What Do New Federal Rules and Proposals for Coal Mean for Wyoming

What do new federal rules and proposals for coal mean for Wyoming  Wyoming Public Radio | By Caitlin Tan

Published May 24, 2024 at 3:49 PM MDT, Alan Nash

It’s not news to anyone that coal has been declining for a while now – production in Wyoming has almost halved since it peaked in 2008. But that decline could steepen thanks to recent federal rules and proposals.

Caitlin Tan covers energy and natural resources for Wyoming Public Radio and has been reporting on these recent developments. She speaks with Wyoming Public Radio News Director Kamila Kudelska to put this all in perspective for the Cowboy State, which remains the top coal producer in the nation.

Editor’s Note: This story has been edited for clarity and brevity.

Kamila Kudelska: For starters, what are these new federal rules and proposals? Caitlin Tan: The first round came in April from the Environmental Protection Agency (EPA). And it’s pretty heavy duty. Analysts say this alone could push the coal industry toward extinction. And the main part of these rules that you guys need to probably know

is that it requires all existing coal fired power plants to cut or capture 90 percent of their emissions or convert to natural gas. That’s all got to happen in the next eight years.

KK: Right. I’m assuming this is related to addressing climate change. I know that’s been a big goal of President Biden’s administration. CT: Yeah, totally. So the EPA earmarked these power plant rules as a way to help with Biden’s goals. And that’s because coal power plants are the largest source of greenhouse gas emissions, which are warming the planet. And just last year, we saw the hottest year on record.

KK: Okay, and what’s the second blow to coal?

CT: There was a proposal that came from the Bureau of Land Management (BLM). Just this month, the BLM announced this proposal to end new federal coal leasing in the Powder River Basin, which we all know supplies more coal than anywhere else in the country. A little backstory here: This is part of the BLM’s updated land use plan for that area. Originally, it didn’t include anything about ending new leases, but then a court order told them to consider how coal leasing in the area affects climate change and health concerns. And now, this is the result. So now, if the proposal goes through, existing mines will be allowed to keep on as usual. The BLM estimates those resources will probably dry up in about 2041.

KK: Okay, and what do these new rules and proposals actually mean for Wyoming, for our coal plants and mines?

CT: I guess I should start by saying none of this is set in stone. There’s likely a long road of legal challenges ahead. But you know, it definitely sets the tone, right? Many agree that the federal government is shifting away from coal. So with this power plant rule, electric utility companies that own these plants, they’re going to have to decide: Do they want to shut down completely, switch to natural gas, or retrofit with carbon capture technology, which in theory captures the climate warming emissions?

KK: But they don’t really have that much time to do that. Isn’t that right?

CT: Yeah. I mean, eight years in this world is very short, especially when you think about carbon capture technology. It’s still not proven on a commercial scale and it’s really expensive right now. Now, that’s not to say that Wyoming hasn’t made impressive strides. But it’s a gamble to say that electric utilities will actually use this technology. And if they don’t, that’s where the problem lies for Wyoming’s mines, because we supply the majority of the coal to these plants all across the country. And if they don’t need our coal, then our mines are mostly out of work.

KK: Okay, so that’s the EPA power plant rules. What does the BLM proposal mean for Wyoming?

CT: Well, it depends who you ask. Travis Deti with the Wyoming Mining Association says it’d be devastating, effectively ending the industry.

“Basically putting our huge coal resources in the Powder River Basin, off limits. And the impacts are amazing. We rely on coal in this state, to the tune of about over $600 million annually. And that is the money that builds our roads and funds, our communities and our schools,” Deti said.

CT: And in that way, Deti isn’t wrong. The industry employs about 5,000 people in Wyoming. And the tax structure here on coal is the glue for funding K-12 schools and contributes to a major trust fund for the state. But on the other hand, some say coal’s decline is nothing new and that shutting down new leases in the Powder River Basin is really just symbolic. Here’s Shannon Anderson, an attorney representing the Powder River Basin Resource Council, a regional conservation group.

“From the reality perspective, this decision does practically nothing. We’ve had what we call a market moratorium on Powder River Basin coal leases since June of 2012,” Anderson said. CT: That’s because 2012 was the last time BLM sold any new coal leases. But Anderson says this horrified response from the industry is a little bit of a knee jerk reaction. She says the existing mines will still produce for another 17 years or so, and that this can allow time for Wyoming to figure out what things look like without coal.

KK: Okay, can we take a step back, Caitlin. How were things looking before the announcements of these federal changes?

CT: Not great. Coal hit its peak in Wyoming in 2008 and has for the most part declined ever since. In fact, demand for the state’s coal went down 20 percent this year compared to last. And that’s related to it being a mild winter and frankly, other sources of electricity were just cheaper. I should also let you know that the main electric company in Wyoming has plans to retire all of their coal plants in the state by 2039. So as you can imagine, the industry is panicking. You could really see that at the most recent legislative minerals committee meeting. Travis Deti, who we heard from earlier, basically pleaded to lawmakers for help. He asked for tax credits for mining equipment and a severance tax break. And, honestly, Kamila, what stood out to me was this moment of maybe mild frustration from Rep. Cyrus Western of Sheridan. And then Deti’s frankness.

“We just lowered the severance tax rate from mining. It’s saving about $50 million a year. What has the company been doing with that $50 million?” said Western.

“Mr. Chairman, Rep. Western, that’s a great question. Trying to stay alive,” said Deti.

CT: So ultimately, the lawmakers actually didn’t give Deti anything. They think a different committee needs to take it up. But most of them – and this has been true for years now – still expressed the state needs to save coal. Sen. Donald Burkhart of Rawllins gave us a peek into what would happen without it: The tiny town of Hanna in southeast Wyoming. It used to have five mines.

“They have none now and see what the town looks like. They used to have a medical clinic, they used to have grocery stores,” Burkhart said. CT: And now Hanna has less than 700 people. And, honestly, there really isn’t an industry there.

“That’s what it looks like if we don’t keep our coal resources up and running,” said Burkhart.

CT: But again, many analysts say this is totally out of Wyoming’s hands and that it’s really just purely market demand. I spoke with Rob Godby earlier this year. He’s an economics professor at the University of Wyoming who’s been tracking coal super closely. And he says coal is getting out-priced by natural gas, and now wind and solar. Godby says federal projections show it’s all kind of coming to a tipping point.

“This is the year where the inevitable happens where coal gets surpassed by solar and wind,” Godby said.

CT: Godby also sits on the Consensus Revenue Estimating Group for Wyoming. And they actually put together their five-year forecast earlier this year.

“Absent some new use for the coal that we have here, it will probably decline to a much lower level, you know, could go away entirely, depending on how policy goes. But that would be several decades away. But we see it declining at a pretty significant rate over the next five years,” Godby said.

KK: Okay, and how is Wyoming responding to all of this? You mentioned earlier, a long road of legal challenges.

CT: Yeah, you know, Wyoming is really hoping that these rules just won’t be their reality. Randall Luthi, the governor’s policy director, spoke about why at that recent committee meeting.

“Litigate, litigate, litigate. That is what we do. We don’t hesitate to litigate,” Luthi said to lawmakers. CT: Wyoming actually joined onto two lawsuits to sue the EPA over that power plant rule, and will more than likely challenge the BLM Powder River Basin proposal as well.

[Editor’s Note: The public protest period is still open through June 17. Comments can be submitted here.]

CT: And so that’s all going to probably be tied up in court for a while.

But in the meantime, as we all know, it’s an election year. And Wyoming leaders are hoping this could all look different if Donald Trump wins. But again, analysts say it’s more of a market thing. Here’s Godby one more time talking about Trump’s presidency,

“Coal still declined faster than it had ever declined before. You know, the president maybe is the most powerful person in the world. But even the president can’t stop markets. And the bottom line is markets are moving away from fossil fuels,” Godby said.

CT: So I guess just to wrap this all up: It’s undeniably a challenging time for the coal industry. I think that’s something we all can agree on. It shapes so much of Wyoming’s economy. So if markets continue to move away from coal, if we see more federal policies kind of quickening, then the state’s going to have to figure out what to do, you know, how to replace that revenue.