of the hypothetical 

Appalachian mountain-top mine, TRC then conducted short-term 

modeling analyses for each hypothetical mine. Among other 

things, TRC's modeling analysis incorporated a hypothetical 

24-hour meteorological data base that could be expected to 

occur two or more times per year at each of the hypothetical 

mines sites. As can be seen from Table 4, TSP concentrations 

from all of the mines were predicted to exceed the allowable 

24-hour PSD increment by an order of magnitude or more. The 

EPA predicted TSP concentrations are also shown with the 

modeled mine size in parentheses. 

To determine the level of production that would show 

modeled compliance with the increments, TRC scaled down the 

emission rates that it had calculated for each activity at the 

hypothetical mines as shown in Table 5. This was done first by 

assuming that modeled concentrations of TSP are linearly proportional to a mine's production rate. The ratio of the 

24-hour Class II PSD increment, divided by each mine's peak 

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modeled impact, was determined for each mine. These ratios 

were then multiplied by the appropriate mine activity 

parameters and the revised emission rates were computed as 

before. 

Finally, using the ISCST and Valley models, TRC computed the TSP impacts from the reduced size mines. The results 

of these computations, which are displayed on Table 5 show that 

with the exception of the Appalachian mountain top mine, the 

maximum predicted 24-hour TSP concentrations from the hypothetical mines examined by TRC are much larger than the 37 ug/m3 

expected from the assumption of linearity between a mine's production rate and its resulting air quality impact. TRC's analysis concludes that emissions from mines where the mining pit 

produces the greatest concentration of emissions do not change 

in direct proportion to the mine's production rate. 

Using its conclusions concerning non-linearity, TRC 

calculated the production rates at which the hypothetical mines 

would comply with the Class II 24 hour PSD increment. Those 

production rates are shown in Table 5. 

In its analysis for EPA, PEI assumed a linear relationship between mine emissions and production rates. As a 

result, PEI significantly overestimates the size of mines that 

would be able to operate in various regions of the country 

under PSD and significantly underestimates the economic impacts 

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P.24 

of EPA's proposal. Table 5 compares the reduced mine sizes 

that TRC calculated would be necessary to meet the 24 hour 

Class II PSD increment with those calculated for EPA by PEI. 

B. PEI's Approach 

PEI's analysis for EPA of the air quality impacts of 

hypothetical mines in the five coal basins it examined differs 

substantially from that performed by TRC. After determining 

the air quality impacts of the prototypical mines in much the 

same way as TRC, PEI developed a "production-pollution 

algorithm" to quantify the relationship between coal production 

and particulate concentrations. This algorithm is nothing 

other than a simple roll-back technique which assumes a linear 

relationship between predicted concentrations and production. 

As I mentioned a moment ago this assumption is incorrect. PEI 

itself admits that its algorithm is an "oversimplification" but 

concludes that it is a "reasonable alternative." PEI used its 

production-pollution algorithm in combination with the PSD 

increments and PM NAAQS to estimate allowable mine sizes under 

the PSD regulations and current ambient standards. 

PEI also modeled the adverse effect on visibility of 

the hypothetical mines it examined under Alternative II and the 

improvements in visual range attributable to compliance with 

the PSD increments. In both cases PEI concluded that the 

impacts on visibility were not perceptible. 

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P.25 

The primary point to be made here is that EPA significantly overestimated the size of a surface coal mine that 

could comply with the PSD regulations. 

IV. DEVELOPMENT OF COST DATA 

The derivation of the production cost data for mines sized 

to comply with applicable PSD increments that was used by the 

NCA/AMC analysis differed substantially from that used by PEI. 

NCA member companies provided actual figures for equipment, 

labor, power, supplies, and other costs for both the base case 

hypothetical mines examined by TRC and the reduced size mines 

that TRC calculated would be necessary to meet the 24-hour 

Class II PSD increments. These costs are displayed in Figure 1 

for the base and PSD compliance cases. 

In contrast, PEI used a mine costing model developed by 

the Electric Power Research Institute to generate production 

costs for the reduced size mines generated by its productionpollution algorithm. That EPRI mine costing model, however, 

has a number of deficiencies and omissions. In fact, EPRI 

itself has developed a revised version of its mine-costing 

model and no longer uses the version employed by PEI. The use 

of the outdated EPRI model by PEI has caused it to greatly 

underestimate the increase in cost per ton of coal that would 

result at each of PEI's prototypical mines from subjecting 

those mines to PSD review. Table 6 compares PEI's increased 

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production cost estimates for each basin it examined with those 

developed by NCA and AMC. 

V. THE ECONOMIC IMPACT OF EPA'S PROPOSAL 

ICF's analysis of the economic impact of EPA's proposal to 

list surface coal mines shows that these costs would be significantly greater than predicted in the RIA for the same air 

quality impact. ICF's analysis for NCA and AMC concludes that 

EPA's proposal could increase electric utility consumer costs 

by between 1 billion and 8 billion dollars per year between 

1995 and 2005, depending on whether existing mines are 

grandfathered. Moreover, ICF's analysis shows that the 

Agency's proposals could cause substantial changes in the type 

of coal purchased by consumers and in regional coal production. 

A. ICF's Approach 

ICF's analysis relies on coal supply curves. These 

curves are based on the fact that different coal reserves have 

different costs. These reserves can, therefore, be organized 

in order of ascending mining costs. The lower cost reserves 

will be produced first. As Figure 2 demonstrates, the effect 

of increasing mine costs and removing coal reserves will be to 

increase the cost of producing the next increment of coal 

supplied which will shift the supply curve up and to the left. 

The exact extent of this shift will vary by region since the 

characteristics, of coal vary by region. 

-11-
P.27 

Based on TRC's estimates of the mine production rates 

necessary to meet the PSD increments and the production cost 

data provided by NCA and AMC, ICF estimated the impact of EPA's 

proposal on surface mine costs. ICF then estimated the impact 

on coal supply curves for each of three cases: the first 

assuming no PSD review; the second, or grandfathering case, 

assuming that only new mines are subject to PSD review, and the 

third, or no-grandfathering case, assuming that both new and 

existing surface coal mines are subject to PSD review. 

ICF then used its Coal and Electric Utilities Model 

(CEUM) as the primary tool in its analysis of the economic 

impact of EPA's proposals. CEUM is a highly disaggregated 

engineering-economic based (not econometric) model of U.S. coal 

supply, coal transportation, and of the electric utility and 

other consuming sectors. 

Coal market forecasts were developed by ICF using the 

base case (no PSD review) coal supply curves and the supply 

curves for each of the two regulatory cases that I have just 

mentioned. The impact of EPA's proposed regulations was estimated as the difference between the base case and the regulatory cases. 

-12-
P.28 

B. Results of ICF Analysis 

1. Effects on Mine Costs 

Based on the production cost information provided by NCA and AMC's members, ICF estimated that increased 

costs of mining in the San Juan Basin, Illinois Basin and in 

Texas would be substantial in absolute dollar terms and that 

the increased costs would be large in percentage terms in the 

other areas examined. For example, Illinois Basin costs 

increased by $76 per ton over a base of approximately $30 per 

ton, whereas Powder River Basin costs increased by $19 per ton 

over a base of approximately $8 per ton. 

2. Effects on Coal Supply 

ICF's analysis also contains 1995 coal supply 

curves for each region and coal type examined. Figure 3 is an 

example of one of these curves. 

For each of these supply curves, the base case, 

that is, no PSD review, production forecast is shown to provide 

perspective on the likely impacts of EPA's proposals. In the 

grandfathering case, the impacts are greatest in those areas 

where demand exceeds existing capacity and where surface 

reserves are a substantial part of new production, such as Central Appalachia. In areas where existing capacity exceeds 

demand, as in the Powder River Basin, the impacts are less 

until the later years because the grandfather case, by 

definition, does not affect existing mines. 

-13-
P.29 

A key assumption that affects the impact on coal 

supply in the grandfather case examined by ICF is the definition of existing capacity. At the direction of NCA and AMC, 

ICF defined existing capacity as that which has been permitted 

and to which substantial financial commitment has been made. 

The capacity estimate developed using this definition is higher 

than alternative definitions, such as 1984 production, particularly in the Powder River Basin and Texas. 

In the no-grandfather case the impacts are 

severe in those areas where surface mines are a substantial 

part of existing capacity, such as the Powder River Basin and 

Texas. 

3. Effects On Regional Coal Production 

ICF's analysis demonstrates that the changes in 

coal supply curves that would result from subjecting surface 

coal mines to PSD review would cause significant changes in 

regional coal production. Production would decrease in regions 

whose coal supply would be relatively more affected by PSD 

review and production would shift to those supply regions relatively less affected. Over time these shifts would tend to 

increase because new electric generating units coming on line 

have greater flexibility to change coal supplies. The next 

chart, Figure 4, shows these impacts for the year 2000. 

-14-
P.30 

In particular, ICF's analysis shows that production in Texas (Gulf) and the Powder River Basin would decrease 

substantially in the no-grandfather case due to the significant 

increases in mining costs at both existing and new mines. 

ICF's analysis also indicates that total coal 

production would decrease due to the shift to higher Btu coal, 

and that lower-btu lignite in Texas and subbituminous coal in 

the Powder River Basin would be displaced by higher-btu 

bituminous coals from the Rockies, Midwest, and Northern 

Appalachia. 

4. Effect on Mine-Mouth Prices 

ICF also concludes that coal prices paid by 

consumers, including the electric utilities, will increase if 

surface coal mines are listed and thereby subject to PSD 

review. The increase is due to changes in a region's coal supply curve and changes in demand due to changes in coal supply 

in other regions. 

Table 7 demonstrates these price effects for the 

year 2000. The increases are greatest in the supply regions 

that would be most affected by PSD review. However, price 

increases also occur in regions where the supply effects are 

relatively small (Midwest and Rockies) because production would 

increase due to shifts from other regions. 

-15-
P.31 

5. Effects on Consumer Costs 

Finally, ICF's analysis shows that the increase 

in electric utility consumer costs resulting from EPA's proposal would be substantial. Table 8 shows the forecasted 

increases. 

In the grandfather case, the costs impacts would 

increase over time as growth in coal consumption increases the 

coal production that would be affected by PSD regulation. 

In the no-grandfather case, the costs impacts 

would be much higher because of the existing production capacity that would be affected. However, these costs impacts would 

decline somewhat through 2005 as consumers shift coal purchases 

to lower cost regions. 

The next chart, Table 9, demonstrates graphically the forecasted increases in consumer costs by region. In 

the grandfather case the cost impacts would be higher in 1995 

in the East where substantial new surface mining capacity would 

be affected. The western regions would incur higher costs 

later as existing mine capacity becomes fully utilized and new 

mines are required. 

In the no-grandfather case, costs would increase 

substantially in 1995 in the West, since existing mines would 

be affected. 

-16-
C. ICF'S Analysis Probably Understates The 

True Cost Impacts of EPA's Proposal 

While we believe that the analysis prepared by ICF 

provides a more realistic assessment of the likely economic 

impacts of EPA's proposal than does the RIA, we think that both 

analyses probably underestimate the real economic effects of 

that proposal. First, both assume that mines of the size necessary to meet PSD increments would be opened. It is unlikely, 

however, that this would in fact happen particularly in the 

case of Texas lignite mines. Second, it is entirely possible 

that EPA's proposal could result in a significant increase in 

coal imports into this country and a significant decrease in 

coal exports thereby worsening the United States trade deficit. 

Third, neither the RIA nor ICF's analysis for NCA and 

AMC consider the costs associated with the fact that if new 

surface coal mines are listed under § 302(j), major modifications at existing mines would subject those mines to PSD 

review. 

VI. CLOSING REMARKS 

In closing, I wish to state that the NCA/AMC analysis of 

the impacts of listing surface coal mines for new source review 

purposes is a more accurate and comprehensive review than that 

undertaken by EPA. EPA has estimated national impacts for only 

Alternative II which amount to $68.2 million in costs with 

$815,900 in benefits. NCA/AMC project those costs to be $1.3 

-17-
P.33 

billion in 1995, rising to $4.3 billion in 2005. EPA estimates 

that Alternative III would cost $15.5 million with benefits of 

$242,500 for the Powder River Basin only. NCA/AMC estimate the 

national cost to be $8.2 billion in 1995 and $7.1 billion in 

2005. There should be no question in either the Panel's mind 

or in the Agency's deliberations that the costs of listing surface coal mines are so great in comparison to the benefits that 

a decision not to list must be a foregone conclusion. 

NCA/AMC believe this conclusion not to list is equally 

apparent for Alternative IV which will now be addressed by 

George Roope. I would be glad to answer any questions at the 

end of the NCA/AMC presentation. 

-18-
r 

FIGURE 1 

EFFECT OF PSD REVIEW 

ON SURFACE COAL MINES 

2 0 0 

180--

O 

1 6 0 

140--

120- -

I— ^~ 

o 

o 

I D 

CO 

co 8 0 -

6 0 

40 --

2 0 -

OPERATING COSTS 

CAPITAL COSTS 

ROYALTIES AND SEVERANCE TAX 

^^A 

^ ^ ^ _J9EfSH_ 

t 

BASE PSD BASE PSD BASE PSD BASE PSD BASE PSD 

PWD RVR N DAK SAN JUAN TEXAS ILLINS 

COAL PRODUCING REGIONS 

BASE PSD 

APALCHA 
FIGURE 2 

TYPICAL COAL SUPPLY CURVE 

6 0 

50- -

4 0 " 

O 

I— 3 0 + 

2 0 

e o o o o e 

<aoo o 

<p • o e e oXi X X X X X 

Xi X X X X -

A e o » * x x x x 

it X X X X -

- • BoCOAL SUPPLY WITH HIGHER MINING COSTS Sc LESS RESERVES 

10 + 

XBASE COAL SUPPLY 

o - J 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 • 1 • ' • ' ' ' ' •-

5 0 100 150 

TONS/YEAR 

200 250 
r 

40- r 

3 5 -

3 0 

2 5 

: CO P 

CT» C ~ 

i " " 4** 

2 0 

15- -

10--

FIGURE 3A 

199 5 COAL SUPPLY CURVE 

POWDER RIVER BASIN 

ooooooo 

OOOOOOOO O 

OOOOOOOOOOOO O 

IOOOOOO O 

OOOOOOOOO O 

• ••UIO()( 

•••••••••••••••••• • 

ex T-x XXXXX X X)() < x ^ 

)(,(>.)()(y)(><>(><)() ( 

J y 

)00()0()() ( ' 

XXX X 

© GRANDFATHER CASE 

XBASE CASE 

O ' I I I . I I I I I I I I I I I I I I I I I I I I I I I I I i I I I I I I I I I I I I I I I I I I I I ) I I I I I I I I ( I I I I I I I I I t 

8 0 150 22 0 290 360 430 

TONS/YEAR 

(MILLIONS) 

500 570 64-0 
r 

FIGURE 3 B 

199 5 COAL SUPPLY CURVE 

POWDER RIVER BASIN 

40 

35 

30 

25 

15 

10--

5 -

QOO O 

OOO O ~ 

tooooooooooo 

ooo?" ooooooo 

OOOOOOOO O 

OOOOOOO ' 

f 

oooo ' 

0000 9 Q • 

txxxxx 

MXXXXii X X X 

yxxx I XXXX X xxxxxxx 

• •PtXXXXXXXXXXXXXMM X 

XXXXX X f XXXX X X X ' **xoNO GRANDFATHER CASE 

XBASE CASE 

I 

I I I I I I I I I I I I I I I I I I I I I I I I I I I I H-I I I I I I I I I I I I I I I I- . I I I I l-l I I I I t-H-HH I I I I I I I IH I j 

80 150 220 290 360 430 500 570 640 

TONS 'YEAR 

(MILLIONS) 
FIGURE 4A 

EFFECT OF PSD REVIEW 

REGIONAL COAL PRODUCTION 

EAST OF. MISSISSIPP 

ON 

200 0 

5 0 0 

450--

400--

350--

300--

3^250 + 

O 

200--

1SO--

100--

5 0 -

LYlpL] 

NO GRANDFATHER 

GRANDFATHER 

BASE 

N. APPALCHA C. APPALCHA S. APPALCHA 

COAL PRODUCING REGIONS 

MIDWEST 

oo 
FIGURE 4 B 

EFFECT OF PSD REVIEW 

REGIONAL COAL PRODUCTION 

WEST OF MISSISSIPP 

ON 

200 0 

3 0 0 

250--

200 --

3^150 + 

CO 

o 

1 DO -

SO--

NO GRANDFATHER 

GRANDFATHER 

BASE 

C. WEST E. N. GRT PLAINS ROCKIES 

GULF W. N. GRT PLAINS SOUTHWEST 

COAL PRODUCING REGIONS 

CO 
TABLE 1 

NCA/AM C APPROACH TO EVALUATING THE IMPACTS O F LISTING 

SURFACE COAL MINES 

INVESTIGATED UNCERTAINTIES ASSOCIATED WITH EMISSION FACTORS AND MODEUNG FOR 

SURFACE COAL MINES 

TRC ENVIRONMENTAL CONSULTANTS. INC., QUANTIFICATION OF UNCERTAINTIES IN 

EPA'S FUGITIVE EMISSIONS AND MODEUNG METHODOLOGY AT SURFACE COAL 

MINES. FEBRUARY 1985 . 

MODELED AIR QUAUTY IMPACTS O F HYPOTHETICAL COAL MINES IN THE MAJOR COAL 

PRODUCING REGIONS: APPALACHIA. ILLINOIS. POWDER RIVER. SAN JUAN. N. DAKOTA 

AND TEXAS; 

TRC ENVIRONMENTAL CONSULTANTS INC.; 

1.)MODELED AIR QUAUTY IMPACTS OF FOUR HYPOTHETICAL SURFACE COAL MINES. 

MAY 1985 . 

2.)MODELED AIR QUALITY IMPACTS OF HYPOTHETICAL NORTH DAKOTA LIGNITE 

MINE. JUN E 1985 . 

3.)MODELED AIR QUAUTY IMPACTS OF HYPOTHETICAL TEXAS LIGNITE MINE. 

JULY 1985 . 

ASSESSED REGIONAL AND NATIONAL IMPACTS OF USTING SURFACE COAL MINES ON 

MINE SIZE AND COSTS. UTIUTY FUEL USE COAL PRODUCTION AND ELECTRIC CONSUMER 

COSTS 

ICF INCORPORATED. ECONOMIC IMPACTS OF U.S.EPA'S PROPOSED REGULATION 

SUBJECTING SURFACE COAL MINES TO PSD PERMITTING REQUIREMENTS. APRIL 

1986 . 
TABLE 2 

HYPOTHETICAL SURFACE COAL MINES 

TO BE 

REGION 

APPALACHIA 

ILLINOIS 

POWDER RIVER 

SAN JUAN 

N. DAKOTA 

TEXAS 

ANALYZED 

PRODUCTION 

MILLION TONS/YEAR 

0.5 

3.0 

1 5.0 

. 0.0 

5.2 

5 .4 

Tl 
TABLE 3 

UNCERTAINTIES IN EPA FUGITIVE PARTICULATE EMISSIONS 

AND MODELING METHODOLOGY AT SURFACE COAL MINES 

EMISSION 

SOURCES OF 

FACTOR EQUATIONS 

ACTIVITY PARAMETERS 

EMISSION CONTROL 

ERROR 

DIPERSION MODEL 

PARTICLE DEPOSITION 

PIT RETENTION 

RANDOM ERRORS 

EXPRESSED AS THE WIDTH OF UNCERTAINTY 

ACTUAL VALUE AT THE 95 % CONFIDENCE 

MINE UNCERTAINTY 

2 4 HOUR 

ILLINOIS 4.3 

POWDER RIVER 3.9 

SAN JUAN 2.9 

ABOUT THE 

LEVEL 

FACTOR IN TSP CONC 

ANNUAL 

3 . 8 

3.4 

2 . 7 

SYSTEMATIC ERRORS 

RESULT IN THE OVER-PREDICTION OF TSP CONCENTRATIONS 

SOURCE 

SETTLING-DEPOSITION ALGORITHM 

PIT RETENTION 

COMBINED 

OVER-PREDICTION FACTOR IN TSP CONC 

4 

1.4 

5 

ro 
TABLE 4 

MODELED AIR QUAUTY IMPACTS OF HYPOTHETICAL 

REGION 

APPALACHIA 

ILUNOIS 

POWDER RIVER 

SAN JUAN 

N. DAKOTA 

TEXAS 

PRODUCTION 

MILUON TPY 

O.S 

3 . 0 

15.0 

10.0 

5 . 2 

5.4 

4» 

** A TEXAS 

2 4 HR PSD 

CLASS II 

INCREMENT 

UG/M 3 

3 7 

3 7 

3 7 

3 7 

3 7 

3 7 

EPA MODELED MINE 

UGNITE MINE WAS 

SIZE 

NOT 

SURFACE COAL 

MAX PREDICTED 

2 4 HR TSP CONC 

UG/M 3 

3 4 7 

5 9 2 

3 4 3 

6 2 9 

160 

5 4 7 

MODELED BY EPA 

MINES 

EPA 

MAX PREDICTED 

2 4 HR TSP CONC 

UG/M3 

27(0.5)* 

35(1.5 ) 

80(10.0 ) 

46(2.5 ) 

54(3.0 ) 

* » 
SURFACE 

REGION 

APPALACHIA 

ILLINOIS 

POWDER RIVER 

SAN JUAN 

N. DAKOTA 

TEXAS 

COAL MINE SIZE 

MODELED 

MINE SIZE 

MILLION TPY 

0 . 5 

3 . 0 

15. 0 

10.0 

5 . 2 

5 . 4 

TABLE 5 

ABLE TO ACHIEVE COMPLIANCE WITH THE PSD 

LINEAR 

REDUCED MINE 

SIZE 

MILLION TPY 

0.05 

0 . 2 

1 . 6 

0 . 6 

1 . 2 

0 . 4 

* A TEXAS LIGNITE MINE 

REDUCED MINE 

MAX PREDICTED 

24 HR TSP CONC 

UG/M 3 

3 5 

1 13 

6 2 

1 5 2 

4 3 

1 6 1 

WAS NOT MODELED 

CLASS II 

PSD 

MINE 

SIZE 

INCREMENTS 

MILLION TPY 

0.05 

0.03 

0 . 8 

0.04 

1.0 

0.014 

BY EPA 

EPA 

CLASS II 

PSD 

MINE 

SIZE 

MILLION TPY 

0 . 5 

1.6 

4 . 6 

1.7 

1 . 7 

* 
REGION 

APPALACHIA 

ILUNOIS 

POWDER RIVER 

SAN JUAN 

N. DAKOTA 

TEXAS 

* 

TABLE 6 

EFFECT OF PSD REVIEW ON NEW 

BASE 

MINE SIZE 

MILLION TPY 

0 . 5 

3 . 0 

15.0 

10.0 

5 . 2 

5 . 4 

MINE COSTS 

BASE 

MINE COST 

•/TO N 

30.24 

29.78 

7.92 

21.13 

15.66 

13.56 

(1985 $/TON ) 

PSD 

MINE SIZE 

MILUON TPY 

0.05 

0.03 

0.80 

0.04 

1.00 

O.014 

FOR A TEXAS UGNITE MINE 

SURFACE COAL 

PSD 

MINE COST 

•/TO N 

36.46 

106.21 

26.80 

69.98 

20.51 

47.26 

WERE NOT 

MINES 

EPA 

MINIMUM MINE 

SIZE ESTIMATED 

MILUON TPY 

0.25 

0.75 

5.00 

1.25 

1.50 

* 

ESTIMATED BY EPA 

EPA 

PSD 

MINE COST 

1983 */TO N 

40.60 

51.40 

7.50 

25.20 

14.20 

* 

Ut 
EFFECT OF PSD 

REGION 

N. APPALACHIA 

C. APPALACHIA 

MIDWEST 

GULF 

W. N. GREAT PLAINS 

ROCKIES 

N.M. SAN JUAN 

N. DAKOTA 

REVIEW ON 

MILLION 

BTU/TON 

2 5 

2 5 

2 2 

1 3 

1 7 

2 4 

1 7 

1 3 

TABLE 7 

LONG TERM CONTRACT 

198 5 $/TO N 

200 0 

BASE 

3 9 

4 1 

3 2 

1 5 

9 

2 5 

2 2 

6 

MINE200 0 -MOUTH 

GRANDFATHER 

4 1 

4 7 

3 2 

1 5 

9 

2 6 

2 3 

7 

N O 

PRICES 

200 0 

GRANDFATHER 

4 1 

4 7 

3 3 

6 5 

2 8 

2 8 

3 1 

2 0 
CHANGES IN ELECTRIC 

199 5 

GRANDFATHER + 1.3 

NO GRANDFATHER +8. 2 

TABLE 8 

UTILITY ANNUALIZED CONSUMER 

(198 5 $ BILLION) 

200 0 200 5 

-1-2.3 -1-4.3 

+8. 1 +7. 1 

* 4.3 % REAL DISCOUNT RATE 

COSTS 

PRESENT VALUE 

199 5 — 200 5 

IN 1985 * 

13.9 

44. 7 
TABLE 9 

CHANGES IN ELECTRIC UTIUTY ANNUAUZED COSTS BY REGION 

(198 5 $ BILUON) 

REGION 

NEW ENGLAND 

MIDDLE ATLANTIC 

UPPER SOUTH ATLANTIC 

LOWER SOUTH ATLANTIC 

EAST NORTH CENTRAL 

EAST SOUTH CENTRAL 

WEST NORTH CENTRAL 

WEST SOUTH CENTRAL 

TOTAL U.S. 

199S 

GRANDFATHER 

+ . 0 

+0. 1 

+0. 2 

+0. 4 

-f-O.2 

+0. 2 

+ . 0 

+0. 1 

199 9 

NO GRANDFATHER 

+.o 

+0. 1 

+0. 2 

+0. 4 

+ 1.1 

+0. 4 . 

+ 1.7 

+2. 4 

200 0 

GRANDFATHER 

+.0 

+.0 

+0. 4 

+0. 6 

+ 1.5 

+0. 2 

+.o 

+0. 2 

NO 

200 0 

GRANDFATHER 

+.o 

+0. 3 

+0. 2 

+0. 9 

+ 1.9 

+0. 8 

+0. 9 

+ 1.7 

200 5 

GRANDFATHER 

+.0 

+ 1.9 

-0. 7 

+0. 8 

+ 1.2 

+0. 3 

+0. 2 

+0. 7 

200 5 

NO GRANDFATHER 

+.o 

+ 1.7 

— 1.1 

+0. 8 

+2. 1 

+0. 7 

+0. 5 

+ 1.4 

+ 1.3 +8. 2 +2. 3 +8. 1 

NOTE: TOTALS MAY NOT ADD DUE TO ROUNDING. 

+4. 3 +7. 1 

oo 
P.49 

Statement of 

Mr. George Roope 

Utah International, Inc. 

at 

Public Hearings 

before the 

U.S. Environmental Protection Agency 

Docket No. A-84-33 

April 9, 1986 

Denver, Colorado 

Good morning. My name is George Roope and I am with Utah 

International, Inc. I am currently the Alton Project Environmental Coordinator and responsible for air quality permitting 

at the Alton mine. I am appearing here today on behalf of the 

National Coal Association and the American Mining Congress as 

well as Utah International. My comments today will focus on 

the Agency's analysis in the RIA of "Alternative IV" which 

would subject surface mines whose operations would impact Class 

I and mandatory Class II (Class I/II) areas to PSD regulation. 

In sum, we believe that the Agency's assumptions and methodology, and therefore its conclusions, were flawed. Consequently, EPA's Alternative IV analysis cannot serve as the 

basis for subjecting mines locating near Class I and mandatory 

Class II areas to PSD review. 

I. EPA's Analysis 

Under EPA's Alternative IV, all new surface coal mines 

having ambient impacts on Class I/II areas would be subject to 

NSR and PSD constraints. The Agency has concluded that neither 

of its other proposals, Alternative II (regulate only all new 
P.50 

mines) or Alternative III (new and existing mines), is economically efficient. The RIA suggests that Alternative IV may be . 

economically efficient, but concedes the results are ambiguous. 

The results are ambiguous at best, but the analysis is 

clearly flawed. The Agency's analysis is premised on a number 

of unfounded assumptions. First, the RIA "assumes" that under 

Alternative IV all mines will move beyond the ambient impact 

range of any Class I/II area in order to avoid being subject to 

PSD review. The RIA acknowledges that some mines might choose 

to operate under the PSD standards, but does not evaluate the 

costs or benefits of that scenario. (p IV-13). Even though 

the RIA limited the scenarios it considered, it did not fully 

analyze the ones it included. For example, while positing that 

mines would relocate to avoid regulation, the RIA does not 

attempt to quantify the costs associated with that mine reloca- "jj 

tion. 

Second, EPA's national analysis of Alternative IV is based 

on predicted effects at just two hypothetical mine locations. 

The RIA does not estimate how many areas are potentially 

affected by the regulation. Rather it asserts that less than 

one percent (1.41 billion tons) of all U.S. surface mineable 

reserves would be affected by the proposed regulation. (Table 

V-13). The RIA does not explain the derivation of that number. ) 

An analysis which ICF prepared for NCA and AMC concludes, however, that at least 20 coal fields in nine states, with 
P.51 

reserves exceeding 8.5 billion tons, could be affected by EPA's 

proposal. Approximately 4.5 billion tons of this amount is \/J 

found in Montana. This represents about 10 percent of the 

total recoverable reserves found in southeast Montana where 

nearly all active mines in the State are located. 

Third, the RIA fails to consider production and permitting 

costs for mines affected by Alternative IV because it assumes 

that all mines will move beyond the regulatory boundary. 

Fourth, in estimating the benefits of Alternative IV regu-' 

lation, the RIA evaluates each mine site in one year only, the 

predicted year of peak mining activity. The decision to rely 

on those figures for calculating overall benefits clearly 

results in their overstatement. 

II. The Benefits of Regulation are Overstated. 

EPA contends that significant benefits accrue, at least at 

Bryce Canyon, from the imposition of PSD requirements in Class 

I/II areas. However, the only benefits predicted are improvements in visibility that at best are at the margin of human 

perception. Moreover, even these benefits are overstated. 

The RIA finds benefits only at Bryce Canyon and only from 

moving a potential mine out of view from the park. This type 

of benefit is not cognizable under the PSD program. The PSD 

program does not regulate the effects of changes in landscape 

on a park visitor's health or welfare. Moreover, in 1980, the 

Department of the Interior designated the area around Bryce 

1 

1 

-3-
P.52 

Canyon "unsuitable" for surface mining under § 522 of the Surface Mining Control and Reclamation Act of 1977. This eliminated part of Utah International's Alton mine. As a result, 

under current law, no mine can locate within view of Bryce Canyon. Thus, EPA's proposed Alternative IV will result in no 

benefits at Bryce Canyon. EPA's regulation, however, could 

force the Alton mine to move further beyond the park boundaries. Thus, Alternative IV could irrationally impose great ^ 

costs for no air quality or visibility benefit. v 

I would like to take a few minutes to discuss the Secretary of Interior's decision regarding the unsuitability petition. The documents pertaining to the petition and subsequent 

decision are in the public record and are available at various 

locations. The Secretary made his decision to declare certain 

leases of the Alton coal field as unsuitable for surface mining 

based on three criteria: visibility, visual resource, and noise 

effects on Bryce Canyon. His decision, as supported in his 

statement of reasons issued in January of 1981, implies that 

surface mining effects from the areas declared suitable for 

surface coal mining would not have any significant impact on 

Bryce Canyon National Park. The Secretary stated in his press 

release announcing the decision that 24 million tons of coal 

are found in the leases declared unsuitable for surface mining. 

This figure is almost 10 times greater than the amount of coal 

reserves in the state of Utah which EPA assumes would be 

-4-
P.53 

affected by Alternative IV. The unsuitable line is drawn at a 

point such that coal leases that could be mined by surface 

methods are not visible from any point in Bryce Canyon National 

Park. 

Even if EPA's proposal did not duplicate existing regulatory structures, the RIA's benefits analysis would still be 

overstated. In evaluating the benefits of Alternative IV, the 

RIA ignores the extensive analyses undertaken by the Office of 

Surface Mining (OSM) in 1980 when it made the "unsuitability" 

determination I have just discussed. These analyses included 

comprehensive studies assessing air quality, visibility, and 

noise effects. By ignoring these analyses, the RIA was forced 

to rely on studies and findings from very different situations. 

In order to apply the results of those other studies, EPA makes 

imprecise adjustments in the data to attempt to simulate 

comparability. 

Those estimates are suspect because of the nature of the 

initial research. All the benefit estimates for Alternative IV 

are based on "willingness-to-pay" (WTP) estimates derived from 

"contingent valuation" or "bidding games." As a group, these 

studies suffer from inherent bias. Respondents often know what 

answer the researcher is seeking and reply accordingly because 

they know they will not actually be forced to pay what they 

bid. That inherent bias combined with the extrapolation of the 

results from other sites renders the RIA benefits figures 

almost useless at the threshold. 

• 5 -
P.54 

The RIA makes exaggerated claims of significant improvement in visibility from Alternative IV. It attempts to 

quantify the visibility improvement associated w-ith regulation 

before estimating the value of that improvement. The RIA 

considers two scenarios: improvement when the mine is moved 

but still visible from a park and improvement when the mine 

moves out of visual range of the park. The RIA predicts that 

the visual range improvements will be imperceptible to the 

human eye at both Chaco Culture and Bryce Canyon when the mine 

is still visible. Visual improvement continues to be imperceptible at Chaco Culture when the mine is moved out of sight of 

the park. The RIA predicts significant reductions at Bryce 

Canyon under "adverse metereological conditions," but fails to 

specify their nature or frequency. The RIA estimates the 

average improvement to be a mere three to five percent. That 

range of average visibility improvement is on the margin of 

human perceptibility. Its value is further undermined by the 

fact mentioned earlier: no mine is currently allowed to locate 

in the area visible from Bryce Canyon National Park. In short, 

EPA did not analyze the appropriate size, shape or location of 

a mine currently allowed under SMCRA provisions on which to 

base their benefit estimates. 

The RIA's attempt to estimate the value of the "benefits" 

is equally flawed. The RIA bases its valuations on the 

willingness-to-pay (WTP) estimates generated in a 1981 study of 

-6-
P.55 

recreational users at Mesa Verde National Park. That study 

showed a $2.84 per visitor valuation for a guarantee of a 

"clear view" instead of "moderate haze." The RIA adopts the 

$2.84 figure, but fails to establish that the visual range 

change to which it relates is remotely comparable to the 

average three to five percent improvement predicted at Bryce 

Canyon. In fact, the two situations are not comparable because 

they relate to two different parks and because the predicted 

improvement at Bryce is only marginally perceptible, while the 

Mesa Verde study hypothesized a dramatic change from a "moderately hazy" to a "clear" view. 

When trying to value the benefit of having a mine out of 

sight of a national park, the RIA relies, without qualification, on another uninstructive study. The study estimated the 

value per month to a household residing in the vicinity of a 

surface mine of having the land reclaimed. EPA divided the per 

month figure to obtain a per day valuation which it then 

applied to the annual number of visitor days for both Chaco 

Culture and Bryce Canyon. This methodology produced a benefit 

value of $37,400 for Bryce Canyon. The process clearly overstated the benefit because the populations are not comparable 

for two reasons. First, there is no reason to assume that the 

value placed on reclamation by a resident of the vicinity of a 

surface mine is remotely related to the value to a park visitor 

of having the air clear on the day he/she visits the park. 

-7-
P.56 

Second, the residential valuation relied on was per household, 

presumably accumulating the benefits to more than one individual, but EPA applied its derived daily valuation per visitor to 

the two parks, thereby inflating the results by an unknown 

factor. 

Finally, the RIA purports to measure the "existence value" 

of visual range improvement at Bryce Canyon. This exercise 

results in the largest, and most flawed, benefits estimate in 

the study. Lacking any data related to the existence value of 

Bryce, the RIA attempts to extrapolate from a study done about 

the Grand Canyon. It tries to justify using the study by 

acknowledging that the benefits estimate is probably overstated. The RIA's attempt at compensating for the 

overstatement is inappropriate and inadequate. It reduces the 

Grand Canyon existence value by the ratio of Bryce to Grand 

Canyon visitor days. However, the number of visitor days has 

no established relation to the value of a site's existence to 

persons who will never visit the parks. The adjustment mixes 

apples and oranges. In addition, this benefit has no value for 

non-natural resource Class I areas such as the Indian reservations in Montana. 

Ill. The Costs of Alternative IV Are Underestimated 

The RIA's cost analyses are deficient because the range of 

costs considered is too narrow. Consequently, the overall 

costs of Alternative IV are understated. 

-8-
P.57 

The RIA assumes that the only costs associated with promulgation of Alternative IV would be the possible loss of plan*-

ning and development costs for proposed mines that would have 

to be abandoned if subjected to PSD regulation. The national 

social costs of Alternative IV were estimated to be between 

$200,000 and $400,000, the sum of estimated sunk costs at Chaco 

Culture and Bryce Canyon. Utah International has spent in 

excess of $400,000 just to study potential air quality and visibility effects near Bryce Canyon. This total does not include 

costs of studies for other required environmental assessments 

nor does it include incremental costs Utah anticipates for 

fugitive .dust controls. That estimate ignores the costs associated with at least 18 other potentially affected sites identified in ICF's study for NCA/AMC. 

The RIA excludes any consideration of the changes in the 

costs of transportation, infrastructure, and other items. 

While these costs will vary from site to site, they represent 

the increased costs of supplying coal to customers who would 

have been served from the reserves near the Class I/II areas. 

IV. Redundant Regulation 

The notion of subjecting Bryce Canyon to additional mining 

restrictions illustrates most clearly how wholly unnecessary, 

yet potentially harmful, Alternative IV is. 

-9-
P.58 

The Surface Mining Control and Reclamation Act of 1977 

(SMCRA) prohibits authorization of surface mines which will 

substantially degrade the environment and bans surface 

operations within the boundaries of national parks, wildlife 

preserves and national forests, i.e., Class I areas. The Secretary and the state authorities also have the discretionary 

authority to designate other areas as "unsuitable" for mining. 

Visibility was the only "benefit" value considered in the 

unsuitability proceeding involving Bryce Canon. 

I should note that any party submitting a permit application to mine the undesignated portions of the Alton coal field 

must assess the potential effects on Bryce Canyon National • 

Park. As the Secretary noted "[a]t that time, the National 

Park Service and the Office of Surface Mining will review the 

application to determine, as required by paragraph 5 of my 

decision, whether mining of these Federal leases would cause 

adverse impacts on "the visual resources and noise levels in 

Bryce Canyon National Park. They may then recommend that special stipulations or conditions to mitigate such damage be 

included in the Department's decision on the mining plan/permit 

application, as provided in 30 C.F.R. 741,18, 761.12 and 

786.19." (Secretary's Statement of Reasons Jan. 1981) 

The existing SMCRA program is more efficient than the 

blanket ban proposed by EPA because it permits area-by-area 

scrutiny and the balancing of unique costs and benefits. SMCRA 

-10-
P.59 

requires a balancing of legitimately competing interests in the 

decision to designate or not designate. In addition, other 

state and federal regulatory programs -- including State new 

source review, the § 169A visibility program, and states' obligation to protect the PSD increments -- provide additional 

mechanisms for preventing visibility or any other air quality 

impairment. 

The duplication of an existing regulatory system and the 

conflicts between agencies inherent in that duplication represent an additional cost of Alternative IV not addressed by the 

RIA. 

* * * * 

EPA admits that the results of its cost-benefit analysis 

are ambiguous. The flaws and omissions which I have discussed 

this morning magnify that ambiguity and render the cost-benefit 

analysis nearly useless in the decision-making process. I urge 

the Agency to consider the costs of regulation I have raised 

here today and to balance them against the diminished benefits 

of Alternative IV. The rational conclusion should be clear; 

Alternative IV would impose significant burdens on fuel 

consumers and the coal industry with (at best) only imperceptible environmental benefits. The next speaker, Mr. Gale 

Hoffnagle of TRC Environmental Consultants, will address certain additional technical flaws in Alternative IV, including 

-11-
P.60 

underestimation of costs and overestimation of benefits in the 

RIA. 

Thank you for your time and attention. I will be happy to 

answer any questions, including specific questions regarding 

the analysis of the Alton project at the end of the NCA/AMC 

statement. 

•12-
IT 

P.61 

STATEMENT OF 

GALE F. HOFFNAGLE 

TRC ENVIRONMENTAL CONSULTANTS 

ON BEHALF OF NCA/AMC 

AT U.S. EPA PUBLIC HEARING 

ON PROPOSAL TO LIST SURFACE COAL MINES 

UNDER SECTION 302(j) OF THE CLEAN AIR ACT 

1. INTRODUCTION. 

EPA's modeling of both ambient air quality and visibility 

is flawed and therefore drastically understates the effect 

of Alternative IV on mining. 

2. THE RIA UNDERSTATES THE IMPACT ON MINES 

OF ALTERNATIVE IV. 

3 

A. Definition of "significant impact:" 1 ug/m or less 

at any distance. 

B. The analysis of mines which could have a significant 

impact on "protected areas" assumes the trivial mine 

size which meets Class II increments (which itself is 

an overestimate). The RIA fails to analyze the more 

important question: what mines have a "significant 

impact" on the protected areas. Economically-sized 

mines could have a "significant impact" at distances 

up to 180 kilometers or more. For instance, any mine 

in the entire Powder River Basin might be required to 

be listed. There might even be a patchwork of those 

that are and are not listed. More importantly, mines 

with a significant impact would be required to meet 

Class II increments at their boundaries, far from the 

"protected area", which in many or most cases would 
¥ 

P.62 

3. 

4. 

i 

result in permit denial and resulting increased 

adverse impacts. 

THE RIA OVERSTATES THE VISIBILITY BENEFITS 

OF ALTERNATIVE IV. 

A. Mining would be precluded out to the average visual 

range at each protected area because the visibility 

analysis is, counterintuitively, independent of distance from the observer. 

B. Details of the visibility analysis have not yet been 

made available. 

THE RIA FAILS TO RECOGNIZE THE ADMINISTRATIVE IMPRACTIBILITY 

AND OTHER "HIDDEN" COSTS OF ALTERNATIVE IV. 

Determining "significant impact" under Alternative IV is a 

highly complex technical determination involving extensive 

analysis and agency interaction. All of this analysis 

would have to occur prior to application for a permit. 

-2-
F 

>-' 

/DO •*•!«& 

UWOMIWGTi 
P.64 

SUMMARY & CONCLUSIONS 

PETER KEPPLER 

ASSISTANT GENERAL COUNSEL 

AMAX, INC. 

AT U.S. EPA PUBLIC HEARING 

ON PROPOSAL TO LIST SURFACE COAL MINES 

UNDER SECTION 302(j) OF THE CLEAN AIR ACT 

Denver, Colorado 

April 9, 1986 

Surface coal mines are not a significant source of particulate matter, as compared to agriculture and unpaved roads. 

Benefits from regulating surface coal mines are less than 

zero for Alternative II and III and uncertain or minimal for 

Alternative IV: 

We believe EPA's analyses showing any benefits for 

listing surface coal mines are flawed and overstated. 

As we have stated, fugitive emissions from surface 

coal mines do not have significant health or welfare 

impacts. 

There is no basis for the soiling "benefits" projected by the RIA. 

Mines should be a separate source category; they are distinct and unique sources of particulate matter as compared to 

other sources subject to PSD. 

The costs of subjecting surface coal mines to new source 

review and PSD regulations far outweigh the benefits: 

- Studies done for AMC and NCA by TRC and ICF show 

costs of Alternatives II-IV are much greater than 

estimated by EPA. Costs could go as high as $8 billion/year, and could be even higher. 

Also, ICF studies show subjecting surface coal mines 

to PSD review would cause significant changes in 

regional coal production, with an overall decline in 

production. 
Alternative IV would subject surface mines whose emissions 

impact Class I and mandatory Class II areas to PSD regulation. 

As pointed out in our testimony, EPA's analysis of 

Alternative IV is flawed: 

It is premised on unfounded assumptions, for example, 

mines will move beyond ambient impact range of 

Class I/II areas; 

It is based on predicted effects of two hypothetical 

mine locations and asserts that less than 1% of all 

U.S. surface minable reserves would be affected; 

The ICF analysis concludes at least 20 coal fields in 

nine states would be affected. Impacts are much 

greater.,when you consider significance level 

(1 ug/m ). 

The RIA fails to consider production and permitting 

costs for mines affected by Alternative IV because it 

assumes that all mines will move beyond the regulatory boundary. 

Also, the costs of Alternative IV are underestimated 

because the RIA ignores planning and development 

costs associated with 18 potentially affected coal 

fields identified in ICF's study and the changes in 

costs of transportation, infrastructure and other 

items. 

There is overlap and duplication with the SMCRA program: 

SMCRA bars mining in Class I areas. 

The Secretary of Interior and states have 

authority to designate areas "unsuitable" for 

mining. 

-2-
P.66 

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P.67 

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Conflict Arts between Selected Coal 

Tracti ind Coal Enchanga* 

Conflict AI M between Selected Coal Trie it 

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Coal Eiching n 

SS Gulf 

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103 "m o Roed _. Situ 

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105 Maori flinch Mine 

107 Open "it end Section 34 Minei 

106 IetonE«plo»ilioninSmi 

109 Bill Smith H n 

SPRBU.N 

110 HioMtndMme.ncM.il 

Bemonite Mine ind Mill Area 

113 American Colloid Mint ind Will 

115 Intfriunionil Mineril Companv 

1 IS Ftderil Btntoniie Corpoition • 

117 American Colloid M.n» 

MB Fetfcril Bentonitt Omiion Mint 

110 Benton Oiv Corporation Mint 

170 Ktit H Bentonite Corporation 1 

131 Benton Oly Corporation Mill 

Oil and GaiFitid Area 

Propoaed Coal Slurry Preparatio 

Exiiting Tranwniuion Lina 

PropoMd Trenimitjion Lina 

E nining Railroad 

Propoaed Railroad 

Propoaed ETSI Pipeline 

1984 Coal Lease Sale 

Regional Activity 

Powder River Coal 

Environmental Impact Statement 
P.68 

TESTIMONY BY JOHN DWYER, PRESIDENT 

NORTH DAKOTA LIGNITE COUNCIL 

PUBLIC HEARINGS ON SURFACE COAL MINE 

FUGITIVE EMISSIONS BEFORE THE 

U.S. ENVIRONMENTAL PROTECTION AGENCY 

DOCKET #A-84-33 

APRIL 9, 1986 

DENVER, COLORADO 

My name is John Dwyer and I am president of the North Dakota Lignite Council. 

The North Dakota Lignite Council's membership includes our state's major producers, who together produce over 25 million tons annually from surface coal 

mines, as well as the investor-owned utilities and rural electric cooperatives 

who generate electricity from lignite. Those companies planning future 

projects are also represented by the Lignite Council. 

In the February 28, 1986 Federal Register, EPA requests comments on four regulatory alternatives. The North Dakota Lignite Council urges EPA to select Alternative I--Do not list surface coal mines as major sources for New Source 

Review and PSD regulation. 

We agree with EPA's statement in the Federal Register that ..."the costs determined under Alternative II and III considerably exceed the benefits". As 

reported by TRC Environmental Consultants in a report prepared for the North 

Dakota Lignite Council on this issue, North Dakota lignite mines would be restricted to no more than one (1) million tons per year (a copy of this report 

will be submitted prior to April 29, 1986). This is assuming that no other 

sources in the area have consumed any PSD increment. Most mines in North 

-1-
P.69 

Dakota are much larger than this in order to support other facilities, namely 

electrical generating plants and the Great Plains Coal Gasification Plant. 

Therefore, it is unlikely that a mine smaller than one (1) million tons per 

year could be opened. According to studies done by ICF, Inc., on behalf of 

the American Mining Congress and the National Coal Association, Alternative II 

would cause North Dakota lignite costs to increase by more than 30% and Alternative III would cause the costs to increase by more than 230%. Either case 

would reduce our ability to compete with other energy sources, particularly 

with hydroelectric power imported from Canada. 

After reviewing Alternative IV of the RIA, we believe that the costs would far 

outweigh the imperceptible environmental benefits. In addition, Alternative 

IV would restrict 889 million tons of North Dakota lignite from being used according to the ICF, Inc. studies. 

Furthermore, Alternative II, III and IV would have severe economic hardships 

on our state's lignite industry which has already been hard hit by production 

losses and job lay-offs. 

A brief review of recent production losses indicates North Dakota has lost 

five (5) million tons annually. 

Annual production cutbacks at Knife River's Gascoyne and Beulah mines total 

1.5 million tons. The shutdown of Basin Electric's William J. Neal Station 

resulted in a loss of 250,000 tons annually. With the two units of the Leland 

Olds Station operating on an alternating basis, production at the Glenharold 
P.70 

Mine has been cut by 1.8 million tons. The amount of lignite burned at the 

Antelope Valley Station this year will be 1.2 million tons less than originally planned. 

This lost lignite production of 5 million tons annually in North Dakota has 

resulted in lost jobs, lost lignite expenditures and reduced economic growth. 

Preventing further decline in production will be difficult unless more electricity can be sold at competitive rates from North Dakota's lignite-fired 

power plants. 

If Alternatives II, III or IV of the RIA are adopted, we believe the remaining 

4,000 jobs involved in North Dakota's lignite mines and energy conversion facilities will be seriously jeopardized. This would further compound the economic problem facing our state due to declining oil and gas prices and a very 

stagnant farm economy. 

In the Federal Register notice, EPA also solicited comments on the issue of 

mines associated with other sources that are subject to new source review. In 

other words, it could be construed that a mine mouth power plant and associated mines are a single source. Virtually every large existing surface coal 

mine in North Dakota would, under this interpretation, be subject to new 

source review. We believe this to be unreasonable. Power plants and mines 

are generally under separate ownership and are subject to different sets of 

regulations. Generally, operations other than transfer of coal between the 

mine and the power plant are completely independent. Coal mines are intensely 

-3-
P.71 

regulated by the Office of Surface Mining and are required by law to minimize 

erosion by air and water. 

We agree with the American Mining Congress, as stated in the Federal Register, 

that coal mines which are sources of fugitive emissions of large inert particles are not the type of sources Congress intended to regulate. We urge EPA 

to change the appropriate regulatory definitions to clarify that mining operations constitute a separate source category which never is part of, or combines with, any of the listed categories for New Source Review. 

The EPA has not demonstrated that surface coal mine emissions adversely affect 

public health or welfare. The overwhelming technical information available 

suggests that particulate matter from surface coal mines does not have an adverse impact on human health or welfare. It appears EPA has concluded that 

surface coal mines have the potential to significantly degrade air quality because they are capable of producing more than 250 tons per year of fugitive 

emissions. However, a report by Evans and Cooper in the December 1980 Journal 

of the Air Pollution Control Association states that surface coal mines collectively contribute less than .05 percent of the total national fugitive 

emission burden. 

In proposing to include surface coal mines as a major stationery source, it 

would appear that EPA has gone rabbit hunting with a cruise missile. Surface 

coal mines cannot, in good conscience, be considered a significant threat 

against air quality while all other contributors, including unpaved roads (48% 

of total fugitive emissions) and agriculture (46%) are virtually ignored. 

-4-
P.72 

It is important to understand that in proposing this rulemaking, EPA would be 

restricting coal development, increasing the cost of power to the consumer and 

jeopardizing a fragile North Dakota lignite economy that has already been hard 

hit due to its inability to compete with other energy sources. This is particularly distressing when you consider the fact that fugitive dust from surface mines is very insignificant when compared to similar unregulated fugitive 

dust sources such as unpaved roads and agricultural operations, which are in 

abundance in North Dakota and other Western states. 

Thank you for your time and attention. I will be happy to answer any 

questions you have at this time. 
P.73 

TESTIMONY OF 

ROBERT B. FLAGG 

MANAGER, TECHNICAL & RESEARCH SERVICES 

MINING AND RECLAMATION COUNCIL OF AMERICA 

AND 

KEN WILLIAMS 

DIRECTOR, GOVERNMENT AFFAIRS 

WESTERN ENERGY COMPANY 

ON BEHALF OF THE 

MINING AND RECLAMATION COUNCIL OF AMERICA 

AT THE 

ENVIRONMENTAL PROTECTION AGENCY 

PUBLIC HEARING 

ON THE 

PROPOSED LISTING OF SURFACE COAL MINES 

FOR PSD PURPOSES 

Docket No. A-84-33 

APRIL 9, 1986 

DENVER, COLORADO 
P.74 

Good morning, my name is Robert Flagg, Manager of Technical and 

Research Services, of the Mining and Reclamation Council of America, better 

known as "MARC". MARC is a national trade association, representing the 

surface coal mining and ancillary industries. MARC's members mine coal in all 

producing regions of the United States and it is on their behalf that I appear 

before you today. 

This testimony is in response to the October 26, 1984 proposal by EPA 

to list surface coal mining as major stationery sources subject to PSD and 

non-attainment new source review. In addition to addressing major 

philosophical, factual and legal issues raised by the proposed regulation, the 

remarks will focus on several of the major flaws in the regulatory impact 

analysis (RIA) and background documents associated with this rulemaking effort. 

Today's remarks will center around four points: 

0 It is inappropriate to regulate fugitive dust for surface coal 

mines. Such emissions cause neither significant adverse health or 

welfare effects nor do they significantly degrade air quality. 

Surface coal mine emissions account for only .05% of the total 

inventory of such emissions nationwide and therefore regulation would 

have a de minimus air quality impact. 

0 The rulemaking is premature. The nature of the pollutant is 

subject to EPA rulemaking and no accurate methods exist to model, 

monitor, or measure emissions are available. 

0 The general conclusions reached in EPA's regulatory impact 

analysis regarding options two and three are correct, however the 

cost/benefit analysis is seriously flawed and grossly underestimates 

costs. If meteorological and economic modeling assumptions are 

changed to more closely reflect reality, EPA's conclusions that costs 

far outweigh benefits under options 2 and 3 are understated 

substantially. 
P.75 

- 2 -

0 EPA's conclusion that benefits may outweigh costs under option 4 

is based upon a grossly flawed analysis of tne actual impact on the 

industry and on air quality. 

Todays comments are general and will be further substantiated in 

written comments. Regarding the latter, I wish to take this opportunity to 

formally request a thirty day extension of the comment period. The currently 

allotted sixty days does not permit sufficient time to adequately address the 

assumptions and documentation EPA has taken several years to compile. Absent 

an extension, the administrative record may not be sufficient for EPA to base 

a final decision. MARC looks forward to favorable action on this request as 

soon as possible. 

Tne reason for my appearance here today is quite simple. MARC's 

members have a vital interest in this rulemaking proceeding. The ability to 

open surface mines or expand existing ones will be substantially and adversely 

effected by any of EPA fugitive emissions regulatory options which differ from 

the status quo. The primary concern is that under the current definition of 

particulate matter as total suspended particulate, it would be impossible, as 

distinct from being costly, to permit all Dut the smallest new or expanded 

surface mining operation in spite of the absence of any significant 

environmental benefit. Surface mining is already subject to BACT or its 

equivalent through compliance with OSM, MSHA, EPA and other state regulatory 

schemes that control fugitive emissions to protect against adverse health or 

welfare effects. These facts, together with the inadequacy of the current 

regulatory tools to model, measure, and monitor fugitive emissions cause MARC 

to question both the basis, necessity and practicality of this rulemaking 

effort. 
P.76 

- 3 -

I. General Regulatory Deficiencies 

A. Timeliness 

First, and critical to any discussion of appropriateness of this rule 

making is whether it is timely. MARC would respond "NO". Issues of critical 

importance in determining the applicability and impact of this proposal have 

not been resolved as the proposed revisions to EPA's ambient air quality 

standards for particulate matter. That rulemaking proposes definitions and 

options for defining particulate matter for PSD purposes. In advance of a 

decission on this issue, it is basically impossible for ooth EPA and the 

general public to assess the need for, ramifications and potential costs and 

benefits of surface coal mine listing. Primary and secondary ambient air 

quality standards are the controlling factors in determining the impact of PSD 

regulation of mines. The very standard upon which the listing decision is 

predicated remains subject to change and in a state of confusion. It is 

inconceivable how EPA can justify not only its own efforts to date, but 

forcing industry to expend millions of dollars to evaluate listing, when in 

fact we are very likely chasing not only a moving target but perhaps the wrong 

one altogether. 

B. The 250 tons/yr. Threshold 

It further appears that EPA has concluded that surface coal mines 

(SCM's) pose a significant threat to air quality degradation due solely to the 
P.77 

- 4 -

supposition that most mines of economically viable size emit in excess of 250 

tons per year of particulate matter. MARC does not believe a presumption that 

a source poses a threat of significant air quality degradation should arise 

from the mere fact that it produces 250 tons per year of fugitive dust. There 

is no basis in the Clean Air Act or its legislative history for a conclusion 

that Congress believed or inferred that 250 tons a year of fugitive dust 

emissions were "significant". To interpret the Act in such an expansionary 

manner would require EPA to list as a major source such activities as a 

pick-up truck on a dirt road and farming. This concept is clearly absurd. 

Because EPA's presumption that a source of 250 tons poses a significant threat 

to air quality is unfounded, MARC submits there is no basis for listing 

mines. The record does not indicate a demonstrative connection between those 

emissions and adverse health or welfare effects, a predicate for action. 

Protection from these effects, as clearly stated in Section 160 of the Clean 

Air Act (CAA), is the principal goal of the PSD program. 

C. Emission Factors 

Moreover, EPA has proposed to add SCM's to the §302(j) list of source 

categories without making an attempt to assess the reliability of available 

methods to model and quantify fugitive emissions from such mines. The 

quantification issue must be resolved before any reasonable decision to list 

can be made, rather than after the fact. At present there are no emission 

factors for eastern mines and no method to account for pit retention. Current 

emission factors are estimated to have an error factor of 2 to 10 while 
- 5 -

applicable air quality models have an error factor of 6 to 30. Without these 

analytical tools, and in the absence of a causal connection between emissions 

and health and welfare effects, the agency is clearly acting in a manner 

contrary to Sec. 307(d)(3) of the CAA. 

D. Section 307(d)(3) Requirements 

Section 307(d)(3) requires that a notice of rulemaking be accompanied 

by a statement of the rule's basis and purpose. This requires inclusion of 

the factual data on which the rule is based, the methodology used in obtaining 

and analyzing the data, and the major legal and policy considerations 

underlying the proposal. This proposal violates the fundamental principles of 

rulemaking and due process by failing to inform the public of the purpose and 

intent of the proposal and the relationship to other regulatory requirements. 

This is clear when one recognizes that although EPA has concluded the proposed 

rulemaking would be applicable to major stationery sources and major 

modifications of such sources, it has not given any indication or definition 

of types of activities thought to constitute a major modification. Since, 

under current definition, a major modification relative to PM is any activity 

with the potential to emit twenty-five tons per year, this is very troubling. 

This level can be exceeded by adding as little as thirty-seven feet of haul 

road at a six million ton per year mine or by a slight change in stripping 

ratios, mining equipment changes, etc. The EPA has not even begun to address 

this issue and therefore once again simply has not afforded the potentially 

regulated community an appropriate opportunity to formulate an informed 

response. 
P.79 

- 6 -

E. Burden of Proof 

As illustrated in the preceeding points, EPA's sequencing of events 

is highly questionable and illegally snifts the burden of proof from EPA to 

the private sector. The Supreme Court has stated that ordinarily it is the 

proponent of a rule or order who has the burden of proof in administrative 

proceedings and that unless Congress has specifically provided otherwise it 

intended the agency to bear the burden of establishing the need for a proposes 

rule. The EPA nas not demonstrated required necessity for the rule and failed 

to meet its burden of proof in derogation of its statutory mandates. The 

court in Alabama Power case did not create a "presumption" in favor of 

regulation of fugitive dust emissions, but instead created a "precondition" to 

such regulation, namely appropriate EPA rulemaking. It neither created a 

presumption that all sources emitting 250 tons or more of fugitive emissions 

per year should be regulated as major stationary sources, nor suggested that 

industry must carry the burden of proving an unacceptable benefit to cost 

ratio. Tne 302(j) rulemaking requirements, as clarrified in Alabama Power 

case, are clearly on EPA, not on industry. 

F. SCM's Contribution to Fugitive Emissions 

Central to the entire fugitive dust and surface mine listing question 

is "what effect do fugitive emissions have on air quality and health and 

welfare values". To answer this EPA must acknowledge the scientific facts and 

the results of their own studies — that the relatively small contribution of 
P.80 

fugitive emission from SCM's to total particulate concentrations, and the 

location of such mines in sparsely populated areas, suggest the overall impact 

on air quality is minimal. A 1980 study has found that only one-twentith of 

one percent of fugitive emission comes from surface coal mines while 3%, 46%, 

and 48% come from construction, agricultural and unpaved roads respectively. 

Further, there is another recent study which concludes that in areas where 

SCM's have displaced agricultural activities as the land's use, overall 

ambient particulate concentrations have been reduced. It therefore appears 

that EPA is attempting to regulate not only the wrong "pollutant" but the 

wrong entity as well. 

This is reinforced by the fact that the vast majority of particulates 

emitted from SCM's are large particles which fall to the ground rapidly and 

correspondingly have only a temporary effect on air quality in the mine area. 

Moreover, such particles, being of crustle composition, are chemically inert 

and of a size that have little impact on visibility. A substantial body of 

scientific evidence supports the innoucuous effects on public health and 

welfare associated with these fugitive emissions. Determination of a threat 

is scientifically unfounded. The proposal constitutes a regulatory 

over-reaction to little more than a local nuisance problem, the latter of 

which is already being addressed by local ordinances in most areas of the 

country. The coal industry in the United States is already one of the most 

heavily regulated and environmentally controlled industries in the world, to 

force hundreds of such operations out of business based upon a perceived 

rather than actual problem is unconsionable. 
P.81 

- 3 -

Three additional points I wish to address, prior to turning rny 

attention to a few of the major deficiencies of the RIA, concern the legal 

efficacy of portions of EPA proposal, the legality of EPA's listing of a 

"sub-class" of mines and, the legal deficiency of EPA's disregard for the 

§302(j) rulemaking process as it pertains to certain mining operations. 

G. Statutory Concerns and Conflicts 

1. Grandfather Provisions 

The first point is easily illustrated from the standpoint of the 

"diligence" requirements of the Federal Coal Leasing Amendments Act (FCLAA) of 

1976 and EPA's proposed grandfather provision. In order to comply with PSD 

requirements, EPA's own studies show that mine sizes would have to be 

restricted and existing mines would need to be downsized. This raises serious 

legal concerns in light of the FCLAA requirements that federal coal lessees 

diligently develop their properties within ten years from lease issuance or 

relinquish the lease. Diligent development is defined as 1% of leased 

reserves by the end of the tenth year from lease issuance. After year 10, if 

the operator wishes to avoid paying advance royalties, he must maintain the 

leases in a state of continued operation. Continued operation means 

continuing production of 1% a year after diligence is met. The 1976 Act also 

requires that the leased reserves be mined out in a period not to exceed 40 

years if the leases are unitized in a logical mining unit. The statutory 

catch 22 dilemma is easy to see from the following example. 
P.82 

- 9 -

If 360 million tons of reserves are under lease, the production 

obligation would require a minimum production of 3.60 million tons annually by 

the end of the first 10 years and a minimum of 3.60 m tons each year 

thereafter. The mine would require an average of 12 mty after the tenth year 

to satisfy the 40 year mineout requirement. Both these conditions would 

result in fugitive emissions that violate PSD increments, and thus preclude 

such an operation from being permitted. Application of the proposed rule 

would result in the loss of coal reserves which, on its face, would appear to 

be an unconstitutional taking. The proposal would further have a deliterious 

impact on the future of the federal coal management and leasing program and 

result in a substantial loss of revenue to both the federal and state 

governments. 

EPA has proposed that actual emissions of mines on which construction 

commenced prior to the date of final action on the rulemaking notice should be 

grandfathered from retroactive consumption of PSD increment. This rule would 

apply unless such emissions occurred after an applicable baseline date has 

been established for the effected area. In many states, as Wyoming where a 

statewide baseline was set in 1977, any benefit of the grandfathering 

provision would be largely negated. If all existing sites are grandfathered, 

a provision strongly supported by MARC, the qualifying phrase restricting 

grandfathering to emissions that occured prior to an applicable baseline date 

should be deleted. To retroactively apply the proposed rulemaking to existing 

operations would constitute an unconstitutional taking and bad public policy. 
P.83 

- 10 -

An additional key phrase in the grandfathering proposal is the term 

"commencement of construction" as noted in the preamble. This term should 

include new mines and planned mining extentions where commitments have been 

made. Examples of such would be where a company has expended resources in 

acquiring coal reserves, conducting environmental baseline studies, altering 

its mine plans, or obtaining contractual commitments for the coal. It is 

unlikely that the company would be able to obtain PSD permits to mine these 

reserves under the proposed rules, raising the "takings" issue noted earlier. 

2. Option 4 

In addition to grandfathering, an issue on which EPA solicited 

comment was whether i t should lis t only those SCM's that "effect" Class I or 

mandatory Class I I areas — known as option four. Beyond the negative net 

benefits associated with such a listing which wil l be discussed later, MARC 

questions EPA's legal authority to distinguish a "sub-class" of Class I I 

areas. Although tnis appears to be EPA's preferred option, under the CAA both 

mandatory and non-mandatory Class I I areas were asigned the same PSD 

protections and increment. The Congress specifically set three classes and 

three increment levels not four classes. The only distinction made by 

Congress was that mandatory Class II' s may only be redsignated to higher 

quality whereas regular Class II' s may be redesignated to either higher or 

lower classes. As a practical matter, there are no grounds for EPA's 

distinction. No Class II' s areas have ever been redesignated as Class II I and 

none are contemplated. There is neither a legal nor practical basis for EPA's 
P.84 

- 11 -

proposed distinction between these types of Class II areas. Moreover there is 

no legal basis for separating out Class I areas for special PSD treatment 

relative to SCM listing. The PSD program affords the same general protections 

or considerations to all three classes of areas, with the increments serving 

as the mechanism which dictates the actual air quality to be protected. The 

Congress did not intend to set up a fragmented and confusing PSD program which 

would provide a different regulatory scheme for pollutants and industrial 

practices among the three classes. It seems EPA, through option 4, is 

attempting to legislate such a distinction by regulation. 

3. Section 302(j) 

Third, in the preamble to the final rule EPA summarized its 

rulemaking responsibility as follows: 

"EPA may require the inclusion of 

fugitive emissions in threshold 

applicability determinations for 

projects in a particular [source] 

category only if it has first satisfied 

the rulemaking requirement of §302(j) 

as to that category..." 49 Fed. Reg. 

43203. 

EPA has disregarded this admission, however, and decided to regulate 

fugitive emissions from certain mining operations without proper consideration 

of the requirements of 302(j). Specifically, problems exist regarding (1) the 

SIC code/source definition, (2) the reaffirmed list and "adjacent sources," 

and (3) secondary emissions. 
P.85 

- 12 -

a. SIC Code 

In response to Alabama Power EPA determined that it would redefine 

"source" and classify a group of pollutant emitting activities as a single PSD 

"source" if those activities were included within the definitional term of the 

first two digits of the SIC code. 

According to the SIC two digit groupings, the fugitive emissions from 

mining activities associated with cleaning plants or the extraction processes 

would be considered in the PSD air quality impact analysis and review 

requirements. This will occur even though EPA had never conducted §302(j) 

rulemaking on the impacts of regulating fugitive dust emissions from these 

mines or mining operations. Inclusion of fugitive dust emissions from all but 

the smallest mining operations within the two digit SIC code would have the 

effect of prohibiting issuance of the PSD permit to the source. It is 

arbitrary for EPA to "incidentally" or "indirectly" subject fugitive dust 

emissions from mining operations to PSD requirements simply on the basis of 

SIC code. 

b. "Adjacent Sources" 

MARC further believes that EPA's reaffinned list and provisions for 

adjacent sources is flawed. Specifically, mines that are adjacent to one of 

the sources included on the reaffirmed list should not be considered part of 

that "source." It makes no sense to construe mines as part of another 
P.86 

- 13 -

sources, such as a powerplant, merely because the mine is adjacent to or near 

a PSD regulated source. If "geographic proximity" is used to define inclusion 

with a "source," then owners and operators of such facilities will be 

encouraged to relocate. This would cause expanded environmental impacts and 

reduced economic efficiencies. EPA should clarify that mines are a separate 

source category for all PSD purposes. MARC is positive however, that when 

proper rulemaking is undertaken, the evidence will establish that fugitive 

dust emissions from mining operations should not be regulated. 

c. Secondary Emissions 

MARC further takes exception to EPA's opinion on secondary emissions. 

The settlement agreement in CMA included a provision that EPA remove the 

requirement that the "secondary emissions" of a major stationary source are 

subject to air quality impact analysis. To date, this has not occurred. 

Therefore, since secondary emissions include: 

"Emissions from any offsite support 

facility which would not otherwise be 

constructed or increase its emissions 

as a result of the construction or 

operation of the major stationary 

source or major modification." 40 CFR 

52.21, 618; 

mines constructed in connection with processing or burning facilities could 

prevent permitting of such sources. 
P.87 

- 14 -

None of the above mentioned scenarios have been scrutinized under 

§302(j) rulemaking procedures, which ironically EPA recently characterized as 

a "safety valve" function nor have the costs and benefits associated with 

these actions been examined in the RIA. this potential regulation runs 

directly counter to the very objectives of these rules and the RIA as stated 

in the preamble. There is no reasonable legal or scientific basis for 

automatically subjecting the above mentioned categories of mining operations 

to preconstruction review and permit requirements. This is especially true 

considering the facts that no detrimental impacts on the public health or 

welfare will result and no attempt has been made or is contemplated which will 

quantify the cost/benefit factors or the number of operations effected. 

For the remainder of the allotted time I wish to turn to Mr. Ken 

Williams, Director of Government Affairs for Western Energy Company. Ken will 

address a number of the deficiencies in the various background modeling 

studies relied upon by EPA and problems in the RIA. 

II. Background Modeling Studies 

Over the past several years many modeling studies have been conducted 

regarding the fugitive dust issue as it relates to surface coal mining. I 

will not detail the results for the sake of brevity. Suffice it to say that 

all have arrived at the same general conclusion — that mines of sizes which 

are typical in todays economy may exceed the increments tens of kilometers 

from the minesite and, since SCM's already apply the equivalent to BACT, the 
P.88 

- 15 -

only method of compliance if listed would be a mandatory reduction in mine 

size and production. In fact, the studies conducted under contract to EPA by 

PEI Associates for use as the basis of the RIA show the same results. 

A. Modeling Results 

For the purpose of illustration of the magnitude of such constraints I 

wish to recount those general results. PEI has estimated that the maximum 

permittable mine sizes under Class II constraints would be 4.6 mty in the 

Powder River Basin, 1.7 mty in the San Juan and Fort Union Basins, 1.6 mty in 

the Illinois Basin and .5 mty in Appalachia. Those unfamiliar with mining may 

believe that these figures seem very large and unrestrictive. Those in the 

industry however, shudder to think of the implied constraints recogniting the 

fact that mines are currently permitted with capacities of over 20 mty. It is 

important to put these values in perspective. Each of the modeling studies 

shows a mandatory production rollback of about four fold from the largest 

existing mines in each basin, and in several cases the predicted maximum 

permittable size is far less than even the average mine size currently 

operational in the study areas. 

If these results were not enough to cast doubts upon the prudence of 

listing, the members of MARC believe the results of these studies to overstate 

the permittable mine size. In fact, modeling work commissioned by MARC and 

the other coal associations, which will be submitted for the record at a later 

date, show that the PEI figures have consistantly overestimated production 
P.89 

- 16 -

figures by factors of between 5 and 20. In brief the results of these studies 

show the following as maximum permittable mine sizes: 800 thousand (k) tpy in 

the Powder River Basin, 40 k in the San Juan, 30 k in the Illinois, 50 k in 

Appalachia, and 1 mty in the North Dakota Lignite regions. If these figures 

are accurate the costs associated with the regulatory proposal as computed in 

the RIA are severely underestimated. 

B. Modeling Deficiencies 

1. False Assumptions 

Two major reasons for the differences in production figures noted 

above arise from the fact that the PEI reports oversimplified the 

meteorological modeling processes and used several overly broad and erroneous 

assumptions. A major deficiencies is that PEI did not assume "worst case" 

meteorological conditions, however a mine operator would be forced to do so to 

show compliance. It is our understanding that PEI used C and D stability 

classes whereas E and F are worst case and were used in our studies. Further, 

and more importantly, the PEI work used an approach which assumed that coal 

production and particulate emissions are linearly related. The industry study 

in addition to modeling the linear scenario, computed figures using a more 

realistic, exponential approach. The numbers mentioned earlier reflect the 

results of the latter. What is important to note however, is even using a 

linear relationship assumption, MARC's results are from 3 to 10 fold more 

restrictive than PEI's. 
P.90 

- 17 -

A flaw common to both the PEI and industry study, one which would tend 

to overstate permittable mine size figures, was that mines were assumed to be 

operated/located in isolation of other mines and other sources of particulate 

emissions. ( i.e. it was assumed that the full increment was available for 

consumption) Given the current pattern of mine locations exihibited in the 

U.S., both in the East and the West, this is a gross oversimplification. Not 

only is it common to have mine mouth generating facilities, i.e. mines 

operated in conjunction with a power plant, mines locate near each other 

frequently because that is where the coal seams are deposited. As such, 

fugitives from one mine or a major source such as a power plant or preparation 

plant will impact others in the area or affect the ability of other mines to 

obtain permits. This condition would further restrict the size and/or number 

of mines beyond those which the studies indicate. 

2. Definition of Significant Ambient Impact Area 

The EPA, since it is considering a regulatory option of listing only 

those mines that affect Class I and mandatory Class II areas commissioned PEI 

to study the impacts of such a regulatory scenario. It is, perhaps, this 

study with which we find the most serious problems. These problems are so 

severe as to render the entire portion of the RIA which was based upon it 

useless and meaningless. The study, if done correctly, would definitely prove 

that the costs of option 4 significantly outweigh benefits. The purpose of 

the study was to "establish the area of impact for mines proposed near Class I 

lands." The area of ambient impact for use in these studies was decided to be 
P.91 

- 18 -

3 

1 ug/m . Further PEI attempted to quantify the amount of lost coal reserves 

based upon an assumption that mines, due to additional permitting costs and 

3 

other complications, would choose to locate outside the 1 ug/m impact area 

of Class I and manditory Class II areas. To accomplish the tasks at hand PEI 

first compiled lists of the Class I and Class II areas. It then chose to model 

two hypothetical mines for the purpose of showing air quality impacts to two 

of these areas. The problem with the study begins with these points and is 

exacerbated as the RIA process continues. First, it is unclear to MARC where 

3 

the magical 1 ug/m figure came from to define significant ambient impact . 

It appears to stem from 40 CFR 52.21(b)(23)(iii), however if this was the 

genesis, it is never explained why this portion was separated from the other 

portion of that definition which includes a 10 kilometer distance 

restriction. Nonetheless, an explanation and justification of the figure is 

necessary. 

C. Incomplete List of Impacted Class I and Class II Areas 

Aside from the preceeding questions which must be addressed, the major 

shortfalls begin with the fact that the lists of Class I and II areas relied 

upon by PEI were incomplete. At a minimum, the lists did not include three 

Indian Reservations which have been redesignated as Class I areas. Most 

notably it did not include the Northern Cheyenne reservation in Montana. What 

is important to realize however, is that virtually all of Montana's 1985 

production, approximately 33 million tons, occurs within 25 miles (40 

kilometers) of this area. 
P.92 

- 19 -

When PEI claimed it modeled the impacts of the Alton Mine, a mine for 

which plans were submitted and permits granted yet was not operational, 

because there were no currently operational mines impacting Class I areas, it 

was seriously mistaken. As I will illustrate, virtually all of Montana's 

3 

production may likely have a 1 ug/m impact on the Northern Cheyenne 

reservation. In fact, initial modeling studies performed by Western Energy 

which applied EPA's modeling techniques to one of its existing mines in this 

3 

area has shown its 1 ug/m isopleth extends approximately 110 miles and that 

other mines predict the same type results. Some studies on existing mines in 

3 

the Wyoming portion of the Powder River Basin show a potential 1 ug/m 

impact on the Northern Cheyenne reservation in Montana and the Wind Cave Class 

I area of South Dakota — both about 100 miles away. Mines in the Southern 

3 

Powder River Basin show a potential 1 ug/m impact on Path Finder National 

Wildlife Refuge, a manditory Class II area - once again nearly 100 miles away. 

Given that EPA acknowledges that their models have not been validated 

beyond 50km, we use these figures more for illustrative purposes of showing 

potential impacts and to demonstrate the need for EPA to develop more precise 

models. As it stands it is unclear how EPA intends to determine impacts 

beyond 50km yet these may be relevent in light of option 4. What is clear, 

however, is that all of the mines currently opperational within 25 miles of 

the Northern Cheyenne would be subject to PSD even without reliance upon the 

large figures for the lug/m3 isopleths mentioned earlier. By virtue of their 

showing a lug/m3 impact on a class I area which is located within the 50km 
P.93 

- 20 -

distance to which EPA believes its models to be accurate, there would be no 

recourse under option 4 but to list these operations as major sources. 

This presents substantial ramifications which were not considered in 

3 

the RIA. By subjecting mines to PSD review by virtue of the 1 ug/m impact 

area, the mines would not only have to show compliance with the Class I or II 

increment at the boundary of the affected Class I or II area, which they may 

likely be able to do, it would face the potentially impossible task of showing 

compliance with the Class II increments at the mines fence line. What seems 

to be overlooked when people look at option 4 is the fact that once a mine 

shows a lug/m3 impact, the operation is thrown into the entire realm of the 

PSD provisions. To compound matters still further, EPA must recognize these 

are not isolated cases. The same types of scenarios, although of a lesser 

magnitude may also be true of numerous existing Eastern and Mid-Western 

operations. For example several mines are currently operating within 9km of 

Dolly Sods a mandatory class I in West Virginia and 9 existing mines, with a 

cumulative 1984 production of nearly 10 mt, are operating within 20km of Crab 

Orchard a mandatory class II in Illinois. In both these situations it is 

expected that the lug/m3 isopleths from these mining operations would cross 

the boundaries of the protected areas and yet the EPA has not attempted to 

quantify the costs associated with regulating these sources.. 
P.94 

- 21 -

D. Impact on Coal Reserves 

I now wish to turn to how these oversights and others to be mentioned 

later, translate into potential reserve losses. To begin, PEI noted that 13 

Class I areas in 10 states and 22 mandatory Class II areas could be impacted 

by surface coal mining. For the reasons stated earlier regarding the 1 

3 

ug/m isopleths from existing mines and because PEI used unrealistically 

small mines when attempting to quantify an unmineable area or buffer zone 

around Class I and II areas, their estimates of lost reserves are totally 

unrealistic. PEI estimated that, using their buffer approach, approximately 

1.4 billion tons of reserves would be lost across the nation, or approximately 

.9% of total U.S. surface mineable reserves. Although MARC has not yet 

compiled a more realistic nationwide estimate it has studied the impacts in 

the vicinity of the Northern Cheyenne . We believe, however, that this 

example will illustrate the point quite well. To be conservative, MARC chose 

a buffer strip of 25 miles around the Reservation - roughly comparable to the 

40 km impact area shown by PEI to result at the Alton Mine. Due to lack of 

geologic/reserve base data, MARC excluded reserves located under the Crow 

Reservation to the West. According to our estimates the likely strippable 

reserves within the buffer zone which may be lost to productive use is 

conservatively approximated at 25 billion tons. Further, the reservation 

itself is underlain by approximately 50 billion tons of coal resources of 

which approximately 10% or 5 billion tons are strippable given todays economy 

and technology. All together this yields a figure of 30 billion tons in this 

one area of the country itself. 
- 22 -

When these values are summed and added to the extremely understated 

figures of PEI, MARC computes a figure of 31.5 billion tons of lost reserves. 

Comparing this to the total U.S. reserves believed to be mineable by surface 

methods, 157 billion tons, I'lARC arrives at a figure of 20% for lost reserves. 

Even more troublesome is the fact that this too may be optimistic depending 

3 

upon actual 1 ug/m isopleths and the full number of "affected" Class I and 

mandatory Class II areas. 

It is apparent from these examples that the PEI studies are a grossly 

inadequate basis for the RIA and, by virtue of their use, the RIA's 

conclusions regarding option 4 are severely skewed toward a potential for 

positive net benefits. A closer look will most definitely prove otherwise. 

III. Regulatory Impact Analysis 

Finally, I wish to address briefly some of the more obvious 

deficiencies of the RIA itself. First however, I wish to recognize the fact 

that even with the severity of the shortfalls of the study from the standpoint 

of understated costs, MARC notes that the RIA has proven conclusively that 

there are no positive net benefits to regulatory options 2 and 3. Together 

with a more complete study of option 4, EPA must conclude that option 1 must 

be selected. 

This review of EPA's analysis will devote particular attention to the 

RIA in the context of option 4 due to the belief that the RIA's findings were 
- 23 -

sufficient in and of themselves to reject options 2 and 3. Several of the 

problems mentioned below however, do persist in EPA's analysis of options 2 

and 3 as well. Several of the problems which limit the accuracy of EPA 

analysis are as follows. 

A. Costs In Impacted Areas 

For option 4 EPA estimated the benefits and costs for only 2 areas 

when in fact a conservative estimate would show at least 30 impacted areas. 

Moreover, although PEI went through an excercise, all be it cursory, to 

compute lost reserves for some 30 areas, it seems the RIA has made no attempt 

to value the lost reserves and factor these amounts into the total costs 

associated with regulatory option 4. As it is, EPA appears to evaluate only 

the added costs of having to mine more expensive reserves and added 

engineering costs while assuming that lost reserves are both insignificant in 

amount and hold no monetary value. These are clearly absurd assumptions. 

This approach overlooks factors important to the overall financial impacts of 

option 4. The market values of all lost reserves must be calculated to give 

an accurate depiction of economic impacts. 

Such an analysis would also focus more attention and place more 

emphasis on the local and regional impacts of such a listing. Further, 

relative to the Bryce Canyon analysis, the RIA appears to have ignored the 

OSM's 1980 study compiled to address an unsuitability petition which included 
P.97 

- 24 -

analyses of impacts of various mine sizes and configurations on air quality, 

visibility, etc. Instead the RIA relied upon several indirect studies and 

numerous adjustments to simulate comparability. 

Costs as those associated with re-siting effected mines and mining 

communities and the costs of lost capital, all of which are very substantial, 

have not been considered. For example, hundreds of millions of dollars worth 

of equipment which was purchased on the basis of presently acceptable mine 

sizes may no longer be appropriate for the restricted mine sizes. At a 

minimum, since the RIA recognizes that as much as 13.5 million tons of surface 

coal production may be displaced by underground mining, it should equally 

realize that the displaced equipment is not interchangeable. Further, since 

use of this equipment requires large mines, mines of sizes which may be made 

illegal, no secondary market would exist for this machinery and other large 

pieces. When one considers for example that draglines of this size cost 

nearly $40 million it is not difficult to envision how financial impacts of 

lost capital expenditures add up rapidly. There does not appear to have been 

any quantification of lost AML fund revenues and lost social benefits 

resulting from the production of less coal via surface mining. The AML fund 

set up by Congress in the 1977 Surface Mining Control and Reclamation Act, 

provides for an industry tax of 15#/ton of underground production and 35#/ton 

for surface production to be expended to reclaim sites abandoned prior to 1977 

which threaten health, welfare and the environment. Therefore any action 

which causes reductions in surface coal production allows less reclamation 

work to be accomplished on those sites and reduced social benefits. 
P.98 

- 25 -

B. Visibilit y Benefits 

Bryce Canyon Recreational Visual Range benefits which constitutes the 

second largest potential benefit in the RIA are based on a study of 

willingness-to-pay for visibilit y prepared by Rae in 1980. The average 

improvements to visibilit y by listing at Bryce is said to be 3-5% while EPA 

acknowledges that the threshold for perception range is generally from 2-5%. 

I t is difficul t to accept that a 3-5% improvement, which is on the margin of 

perceptability, corresponds to a change from a "moderately hazy" view to a 

"clear view" as was the basis for the Rae willingness-to-pay figures. 

C. Existence Values 

"Existence values" were based upon values and studies for the Grand 

Canyon and even though adjusted for bias, probably yield inflated results. 

Moreover, although EPA has not seemingly included benefits from noise 

reduction, etc. due to quantification difficulty, it has made it clear that 

these values should be considered before making a final decision, for they 

would yield higher net benefits. There is no basis for inclusion of such 

benefits. Non-air related benefits have nothing to do with the PSD program 

and the protection goals of the CAA. Non-air values should not be entered 

into the decision making process. 

A further question is present regarding whether "existence values" 

have a place in the PSD decision making process since they seem to have little 
P.99 

- 26 -

to do with the protection from adverse physical health and welfare affects, 

the primary goals of the PSD program. The program was not set up for the 

protection of "mental" health as EPA's inclusion and heavy reliance on 

"existence values" would seem to suggest. 

D. Supply and Demand Modeling 

More critical to the study's accuracy is that EPA used national supply 

and demand curves to evaluate the changes in the markets due to removal of 

coal supply from the two study areas. However, important regional differences 

in coal supply and demand, as well as the importance of transportation costs, 

dictate an analysis of the interaction of regional demand and supply to assess 

accurately the impact on consumers to the removal of coal supply. EPA did not 

consider regional coal markets. Such analysis is necessary and will 

demonstrate vastly differing results. For example, under option 4 Montana's 

surface production may cease. This will cause significant regional changes in 

supply and demand and portend severe impacts for the state and local residents 

and governments. These impact levels must be analyzed, in addition to those 

at a national level. 

E. Fuel Competition 

The RIA fails to capture the interrelationships between various fuels 

and coal supply regions, often assuming that such competion does not exist. 

This latter assumption is ridiculous. Coal from one area not only competes 
P.1 

- 27 -

with coal from other areas of the continental U.S., but also with imported 

coal in some regions and with other fuels and sources like natural gas, 

hydropower and bulk power purchases from other states or countries. For 

example coal fired power plants in the Pacific Northwest are in direct 

competition with U.S. and Canadian hydropower and coals from several basins 

compete for its supply contracts. As such, even small cost increases can 

weigh heavily on power generation decisions. 

In its national supply and demand analysis, EPA failed to evaluate the 

validity and consistency of many of the assumptions used in the calculations. 

The demand elasticity of -0.22 assumed in the RIA implies that demand for coal 

in the U.S. is relatively unaffected by price changes (i.e., demand is 

inelastic). This assumption is unfounded falling oil and gas prices in recent 

years make those commodities alternatives to coal-fired generation in many 

applications. Also, while coal is still very competitive for large, central 

station generation plants, other forms of generation, such as cogeneration or 

direct power purchases, are in direct competition with coal-fired units. Tin's 

competition has been responsible for the cancellation or deferral of a number 

of coal-fired units in the last several years. 

Problems also are present with EPA's national coal supply elasticity. 

The RIA cited an analysis published in 1983 (Kalt, 1983) which in turn relied 

upon a 1978 U.S. Department of Energy documentation of the supply curves in 

the National Coal Model (NCM) at that time. The numerous problems with the 

supply curves then in use in the NCM, which are well documented, greatly 
P.2 

- 28 -

weaken any estimates of coal supply elasticity derived from them. Also, the 

structure and costs of the coal industry have changed drastically since 1978. 

For example, underground productivity has increased by 50 percent. 

In addition, Kalt (1983) and therefore EPA indirectly assumes a 

constant national supply elasticity across all production ranges. Coal supply 

cannot be accurately represented by such a curve; the shape of coal supply 

curves are irregular. In terms of EPA's analysis, the national coal supply 

curve has different elasticities depending on production level. 

Implicit in EPA's analysis are price increases. These price increases 

result in increased consumer costs. The change in consumer costs is an 

important policy consideration since it does involve transfers and it will 

determine changes in electricity prices which affect the secondary markets 

where electricity is an input. 

IV. Conclusion 

Overall, the RIA has focused inadequate attention on quantifying 

numerous direct costs and has appearently ignored the entire range of 

secondary costs. EPA has failed to study impacts associated with changing 

employment, capital losses and/or movement, local and regional tax bases, 

higher costs for power generation, balance of trade ramifications and many, 

others. For the reasons outlined in the remarks, the RIA falls far short of 

what is necessary to justify any regulatory action other than option 1. 
P.3 

- 29 -

The members of the Mining and Reclamation Council of America strongly 

urge EPA to withdraw the proposal to list surface coal mines as major emission 

sources. A decision by EPA to include fugitive emissions from SCM's in PSD 

threshold applicability determinations would be arbitrary, unsupported by 

statutory authority and inconsistent with the national interest. The 

preponderence of evidence conclusively illustrates that the adverse economic 

impacts of such actions clearly outweigh any actual or perceived benefits to 

public health and welfare. If EPA decides to continue this rulemaking 

proceeding, at a minimum a more in depth RIA, using realistic assumptions and 

modeling works must be developed. 

This concludes my prepared statement. I will be happy to address any 

questions reserving the right to respond in writing. MARC's membership 

appreciates this opportunity to present its views on this rulemaking proposal. 
P.4 

TESTIMONY OF TERRY O'CONNOR 

WESTERN REGIONAL COUNSEL 

PEABODY HOLDING COMPANY, INC. 

AT PUBLIC HEARING BEFORE 

THE ENVIRONMENTAL PROTECTION AGENCY 

DOCKET NO. A-84-33 

LISTING OF SURFACE COAL MINES AS 

MAJOR STATIONARY SOURCES -

REVIEW OF REGULATORY IMPACT ANALYSIS 

APRIL 9, 1986 

DENVER, COLORADO 

f9 A-**-ys 
P.5 

Good morning. My name is Terry O'Connor. I am Western Regional 

Counsel for Peabody Holding Company, Inc. located here in Denver, 

Colorado. Various subsidiaries of Peabody Holding Company, including 

Peabody Coal Company (the nation's largest coal producing company), currently employ over 13,000 employees and operate some 45 surface and underground coal mines in 11 eastern, midwestern and western states in the United 

States. 

I am appearing today to express Peabody's comments regarding the Regulatory Impact Analysis ("RIA"), which EPA recently released for public comment. This RIA evaluated four alternatives to regulating new and modified 

surface coal mines as major construction projects under new source review 

criteria. It considered benefits, costs and general environmental and economic impacts of these four alternatives. 

While Peabody will submit more detailed written comments prior to the 

end of the public comment period relating, not just to the RIA itself, but also 

to a number of other issues relating to the listing of surface coal mines as 

major stationary sources, our oral comments today will focus principally upon 

the fourth alternative of the RIA, i.e . to list only surface coal mines impacting Class I and Mandatory Class II areas, and specifically how this fourth 

alternative could impact Peabody's existing and proposed surface coal mining 

operations in Montana. 

Peabody Coal Company owns and operates the Big Sky surface coal mine 

in Rosebud County, Montana, which mine produces in excess of 3 million tons 

of coal per year. The current mining operation is located approximately 12 

miles from the northern boundary of the Northern Cheyenne Reservation. As 

you should be aware, while the Reservation was originally not a statutory 

Class I area, it was reclassified to Class I status in the late 1970s. As a 

1 -
P.6 

consequence, we fear that our Big Sky operation would be jeopardized by its 

proximity to this redesignated Class I area. 

We have continuously operated this mine for over 15 years and currently 

employ some 132 persons at the mine site. In 1985, the Big Sky mine generated an annual payroll of $5,320,000 and also generated approximately 

$4,160,000 in additional revenues to Montana vendors. We paid $285,000 to 

the federal government for federal coal royalties (50% of which is returned to 

the state of Montana). We also paid $128,000 in Rosebud County property 

taxes. However, even more significantly, last year alone Peabody paid 

approximately $1,175,000 to the federal government for the federal reclamation 

fee, almost $1,500,000 in Black Lung fees, and approximately $8,925,000 to 

the state of Montana in state severance, gross proceeds, and resource indemnity trust fund taxes. I mention all these numbers because, if EPA promulgates regulations supporting Alternative IV of the RIA, all of these sources 

of revenue to the state of Montana and to the federal government could be 

jeopardized. 

As we have pointed out in prior comments, even if EPA attempts to 

"grandfather" existing operations (under any alternative), we have serious 

fears that such grandfather protection would be inadequate for surface coal 

mines inasmuch as surface coal mines are truly not stationary sources. As a 

result, we fear that the major modification provisions of the regulations and 

in the Act could very well negate any grandfather protection EPA might purport to grant to existing operations. 

In any event, we wish to point out that the surface mineable reserves in 

the existing Big Sky, Area "A" will be depleted in a few years, at which time 

it will be necessary to move our draglines and ancillary equipment several 

miles south to another area which we call Big Sky, Area "B" (which 

- 2 -
P.7 

I ' 

incidentally is less than 10 miles from the Northern Cheyenne Reservation 

boundary). While we have now progressed well into the permitting stage for 

Area "B, " promulgation of regulations as proposed by EPA could construe 

Area "B" as a new mine, or at least a major modification to the existing operation, thus jeopardizing, if not precluding, further coal mining operations at 

the Big Sky mine. We do not believe that the RIA in any respect addressed 

any of these economic or human impacts. 

In addition to the existing Big Sky operations, Peabody also controls two 

other reserve areas which are near the Northern Cheyenne Reservation. 

These include the North Ashland reserves and the Beaver Creek reserves. 

The North Ashland reserves are in fact virtually adjacent and to the north of 

the Northern Cheyenne Reservation and contain 400-500 million tons of coal, 

which is significantly in excess of our Big Sky reserves. By 1995 Peabody 

plans to open a surface coal mine at least twice the size of the existing Big 

Sky mine on these North Ashland reserves. Assuming a 30 year mine life and 

an 8 million ton per year operation, this new mine would generate a positive 

payroll impact to southeastern Montana from Peabody employees and their vendors of approximately $568,000,000 over the life of the operation. Furthermore, Rosebud County would expect to recover at least $8,000,000 in property taxes. The state of Montana would recover almost $1 billion in state 

severance and related taxes, and the federal government would recover almost 

$165,000,000 in federal coal royalties plus significant Black Lung and reclamation fees. These numbers are actually conservative because they only reflect 

8 million tons of coal production per year for 30 years, which would not 

result in lease reserve exhaustion or maximum economic recovery ("MER") of 

the reserve. 

- 3 -
P.8 

/ *' 

As you are aware, by federal law BLM requires MER of federal reserves, 

which constitute almost one-half of the North Ashland properties. Assuming 

MER, the federal government would receive over $320,000,000 in federal coal 

royalties alone and over $2 billion in state taxes would be paid over the eventual life of the operation. If Alternative IV of the RIA were implemented and 

all surface coal mines impacting Class I and Mandatory Class II areas were 

required to be listed as major stationary sources, the North Ashland mine 

would probably never be opened and this source of revenue to Montana and 

to the federal government would be lost. We do not believe that the RIA in 

any fashion addressed the adverse economic or human impacts of such losses. 

As I mentioned earlier, we also hold significant reserves in the Beaver 

Creek area, which is located within three miles of the Northern Cheyenne 

Reservation. While time does not permit a recitation of financial forfeitures 

for this reserve area, one can generally assume that, inasmuch as the Beaver 

Creek properties contain coal reserves approximately equivalent in quantity to 

the Big Sky mine, the adverse financial impacts from failing to develop this 

reserve would be comparable to the recited losses at our Big Sky mine. 

As I explained earlier, this testimony relates only to Peabody's 

operations and reserve position in southeastern Montana. As EPA is or 

should be aware, a number of other companies also have existing surface coal 

mining operations near the Northern Cheyenne Reservation and significant 

undeveloped reserves in close proximity thereto. In fact, virtually all of 

Montana's existing coal production comes from southeast Montana. One estimate reveals at least 4.5 billion tons of coal reserves are located in southeast 

Montana. If Alternative IV of the RIA is promulgated in regulatory form as 

written, one must logically conclude that, at best, existing surface coal 

mining operations in southeastern Montana will be required significantly to 

- 4 -
P.9 

reduce existing production and no new surface coal mines would be constructed, and, at worst, all surface coal mining activities in southeastern 

Montana would cease. By EPA's own analysis, these mines would have to 

close, because Alternative IV "regulatory costs would increase production 

costs to such an extent that the mines would not be able to market their 

coal." In either event, southeastern Montana and indeed the entire state of 

Montana would incur dramatically adverse economic and human consequences. 

For these reasons, we must urge that EPA formally acknowledge in final 

rule making that Alternative IV of the RIA did not adequately recognize the 

significant adverse socioeconomic effects which would result if present and 

proposed surface coal mines near the Northern Cheyenne Reservation were to 

be classified as major stationary sources. Furthermore, we must urge the 

U.S. Environmental Protection Agency not to list surface coal mines as major 

stationary sources, wherever such coal mines are located, and irregardless 

whether such coal mines are classified as new or existing operations. To do 

otherwise would have significant adverse economic impacts on the local, the 

regional and the national economies. 

In closing, I would agree with EPA to the extent it concluded that Alternatives II and III would result in negative economic impacts. However, we 

believe that the implementation costs of these two alternatives were greatly 

underestimated and that the benefits were greatly overestimated by EPA. We 

will discuss this matter in greater detail in our written comments. 

As I testified before a similar EPA panel on December 7, 1984 relating to 

the surface coal mining listing issue, we do not believe that surface coal 

mines pose a significant threat of air quality degradation, particularly inasmuch as surface coal mining only contributes an estimated 1/20 of 1% of all 

fugitive dust emissions in this country. EPA should determine not to list 

5 -
P.10 

J • 

surface coal mines and should exercise Alternative I and continue to require 

that surface coal mines meet the present National Ambient Air Quality health 

based standards. 

Thank you very much for your time and attention. 

If you have any questions, we will be happy to answer them. 

- 6 -
P.11 

TEXAS MINING & RECLAMATION ASSOCIATION 

807 Brazos 

The Vaughn Building, Suite 400 

Austin, Texas 78701 

(512)478-3646 

Apri l 9, 1986 

Environmental Protection Agency 

Federal Building, Room 239 

Stout Street at 20th 

Denver, CO 80205 

Gentlemen: 

The Texas Mining and Reclamation Association would like to 

present the attached comments regarding putting coal mines 

under PSD and the impact it would have on Texas mining. 

These oral comments are being presented by D. R. Trigg, 

Chairman, Environmental Committee, TMRA. 

Sincerely, 

D. R. Trigg^—•* 

/bb 
P.12 

TEXAS MINING & RECLAMATION ASSOCIATION 

807 Brazos 

The Vaughn Building, Suite 400 

Austin, Texas 78701 

(512)478-3646 

TEXAS MINING AND RECLAMATION ASSOCIATION'S COMMENTS ON EPA'S 

PROPOSAL TO SUBJECT SURFACE COAL MINE TO PREVENTION OF SIGNIFICANT 

DETERIORATION REVIEW 

My name is Dan Trigg. I am Site Manager of The Dow Chemical Company's 

lignite operation. I am also Chairman of the Texas Mining and 

Reclamation Association's Environmental Committee. Today, I am 

appearing on behalf of TMRA regarding EPA's proposed rulemaking and 

Regulatory Impact Analysis on Listing of Surface Coal Mines for New 

Source Review. 

The Texas Mining and Reclamation Association (TMRA) is an organization consisting of 80 companies and individuals representing all 

aspects of the surface mining industry in Texas. Lignite is one of 

the primary minerals which is mined and utilized by the companies in 

the TMRA. 

The lignite industry plays a major role in the economic status and 

development of Texas. Texas has vast reserves of lignite. EPA's 

"Study of Potential Effect of Regulating Strip Mines Under New Source 

Review" shows that in 1982, Texas was fourth in the nation in both 

potential surface mineable coal reserves (13.5 billion tons) and 

surface mined annual coal production (34.8 million tons). Current 

production has increased to 41 million tons in 1985 and is projected 

to more than double to 85 million tons by 1995. Annual salaries 

for the lignite and coal industry in Texas are over $55 million per 

year. Lignite in Texas is used primarily in mine-mouth power plants 

to generate electricity. Approximately one-fourth of the electricity 

needs of Texas are met through the use of lignite. 

Companies of the Texas Mining and Reclamation Association have 

reviewed the four alternatives evaluated by EPA including: 

1. Not listing mines; 

2. Grandfathering existing mines; 

3. No grandfathering; and 

4. Only listing mines impacting Class I and mandatory Class II 

areas. 

TMRA believes alternatives 2. and 3. would greatly restrict lignite 

mining in Texas and would result in severe economic and social 

impacts. 
P.13 

TMRA COMMENTS TO EPA (continued) 2 

The stated purpose of EPA's Regulatory Impact Analysis was to 

evaluate the consequences of alternative approaches to regulating 

surface coal mines under New Source Review considering benefits, 

costs, and general environmental and economic impacts. TMRA 

agrees with the RIA's conclusion that alternatives 2 and 3 are not 

economically reasonable, but we also believe EPA has still greatly 

underestimated the costs and overestimated the potential benefits 

of these two alternatives. We are deeply concerned that the RIA 

did not include Texas lignite in its evaluation even though the 

growth of coal production in Texas during the last 10 years has 

been second only to Wyoming and production of Texas lignite is 

projected to double during the next 10 years. 

Texas lignite has a low heat value and is found in thin, shallow 

seams that can be recovered only by surface mining. To compete 

economically with out-of-state coal and foreign coal, Texas lignite 

must be produced from large mines and used near those mines to 

minimize transportation costs. Texas lignite mines are typically 

producing three to ten million tons per year and located near a 

large power plant with boilers specially designed and constructed 

to burn lignite over a 30 to 40 year period. 

The problems that EPA has identified with predicting and calculating 

PSD increment consumption by mines is magnified in Texas because of 

large surface areas disturbed over the life of the mines. Mines 

are located in rural, low populated areas, but private property 

within and adjacent to mine permit areas make buffer zones costs 

prohibitive or unavailable. This is further complicated by the 

variable location of mining equipment and haul roads over a range 

of miles during the life of a mine. These factors make applying 

PSD review particularly restrictive for Texas lignite mines. 

The National Coal Association and the American Mining Congress (AMC) 

will present, as part of the record, a study by ICF, Inc. which 

assesses the economic impacts of EPA's proposed rules. The report 

uses maximum mine sizes allowed under PSD increments (as determined 

by modeling by TRC, Inc.) for each of five coal basins reviewed by 

EPA, but also includes the Texas lignite basin. The ICF Study gives 

a more accurate economic impact analysis than EPA's study, but is 

still conservative because of assumptions that the grandfathering 

option would not affect existing mines. We would like to address 

some of the specific results of the ICF study as they pertain to 

Texas lignite. 

The ICF study predicts that because of mine size limitations, lignite 

cost will increase from $13.56 per ton to $47.26 per ton. With this 

increase, lignite would no longer be economically viable and future 

coal use in Texas will be only from out-of-state or foreign coal 

sources. The study also predicts a 90% reduction in Texas mining 

employment. 
P.14 

TMRA COMMENTS TO EPA (continued] 

The adoption of EPA's proposal to list surface mines would have 

severe regional impacts to Texas due to loss of the ability to 

recover a valuable local resource, loss of thousands of jobs for 

local mine workers, loss of local tax base and severe increases in 

the cost of fuel for generation of electricity. ICF predicts that 

national electricity costs will increase from 1.2 to 8.3 billion 

dollars per year. The cost in Texas will be highest because of 

expensive requirements to convert existing local lignite facilities 

to burn a different type coal. We request that this information 

on Texas lignite be added to EPA's record as further evidence that 

the listing of surface coal mines for PSD purposes is not justified, 

TMRA fully supports the comments of NCA and AMC being submitted on 

this rulemaking. We appreciate this opportunity to present our 

views. Additional, more detailed, comments on the RIA will be 

submitted prior to the close of the comment period. 
P.15 

fa r\-?*-1% 

April 9, 1986 

Texas Utilities Mining Company and 

Texas Utilities Generating Company Comments on 

EPA's Proposal to Subject Surface Coal Mines to 

Prevention of Significant Deterioration Review 

My name is Dick Robertson. I am Manager of Permits for Texas Utilities 

Generating Company (TUGCO). Today I am presenting comments on behalf of 

Texas Utilities Mining Company and Texas Utilities Generating Company on 

proposed rulemaking concerning PSD permits for surface coal mines. 

Texas Utilities Mining Company conducts surface mining operations in Texas 

to supply lignite to the steam electric power plants operated by Texas 

Utilities Generating Company. The Texas Utilities System provides electric 

power to approximately one-third of the population and area of the state of 

Texas including Dallas and Fort Worth. The lignite mined by Texas 

Utilities Mining Company is burned at mine-mouth power plants to produce 

over 50% of the electric power used by customers of the Texas Utilities 

electric power system. The mining company employs over 2,650 people and 

surface mines over 30 million tons of lignite per year. Two new power 

plants and associated mines of approximately 12.5 millions tons per year 

are scheduled to begin operation during the next 10 years. 
P.16 

l 

Because of our heavy commitment to existing and future uses of lignite we 

are extremely concerned about the potential effect of the proposed rules on 

our ability to provide power to a growing Texas economy. Existing 

generating units and future units now under construction have been designed 

to handle the special properties of lignite with low BTU and high ash 

content. Conversion to a higher BTU coal from out-of-state would require 

major modifications to boilers, coal handling facilties and pollution 

control equipment. Company investments for mining equipment and lignite 

deposits already under lease would be lost at great expense. We believe 

that adoption of either of the alternatives that would list surface mines 

would have a significant adverse effect on our ability to meet electric 

power needs of Texas and greatly increase costs to electric • power 

consumers. 

We have reviewed the EPA's Regulatory Impact Analysis (RIA). We note that 

the RIA did not address the impacts on Texas lignite operations or the 

effect on electric utilities in Texas. We believe that if EPA had included 

Texas lignite in its analysis, the RIA's apparent conclusion that listing 

of surface mines is not cost justified would have been even stronger. 

An economic analysis by ICF Inc. is being submitted into the record by the 

National Coal Association and American Mining Congress. The study expands 

upon the EPA Regulatory Impact Analysis to include impacts on the Texas 

lignite basin. Results of this study show that the maximum allowable size 

of a Texas lignite mine would only be 14,000 tons per year. Mines of this 

size would be far too small to supply the needs of Texas Utilities power 

plants and would be uneconomical. The effect would be that the significant 
P.17 

planned development of new mines to support power plants already under 

construction would be severely jeopardized. 

We are also concerned about EPA's assumption that existing mines would not 

be affected if grandfathering is adopted. Mining permits are issued in 

Texas for only five years. Renewals for existing mines can include new 

areas as the mine pit progresses. Also over the life of a 30-year mine, 

modifications of mining procedures or extensions of haul roads could affect 

fugitive emissions and the applicability of PSD permitting. EPA should not 

assume that the "grandfathering" of existing mines will allow the avoidance 

of the severe economic regional and national impacts that would occur if 

surface mines are regulated under PSD. Texas Utilities believes the only 

reasonable alternative for EPA to adopt is alternative one - not listing 

surface mines. 

EPA has asked for comments concerning mine-mouth power plants. We believe 

the current definitions and regulations recognize that power plants and 

mines are separate source categories because they have different Standard 

Industrial Codes (SIC). However, without further clarification from EPA, 

there is potential for misinterpretation that the mine is the same "source" 

as the plant and, therefore, subject to inclusion of fugitive mining 

emissions in PSD applicability determinations. A mine is simply a fuel 

source and not a "support" facility for a nearby power plant any more than 

it is a support facility for distant power plants. EPA should make clear 

in its final decision that mines and power plants are separate sources 

under all cases. 
P.18 

We have contributed to the comments of the Texas Mining and Reclamation 

Association being presented separately at this hearing. We fully support 

their comments as well as NCA and AMC joint comments. We appreciate this 

opportunity to contribute to this rulemaking. 
P.19 

«-."' *NOTE: This is a copy of the oral statement presented by Randolph Wood. 

THE STATE ^MPM^grg ? OF WYOMING ED HERSCHLER 

GOVERNOR 

Wefiattment ct (Dnwitonmenial zluaiitu 

oddtn in ii A a /ic n 

TELEPHONE 307-777-7937 HERSCHLER BUILDING 

122 WEST 25TH STREET 

CHEYENNE. WYOMING 82002 

TRANSCRIPT OF STATEMENT OF RANDOLPH WOOD 

April 9, 1986 - Public Hearing - Denver, Colorado 

Ladies and Gentlemen, 

My name is Randolph Wood. I am the Director of the Wyoming Department of 

Environmental Quality. The rule proposal before you today relating to the 

question of listing surface coal mines as a "major source" for new source 

review purposes is of extreme interest to me and the State of Wyoming. Within 

the Department of Environmental Quality I have responsibility for both the 

mine reclamation program including an approved coal mine reclamation program 

through the Office of Surface Mining and a program for air pollution control 

approved by EPA under the Clean Air Act. The comments which I will present 

to you today reflect the knowledge of the Department in both the coal mine 

reclamation program and the air pollution control program. 

I would first like to start by saying that the comments presented for Governor 

Ed Herschler, State of Wyoming at the December 7, 1984 hearing on the same 

subject and the written comments dated January 25, 1985 mailed to EPA on this 

same docket are particularly salient to the discussion at hand and we would 

incorporate them as part of our testimony to you today. Governor Herschler's 
P.20 

Statement - Randolph Wood 2. 

April 9, 1986 - Public Hearing - Denver, CO 

earlier comments are particularly pertinent to the subject of the hearing today since he discussed the economic impact on the State of Wyoming if surface 

coal mines were listed. The comments submitted by the Air Quality Division in 

1985 are also particularly pertinent since they provide a technical basis for 

the position of the State of Wyoming that the listing of surface coal mines 

will preclude the issuance of permits for any new surface coal mine in the 

future. 

Wyoming is vitally interested in this rulemaking proposal since Wyoming is 

the second largest coal producer in the nation. It is the largest coal producer from surface mines and could well be the largest coal producer in the 

nation in the not too distant future. In addition 20-30% of the United States 

recoverable reserves are within the borders of the State of Wyoming. If adopted 

as, proposed, these rules will dictate the future for coal development and 

economic development in the State of Wyoming. The prospects of healthy economic coal development under these proposals is bleak. 

In considering the listing of surface coal mines as major for new source review purposes and thus including fugitive emissions in all of the required 

considerations, the Environmental Protection Agency must make two applicability 

determinations under Section 302J of the Clean Air Act. The first of these is 

that the sources have the potential to degrade air quality significance. The 

second determination that must be made is that no unreasonable socio economic 

impacts relative to benefits would result from subjecting the source to new 

source review. The second determination is pivotal in this issue and in the 

opinion of the State of Wyoming the language "no unreasonable socio economic 
P.21 

Statement - Randolph Wood 3. 

April 9, 1986 - Public Hearing - Denver, CO 

impacts relative to benefits would result from the action" requires a straight 

forward and absolute determination. We believe that we can clearly show that 

tremendous socio economic impacts relative to benefits will occur in the State 

of Wyoming if EPA adopts this proposal. 

It is certainly necessary to discuss the benefits which might derive from the 

listing of surface coal mines. The important provisions of the Clean Air Act 

in this consideration are those provisions dealing with the program for the 

prevention of significant deterioration (PSD) and the requirements in Section 

109 pertaining to the establishment of national ambient air quality standards. 

The latter of these two statutory provisions require EPA to establish national 

ambient air quality standards which in the judgment of the administrator are 

requisite for the protection of the public health including an adequate margin 

of.safety. In addition the administrator is required to specify levels of air 

quality which in the judgment of the administrator is requisite of the protection 

of the public welfare from any known or anticipated adverse effects associated 

with the presence of air pollutants in the ambient air. Thus it is patently 

clear that EPA is to provide for the protection of the public health and welfare 

through the establishment of national ambient air quality standards under 

Section 109. If these national air quality standards do not provide protection 

for the public health and welfare with this adequate margin of safety EPA has an 

affirmative duty to revise them to accomplish this end. On the other hand the 

purpose of the PSD program is clean air resource managment. This program is 

designed to assure that states make conscientious decisions in the public arena 

regarding economic development and the allocation of that clean air resource for 
P.22 

Statement - Randolph Wood 4. 

April 9, 1986 - Public Hearing - Denver, CO 

the purposes deemed appropriate by that state. In fact Congress clearly acknowledged in the development of the PSD program statutory provisions that the PSD 

increments were merely fractional portions of the ambient air quality standards 

which existed at that time and were not related to public health and welfare 

protection. 

Therefore, since the PSD increments do not have anything to do with the protection 

of the public health, Wyoming is totally unable to understand how costs for 

public health benefits could be calculated for this analysis. The whole concept makes a mockery of EPA's responsibilities to establish national ambient air 

quality standards for the protection of the public health and welfare. We believe that the public health benefits for listing surface coal mines are zero 

so long as the ambient standards are maintained. On the other hand, any other 

types of benefits (non public health and welfare benefits) represent considerations reserved to the states themselves. In considering these other types of 

benefits the states have the ability and the mandate to weigh competing demands 

and make decisions on the overall management of the total clean air resource. 

This implicitly requires the balancing necessary economic development against 

need and desire to have an array of clean air resource possibilities. Therefore, 

in defining benefits which might accrue as a result of a listing we believe that 

EPA has the responsibility to weigh health and welfare benefits and the states 

have the responsibility to weigh other types of benefits. Finally, we believe 

that since the national ambient air quality standards are established at levels 

which are requisite for the protection of public health and welfare with an 

adequate margin of safety, there are no health and welfare benefits which EPA 

has defined as being possible through a listing. 
P.23 

Statement - Randolph Wood 5. 

April 9, 1986 - Public Hearing - Denver, CO 

The other half of the question which must be addressed under Section 302J is 

whether or not unreasonable socio economic impacts would occur as a result of 

listing. For the issue at hand this translates to a question of whether or 

not permits could be issued for new surface coal mines if fugitive emissions 

are included in the analyses and the analyses must demonstrate compliance with 

PSD increments for particulate matter. I believe that since 1974 the State of 

Wyoming has issued more permits for large surface coal mines than any other state 

in the nation and has conducted literally hundreds of air quality analyses for 

such surface coal mines. These permits and analyses have included mines up to 

a capacity of 25 million tons per year and total somewhere between 250 and 300 

million tons per year coal production. With this experience in the permitting 

of surface coal mines in the west I can tell you in no uncertain terms that this 

proposal would be devastating to the coal mining interest of the State of Wyoming. 

Small, isolated coal mines as would be required by this proposal are not viable 

to Wyoming. This is not because we do not require the best of control technology. 

We have required for 12 years the very best and have lead the nation in this 

area. We intend to continue to do so. However surface coal mining is an activity 

which involves the handling of millions of tons of earth and minerals outside in 

the elements where there is only so much that can be done to eliminate the emissions. The residual uncontrolled emissions must be accepted and analyzed against 

the standards. We have been doing this for 12 years now. Thus, we are unable to 

see how in your regulatory impact analysis you are able to assign a cost to increased control effectiveness since we do not believe that such increased control is available unless you are proposing to require the construction of a 

superdome over the mine, thus restricting all of the emissions. Rather, we are 
Statement r> Randolph Wood 6. 

April 9, 1986 - Public Hearing - Denver, CO 

of the opinion that this proposal will literally mean that surface coal mining 

in Wyoming will cease. Our surface coal mines were developed due to the economics of size. These vast investments cannot be recovered at the coal production 

which would be required if compliance with PSD increments is mandated. We think 

the analyses is seriously flawed in this area. 

In summary we are convinced that the real socio economic cost to the State of 

Wyoming will be enormous and well in excess of those calculated in your analyses 

and that the benefits will be zero or minimal since public health and welfare 

will be protected through the requirements for compliance with the ambient air 

quality standards. Therefore we believe quite clearly that EPA cannot list 

surface coal mines as major for new source review purposes since the second test 

of Section 302J of the Clean Air Act is failed since significant unreasonable 

socio economic impacts relative to benefits would result from the subjecting the 

sources to new source review. 

As an associated issue EPA has requested comments on the basic question of 

whether if a surface coal mine is somehow associated with a facility which is 

a major emitting facility and thus subject to new source review, is that mine 

a part of the major emitting facility and thus the fugitive emissions from the 

mine must be included in the analyses. We believe that this is a relic of 

EPA's use of the standard industrial classification (SIC) process of identifying 

facilties. We have always maintained that the use of the SIC process had an 

inherent problem due to the potential to both exclude and include - erroneously -

sources into the new source review process. We have noted these problems in the 

past and we believe the current proposal would continue to propogate this error. 
Statement - Randolph Wood 

April 9, 1986 - Public Hearing - Denver, CO 7. 

We do not believe for instance that a coal mine is a part of a mine to mouth 

power plant and thus it should be subject to new source review simply because 

the mine mouth power plant is a major facility and itself subject to new source 

review. We believe that a surface coal mine is a facility unto itself, that it 

produces a product which may then be utilized by some other facility either on 

site or thousands of miles down the railroad track and thus the surface mine 

should not be gathered into the new source review process simply by virtue of 

its location. If EPA now attempts to bring through the back door into the new 

source review process surface coal mines and consider fugitive emissions from 

such mines in an applicability determination we believe that EPA must make such 

applicability determinations pursuant to the provisions of Section 302J of the 

Act. We do not believe that EPA has conducted an analysis to determine if unreasonable socio economic impact relative to benefits would result from aggregating surface coal mine with other new source review facilities and thus such 

an effort would be improper. 

We also believe we must comment specifically on Alternative 4 as presented by 

EPA. Section 165 (d)(2)(c)(ii) of the Clean Air Act charges the state with the 

final determination of whether or not adverse impacts including impacts on visibility will occur in a Class I area as a result of emissions from a new facility. 

EPA does not make that determination: The federal land manager does not make 

that determination: That determination is reserved to the State. Through the 

considerations in Alternative 4 we believe EPA is attempting through this rulemaking to preempt the prerogatives of the State in protecting visibility of 

Class I areas. We believe that this is a serious flaw of the proposal in 

Alternative 4 and we believe EPA should recognize State's prerogatives and 

reject Alternative 4. 
Statement - Randolph Wood 

April 9, 1986 - Public Hearing - Denver, CO 8. 

In addition to the above overall general evaluation the following specific 

comments are offered. 

Refer to page XVI - in the middle of the page EPA makes the statements "SCM's 

like other industrial emitters dispose of unwanted byproducts by emitting them 

or failing to prevent their release to the outdoor air essentially without cost 

or impact to the source itself." This statement clearly demonstrates EPA's 

lack of understanding of surface coal mining operations. The fugitive emissions 

from surface coal mines are not unwanted byproducts. They are in fact the 

residue which result even from mines which have extensive abatement measures in 

existence. Our experience leads us to believe that surface coal mines exercise 

extremely good faith efforts to mitigate fugitive emissions and for EPA to make 

this statement is an absolutely unwarranted and unfounded accusation. 

Refer .. to page XV (iii) - the footnote on this table denoting allowable PSD 

particulate matter increments and national ambient air quality standards states 

that Wyoming regulations established Class II annual increments at 10 micrograms 

per cubic meters. This footnote is incorrect. The Wyoming Class II annual 

increment is 19 micrograms per- cubic meter as prescribed in the Clean Air Act. 

Refer to page XXV - near the top of this page EPA makes the statement "Under 

Alternative 4 mines proposing to locate near Class I in mandatory Class II areas 

were assumed to move beyond the ambient impact range of such protected areas." 

This statement seems to indicate that EPA does not understand that coal must be 

mined where it is found and that an assumption that a mine is going to move is 

an assumption which must be examined under the situations which exist locally. 

For EPA to make this assumption in its model without considering local 
P.27 

Statement - Randolph Wood 

April 9, 1986 - Public Hearing - Denver, CO 9. 

circumstances is to render the results of the model absolutely meaningless. In 

addition, EPA does not appear to have considered that even if under some circumstances the assumptions were correct, EPA is making a national resource decision 

which will eliminate from production in perpetuity that coal. We believe that 

this is an absolutely inappropriate process. 

Refer to page XXV - near the bottom of this page EPA discusses the incremental 

cost of additional control and makes the statement that mines in states with 

existing strict controls would have low cost. We believe that this is an 

absolutely incorrect statement. Those states which have required existing 

strict controls have already required those which have low cost associated with 

them. The remaining available controls are those which have extremely high cost 

related to them. Thus as the control requirements increase, the costs increase 

exponentially. They do not decrease. 

The State of Wyoming appreciates the opportunity to present comments on this 

extremely important issue and we remain available to provide any clarification 

should EPA so desire.