The War on Coal 2012West Virginia

Bill Raney, PresidentWest Virginia Coal Association

September 2012

Total Production (2011) 137,498,509Underground 89,513,004Surface 47,985,505

Coal Companies Operating in WV 231

Number of Mines 229Underground 141Surface 88

West Virginia Coal Employment 20,705 (UG+SU)Underground 15,469Surface 5,236Coal Handling Facilities 2,340Contractors 2,165Total Coal Employment 25,210

Estimated Average Annual Coal Wage $68,500Estimated Production Value 2011 $9,624,895,630Estimated Coal Severance Tax Paid $500 Million

West Virginia Coal

IMPACT this year

• Production– Off by 5% YTD• 3% in the North • 6% in the South

• Employment– More than 2,600 to date

WHY?

Economic “uncertainty” – America and worldwide

Mild winterNatural gas pricesFederal government – “Encourage, not

discourage”EPAMSHAOSM

The Perfect Storm

Additional Challenges

• Large stockpiles of coal • Mild winter and decreased demand

• Permit uncertainty• Radicalized Regulatory Agencies

• Air quality issues

• More difficult reserve base

• Transportation to export markets

• Competition from other basins/countries

War On Appalachian Coal

EPA INTERFERENCE FROM DAY ONE• Formal objections to mine permits (404 and 402)• Interagency MOU- Revise permitting and policy• Enhanced Coordinated Review Process (Enhanced Permit Delay)• Nearly All Permits Held Hostage • Ecological Assessment • Suspension of NWP 21 • Revocation of Spruce Fork Permit • Targets All Mining

The War on Coal 2012

• CSAPR 4.8 GW (court)• $2-3 billion annually• SO2• Nox

• HgMACT 10 GW (court)• $10-11 billion annually• PM?

• NAAQS• SO2, NOx, PM, CO, Ozone, Lead • Initial Cost = $1.5 billion annually• $19-25 billion annually by 2020.• SO2• Ozone• PM?

• GHG NSPS• No New Coal Plants• Requirements applied to

existing plants per NSR• Technology Does Not

Exist

• COAL ASH (legislation)• RCRA Hazardous Waste• $1.5 billion annually

•TOTAL PROJECTED IMPACT• $22.5 billion - $40.5 billion

The Courts Strike Back

THE COURTS TRUMP THE EPACONDUCTIVITY/ECP“EPA’s position … is stunning power for an agency to arrogate to itself when there is absolutely no mention of it in the statute.”

SPRUCE PERMIT“EPA engaged in magical thinking to reach an illogical and impractical conclusion.” “EPA’s position proposes a scenario involving the automatic self-destruction of a written permit issued by an entirely separate federal agency after years of study and consideration. POOF!”

CSAPR“EPA’s decision … has the air of a disappointed player’s threat to take his ball and go home when he didn’t get to pitch.”

OPPORTUNITIES

The real question is not whether coal will continue to be used but rather where will it come from domestically?

- East of the Mississippi River

- 40 percent of the nation’s production

- 80 percent of mining jobs

We must MAINTAIN --- SURVIVE

World energy needs and coal usage will increase

West Virginia Coal Association 2012

USA Russia Iran Saudi Arabia Venezuela

Coal Natural Gas Crude Oil

Quadrillion BTUs

6,000

1,000

2,000

3,000

4,000

5,000

0

America has MORE than any other

Energy Forecast

Port Development

PLEASE HELPNURTURE COMPETITIVE SITUATION

• In-state power plants’ compliance• Infrastructure development• Continued legal challenge

EDUCATION ENERGY POLICY

• Longview Power Plant• Regional assets• Use it & “get better” everyday

PRESSURE CONGRESS• Rockefeller letter• Bills to “control” EPA

ELECTION• Take care of home• Eastern States Coalition

Pressure CongressHR 3409 – Coal Miner Employment and Domestic Energy Infrastructure Protection Act • Introduced yesterday –– will be passed this morning• Combines five bills that have already passed the House

– HR 3409 – Prevent Interior from issuing new rules that would adversely affect mining jobs– HR 2018 – Prevent EPA from “bullying” the States and forcing water quality standards– HR 2401 – TRAIN Act – Require analysis of economic effects of proposed rules on jobs– HR 2273 – Fly Ash Bill – Limits EPA’s control of fly ash disposal– HR 910 – Prevent EPA from regulating greenhouse gas emissions

Also –

HR 1540 – National Defense Authorization Act• Relieve limitation on military using coal-to-liquid fuels

Senate Bill • Introduced yesterday by Manchin (WV) and Toomey (PA)• Same as HR 2018

The November election is critical to the future of our industry. As you can see, the Obama campaign starts out with a substantial electoral vote advantage. This advantage can only be overcome with hard work and determination.

Moving Ohio (18 EV), Virginia (13 EV), Maryland (10 EV) and Pennsylvania (20 EV) from the Obama side of the ledger to the Romney side, added to Florida (29 EV), adds a potential 90 EV to Romney’s total leading to a Romney win. Our concentration is on Virginia, Pennsylvania and Ohio. West Virginia and Kentucky will STRONGLY support Romney.

OUR REGION IS CRITICAL

Its all about -- OH-PA-VA

Coalition • Ohio Coal Association

– Citizens for a Working America• Pennsylvania Coal Alliance• Virginia Coal Association

– FACES• West Virginia Coal Association

– Friends of Coal– Citizens for Coal– Coalition for Romney– Friends and Families for Coal

• Kentucky Coal Association • ACCCE

Cooperation • Billboards• Radio• Print ads• Direct mail• Rallies• Grassroots mobilization• Voter registration