Protecting Coal Mining From the Stream Protection Rule

On Wednesday, February 3, the Senate Environment and Public Works committee will hold a hearing on a new “Stream Protection Rule” being proposed by the Department of the Interior’s Office of Surface Mining (OSM) that looks to be another nail being hammered into the coal industry’s coffin by the Obama Administration.

Energy and mineral resource development in the U.S. is being thwarted by a wave of agenda-driven federal agency rulemakings being rushed through before the end of this administration. Oil, natural gas, and coal have been targeted for replacement by renewable energy sources. The coal industry has been fast-tracked by the OSM’s proposed new “Stream Protection Rule” (SPR). 

The new SPR would supersede the existing Stream Buffer Zone Rule, enacted in 2008 to regulate surface coal mining on aquatic environments in Appalachia. But, as is so often the case in the world of environmental regulation, that was not sufficient for the OSM, and, over the past seven years it has continued to press for more and stricter regulations on coal mining all across the United States.  They seem to prefer a nationwide one-size-fits-all regulatory enforcement scenario, even though local geology, geochemistry, and terrain vary widely between states and basins.  As it is, these concerns are more efficiently addressed by the states and policed by the industry.

That aside, the real impacts of the SPR, openly acknowledged by OSM, leave tens of billions of dollars’ worth of coal in the ground with no chance of future development—“stranded reserves,” as OSM terms them in the rule. Those coal deposits, according to OSM, “…are technically and economically minable, but unavailable for production given new requirements and restrictions included in the proposed rule.”  Yet, OSM’s engineering analysis, cited by a Congressional Research Service study, states that there will be no increase in “stranded reserves” under the SPR. In other words, the same volume of coal will be mined under the proposed rule as under the current rule…an OSM oversight, no doubt.

The proposed rulemaking employs questionable geoscience and mining engineering issues such as overemphasizing the importance of ephemeral streams to limit mining activities in all areas, requiring needless increases of subsurface drilling and geologic sampling, redefining accepted technical terms such as “approximate original contour” and “material damage to hydrologic balance,” and creating new unfamiliar terms such as “hydrological form” and “ecological function.”

But OSM likely is not focused on technical issues as much as their main concern: that the new rule is more stringent than the existing 2008 rule as is possible, and that it will apply nationally. Hence, the rule appears to be more for the benefit of regulators and places undue burden and expense on coal miners. Neither is OSM overly concerned with the big three tangible adverse impacts of their proposed rulemaking: lost jobs, lost resources, and lost tax revenue—with Appalachia being hit the hardest. Consensus estimates—not OSM’s—of the number of mining-related jobs lost nationally due to the SPR: in excess of 100,000 to upwards of 300,000. The decrease in coal tonnage recovered: between roughly 30 to 65 percent less. The annual value of coal left in the ground because of the rule: between 14 to 29 billion dollars. The estimated decrease in Federal and coal state tax bases: between 3.1 to 6.4 billion dollars. These are not very encouraging statistics for an industry that is currently responsible for supplying 40 percent of U.S. electrical power generation.   

Interior’s Office of Surface Mining has failed to adequately justify its proposed Stream Protection Rule in light of the federal and state rules and regulations already in place. Rather, OSM has embarked on a seven year odyssey of agenda-driven rulemaking that would force-fit regional and local characteristics coal mining operations to a nationwide template. However, Congress and the courts had already established that a uniform nationwide federal standard for coal mining would not be workable given the significant differences in regional and local geology, hydrology, topography, and environmental factors related to mining operations everywhere. On the non-technical side, OSM does not retreat from its admission in the preamble to the proposed rule that the SPR is politically motivated. Press reports have quoted an OSM official as acknowledging that there was pressure to get the SPR done in this administration’s last year.

Enacting the new SPR would be an ominous threat to a coal mining industry that deserves much better from this or any other future administration. This is one reason why OSM’s proposed SPR has been tagged by the National Mining Association as “a rule in search of a problem.” However, to paraphrase a more appropriate quote: the voluminous Stream Protection Rule is not the solution to the coal industry’s problems—rather the Stream Protection Rule is the problem.

It will be interesting to see how this all plays out in the Senate on Wednesday.

Air Traffic Control Reform

In the 1990s, the Clinton administration proposed restructuring our air traffic control (ATC) system, creating a self-funded organization outside of the Federal Aviation Administration (FAA). The idea went nowhere in Congress at the time.

Since then, numerous countries have successfully privatized their ATC systems, including Britain and Canada. Meanwhile, our ATC is still trapped inside the FAA bureaucracy, and it continues to fall short on crucial technology upgrade projects.

The good news is that major restructuring is back on the agenda in Congress. House Transportation and Infrastructure Committee chairman, Bill Shuster, is expected to soon unveil a major reform proposal, perhaps along the lines of Canada’s non-profit ATC corporation, Nav Canada. The FAA must be reauthorized by the end of March, which gives some momentum to reform. If President Obama wants an important pro-growth legacy in his final year in office, he should get behind this effort.

Are Almost All NYC Public Schools Actually Voucher Schools?

A popular knock against vouchers and other school choice programs is that private schools do not serve many students with disabilities, whereas public schools serve everyone. If that’s true, then the vast majority of public schools in New York City must actually be private.

According to a federal investigation just rejected by the de Blasio administration, the large majority of New York City elementary schools – 83 percent – are not “fully accessible” to students with disabilities. That forces many disabled students to travel far afield from their local public schools, which are supposed to serve every zoned child. The U.S. Department of Justice’s letter to the city laying all this out contains this anecdote:

In the course of our investigation, we spoke to one family who went to extreme measures to keep their child enrolled in their zoned local school, rather than subject the child to a lengthy commute to the closest “accessible” school. A parent of this elementary school child was forced to travel to the school multiple times a day, every school day, in order to carry her child up and down stairs to her classroom, to the cafeteria, and to other areas of the school in which classes and programs were held.

Money Buys Elections

Jeb Bush spent at least $14.9 million trying to win the Iowa Republican primary, the most of any candidate in either party. He finished sixth.

Will this persuade people that money does not buy elections? Probably not. The belief that “money buys elections” is not really falsifiable. It is a matter of faith.

But perhaps those who believe that money buys elections will now think it is somewhat less probable they are correct.

Proposed Stricter OSHA Regulations on Airborne Silica Exposure Seem Needless

The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) is soon set to release new exposure limits to air-borne silica dust. The rulemaking has been in the works for about three years with a final rule scheduled to be announced this year. The silica industry is not enthused.

Silica dust is known to cause respiratory illnesses (e.g., silicosis, lung cancer, other airways diseases) that may contribute to or lead directly to death when it is breathed in high enough concentrations over long enough time periods.

OSHA explains that exposure to respirable silica “occurs in operations involving cutting, sawing, drilling and crushing of concrete, brick, block and other stone products and in operations using sand products, such as in glass manufacturing, foundries and sand blasting.”

OSHA’s proposal, generally, is to lower the existing permissible exposure limits (adopted in 1971) by about 50%, dropping them from around 0.1mg/m3  to 0.05mg/m3 (specific details here). OSHA explains:

The agency currently enforces 40-year-old permissible exposure limits (PELs) for crystalline silica in general industry, construction and shipyards that are outdated, inconsistent between industries and do not adequately protect worker health. The proposed rule brings protections into the 21st century.

And, as the government likes to claim with all of its regulations, the added restrictions will save lots of lives, and in doing so, will save lots of money:

OSHA estimates that the proposed rule will save nearly 700 lives and prevent 1,600 new cases of silicosis per year once the full effects of the rule are realized.

The proposed rule is estimated to provide average net benefits of about $2.8 to $4.7 billion annually over the next 60 years.

Interestingly, a visit to the Centers for Disease Control in search of deaths from silica inhalation produces this chart graphing silicosis mortality over time. The numbers have dropped considerably over the past 40+ years, and by 2010 had fallen to about 100 or so deaths per year (U.S. residents over the age of 15) attributed to silicosis as either the underlying or contributing cause.

Figure 1. Silicosis: Number of deaths, crude and age-adjusted death rates, U.S. residents age 15 and over, 1968–2010 (Source: CDC).

Figure 1. Silicosis: Number of deaths, crude and age-adjusted death rates, U.S. residents age 15 and over, 1968–2010 (Source: CDC).

The CDC data shows that silicosis deaths have been declining and although the decline has slowed, it continues to drop while under the current OSHA guidelines. And further, the 100 or so deaths that are occurring annually are several times less than the annual number of deaths that OSHA predicts will be saved by the new regulations. That’s a pretty neat trick—the new regs are going to save several times more lives than are actually lost!

Will Senate Use Energy Bill to Weaken FHA Mortgages?

As I recall from my time in the Senate, there’s nothing like an energy bill to attract misguided proposals.  This week the Senate begins consideration of S.2012 — the Energy Policy Modernization Act of 2015.  Among the almost two hundred filed amendments is a proposal (Amendment #3042) from former real estate broker, Senator Isakson, to mandate that the Federal Housing Administration (FHA) reduce the quality of its loans in order to encourage more efficient energy use.

The two most concerning aspects of Amdt 3042 are 1) it would allow “estimated energy savings” to be used to increase the allowable debt-to-income (DTI) ratios for the loan and; 2) require “that the estimated energy savings…be added to the appraised value…”

These changes might not be so bad in the abstract but when combined with existing FHA standards, they set the borrower up for failure and leave the taxpayer holding the bag. Let’s recall that borrowers can already get a FHA mortgage at a loan to value (LTV) of 96.5%, and that’s assuming an accurate appraisal.  If borrowers were required to put 20 percent down, then this amendment would be a minor problem, but under existing standards, borrowers would mostly likely leave the table with an LTV over 100%, that is already underwater before they’ve even moved in.  Did Congress learn nothing from the crisis?

The increase in DTI might not matter if FHA did not already allow a DTI as high as 43% of income.  Under Amdt 3042 borrowers could easily leave the closing table devoting over half their income to their mortgage.  Again, did Congress learn nothing from the crisis?

To illustrate that the intent of the proposal is to have the taxpayer take more risk, Amdt 3042 actually prohibits FHA from imposing any standards that would offset this risk.  If these new loans perform worse, as one would expect, FHA cannot put them back to the lenders.   And let’s not forget FHA allows the borrower to have a credit history deep in the subprime range.  So you could have a subprime borrower, say FICO down to 580, LTV > 100% and DTI > 43% - what could go wrong?

If indeed energy savings actually increased the value of the home, that would be reflected in the price.  There would be no need to mandate such.  Not only does this proposal weaken FHA standards, and expose the taxpayer to greater risk, it takes us further down the path of an already politicized housing policy, where instead of relying on market prices, values are dictated by Soviet-style bureaucratic guesswork.

End America’s Busted Nation-Building in Afghanistan

Afghanistan is a bust. The Taliban is expanding its control. The number of “security incidents” was up a fifth in the last months of 2015 over the previous year. Popular confidence is at its lowest level in a decade. U.S. military officers now speak of a “goal line” defense of Kabul.

While the deadly geopolitical game is not yet over, it is hard to see how the current regime can survive without Washington’s continued combat support. The nation-building mission always was Quixotic.

Indeed, the latest report from the Special Inspector General for Afghanistan Reconstruction shows how far this Central Asian land was and remains from developed status. And how ineffective U.S. aid programs have been in transforming it.

While Afghanistan enjoyed some boom years in the flood of Western cash, the foreign money also inflamed the problem of corruption. The Stockholm International Peace Research Institute explained: “The significant amount of aid and vast international military spending post-2001 has re-ingrained a culture of aid-rentierism: the Afghan elite competes internally for political rents from the international community.”

Tougher times have not increased honesty. In its latest quarterly report, SIGAR noted that a recent Afghan task force “reportedly found that millions of dollars were being embezzled while Afghanistan pays for numerous nonexistent ‘ghost’ schools, ‘ghost’ teachers, and ‘ghost’ students.”

Even worse, the same practice apparently afflicts the security forces. SIGAR cited an Associated Press investigation: “In that report, a provincial council member estimated 40% of the security forces in Helmand do not exist, while a former provincial deputy police chief said the actual number was ‘nowhere near’ the 31,000 police on the registers, and an Afghan official estimated the total ANDSF number at around 120,000—less than half the reported 322,638.”

Security never has been good during the conflict. Today it is worse than ever.

Explained SIGAR: “The Taliban now controls more territory than at any time since 2001. Vicious and repeated attacks in Kabul this quarter shook confidence in the national-unity government. A year after the Coalition handed responsibility for Afghan security to the Afghan National Defense and Security Forces (ANDSF), American and British forces were compelled on several occasions to support ANDSF troops in combat against the Taliban.”

Yet the failure of U.S. aid programs reaches well beyond insecurity. Despite pouring $113.1 billion into Afghanistan, Washington has surprisingly few sustainable, long-term benefits to show for it.