The 5th meeting of the Interim Joint Committee on Agriculture and Natural Resources was held on Wednesday, October 12, 2005, at 1:00 PM, in Room 131 of the Capitol Annex. Representative Jim Gooch Jr., Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representatives Jim Gooch Jr., Co-Chair, and Thomas M. McKee, Co-Chair; Senators David E. Boswell, Ernie Harris, Robert J. (Bob) Leeper, Vernie McGaha, Richie Sanders Jr., Ernesto Scorsone, and Damon Thayer; Representatives Adrian K. Arnold, James E. Bruce, Dwight D. Butler, James Carr, Mike Cherry, Hubert Collins, James R. Comer Jr., Tim Couch, Mike Denham, C. B. Embry Jr., W. Keith Hall, Jimmy Higdon, Charlie Hoffman, Charles E. Meade, Reginald K. Meeks, Brad Montell, Fred Nesler, Don R. Pasley, Marie L. Rader, Rick W. Rand, Steven Rudy, Terry Shelton, Tommy Turner, Ken Upchurch, Robin L. Webb, and Susan Westrom.
Guests: Secretary LaJuana Wilcher, Commissioner Susan Bush, Judy Piazza, Environmental and Public Protection Cabinet; Jim Sims, Western Business Roundtable; Dr. Rick Sweigard, University of Kentucky Mining Engineering Department; Eric Gregory, East Kentucky Power Cooperative; and David Morgan, Division of Water.
LRC Staff: Tanya Monsanto, Lowell Atchley, Carl Frazier, Biff Baker, Hank Marks, and Kelly Blevins.
Then, Rep. Gooch asked for a report of the Horse Farming Subcommittee. Rep. Westrom stated the subcommittee received testimony from the University of Louisville's Equine Industry Program and the University of Kentucky's Equine Initiative. Also Mr. David Switzer provided some good industry statistics. There was a motion and a second. The subcommittee report was approved by voice vote.
Then, Rep. Denham gave the Rural Issues Subcommittee report. Rep. Denham stated the meeting examined the status of rural water line extensions and the permitting process for building in areas without planning and zoning. There was a motion and a second. The subcommittee report was approved by voice vote.
Finally, Rep. Hall gave the report of the Natural Resources Subcommittee. Rep. Hall stated that the committee received testimony regarding the Underground Petroleum Storage Tank Program (USTB) which is experiencing a funding crisis. Rep. Collins then talked about changes in the organization of the USTB program and the improvements made to the program. There was a motion and a second. The subcommittee report was approved by voice vote.
Then Secretary LaJuana Wilcher gave the report of the 404 Task Force. The task force was established pursuant to SB 175. Secretary Wilcher explained that SB 175 gave authority to the Environmental and Public Protection Cabinet (EPPC) to petition the United States Environmental Protection Agency (U.S. EPA) for the authority to issue permits under Section 404 of the Clean Water Act. Then, Secretary Wilcher identified the task force membership, the issues discussed at previous meetings, and topics to be covered at future meetings. The Secretary explained that the 404 program is very complex and it involved multiple levels of authority.
Rep. Webb stated that the 404 permit affects all aspects of development. The number and type of requirements established by the different U.S. Army Corp of Engineer district offices with jurisdiction in Kentucky creates confusion. Rep. Webb stated that as a member of the 404 task force, she welcomed questions from anyone about the process or the goals of assuming state control of the permitting process.
Rep. Collins stated that the 404 permit is another example of having too many offices administer one program. All have different rules and regulations.
Then, Mr. Jim Sims with the Western Business Roundtable gave a presentation on energy and new electric generation technologies. He talked about the current energy crisis and options to deal with the crisis. Focusing on four options--taking no action, increasing supply, restricting demand, and setting price controls--Mr. Sims stated increasing supply is the only viable option.
Conservation is important, but in order to reduce cost, there must be additional energy supplies. Then, Mr. Sims discussed the role of coal in the generation fuel mix. He stated that coal prices have been stable compared to petroleum and natural gas. Coal has been responsible for keeping energy prices affordable. Mr. Sims also discussed how higher prices are impacting consumers, particularly low income consumers.
He then talked about encouraging coal production in Kentucky and stated that new technologies would make it possible to burn coal cleanly and efficiently. Mr. Sims also compared emissions rates on pulverized coal plants and the emissions requirements for new facilities. He stated that plants like Thoroughbred Generating Station are essentially clean coal facilities.
Sen. Boswell stated that Kentucky used to be on the cutting edge of synthetic fuels, but we lost ground due to the lessening importance of formulating an energy policy. Now, we must recognize energy is an important issue. Also an emphasis must be placed on good mining techniques along with encouraging clean coal technology.
Mr. Sims replied that the U.S. failed to recognize the importance of coal. In the future, coal will be a cleaner, more reliable fuel option. Extraction and mining must be evaluated in that context too.
Then, Mr. Sims talked about three advanced power technologies: pulverized coal boilers, fluidized beds, and integrated gasification combined cycle (IGCC). According to Mr. Sims, IGCC has promise and will reduce emissions, but IGCC isn't commercially available at this time. There will be many generations of IGCC technology before investments will be committed in the commercial market.
Rep. Gooch asked about the difference between the emissions from Thoroughbred and emissions from an IGCC. He also asked whether the resolution offered by the Interim Joint Committee on Agricultural and Natural Resources in August was correct.
Mr. Sims replied that the resolution was on target in that the state should encourage coal production. I think you should continue building plants like Thoroughbred because it continually pushes investment in newer technologies. Currently we don't know what a full-scale, operational IGCC would cost.
Finally Mr. Sims talked about the hydrogen economy and stated that Kentucky could be a primary producer of hydrogen in the future. Also, Mr. Sims discussed climate change and carbon sequestration.
Sen. Thayer asked about the possibility of passing legislation allowing production in Anwar and how long it would be before companies respond. Mr. Sims replied that the oil and natural gas in Anwar make it attractive. An Anwar amendment is likely to be passed in the future. Regarding an industry response, Mr. Sims said the interests is already there. The United States needs another pipeline in Alaska for the natural gas.
Sen. Thayer asked about the impact of production on caribou herds. Mr. Sims stated the herds are growing in other parts of the arctic plain and that the herds co-exist with the pipeline that is already there.
Rep. Gooch asked how much oil would Anwar produce. Mr. Sims stated that oil from Anwar would displace 30 years of Saudi imports.
Rep. Webb stated that she valued the environment and stated Kentucky used to produce diesel from hemp. Rep Webb asked what types of renewables Kentucky should encourage. Mr. Sims replied that Kentucky should encourage all types of renewables because the first goal of energy policy is diversity in supplies.
Sen. Boswell asked Mr. Sims if there would be more consistency in making energy policy. Mr. Sims said he hoped so, but the energy bill was a patchwork of different pieces.
Rep. Cherry asked if grain-based ethanol additives for fuel would be a part of the future fuel mix. Mr. Sims stated that grain-based technologies will continue to be important and there are a lot of states promoting ethanol production.
Rep. Gooch talked about the role of activist environmentalism in impeding a pro-active energy policy. The press reporting on Thoroughbred and mercury is skewed. The Thoroughbred plant could be forgone because of litigation. Mr. Sims concurred and stated that most of the world's mercury is produced by China.
Then Commissioner Bush, Mr. David Morgan, and Mr. Larry Adams provided an update on streamlining the coal permitting process. Commissioner Bush talked about production trends and price trends in the spot market for coal. She then described the various permits required for coal operations including those required under the federal Surface Mining Control and Reclamation Act (SMCRA).
Commissioner Bush also discussed the Kentucky Coal Water Efficiency Task Force and the relationship between coal mining and water permitting issues. She also discussed industry outreach efforts and the network ties between the division of water and the permitting division.
Sen. Boswell asked about the Abandoned Mine Reclamation Program (AML). and the impact of fire destruction of mining records. Commissioner Bush responded that the destruction of the records was a problem, but many coal companies are providing maps to the agency under the mine mapping initiative.
Rep. Webb asked if staffing in the Division of Mine Permits is adequate. Commissioner Bush replied that the Division is challenged by a labor shortage. Retention, however, is a bigger problem.
Rep. Hall talked about a project in his district that faced permitting problems. A technical revision on the application held up the entire process. There is also a need for oil and gas data presently. Commissioner Bush responded that permitting time frames have been reduced. There is an ongoing effort to get the oil and gas data to the coal companies.
Rep. Bruce talked about several schools to train miners in Eastern and Western Kentucky. Commissioner Bush said the office of mine training and safety is coordinating efforts with those schools.
Dr. Rick Sweigard, University of Kentucky Mining Engineering Department and Mr. Bill Caylor, Kentucky Coal Association talked about the need for recruitment and retention in the mining engineering program. Dr. Sweigard talked about the need for mining engineers due to extreme shortages of these engineers nationally. There are only 12 accredited programs in the United States. Dr. Sweigard noted that Kentucky was the fourth largest in enrollment nationally. He also talked about the increase in current coal production and the creation of a scholarship program at the University of Kentucky for students enrolling in the field of mining engineering.
Rep. Nesler asked why the scholarships are limited to students from the coalfields. Second, how does UK rate among other colleges in the mining engineering program? Third, what is the opportunity for employment and salary?
Dr. Sweigard stated that the UK recruits from all across Kentucky, but for political reasons these scholarships would be available to students from counties in the Kentucky coalfields. UK's program is very strong. Employment opportunities are very good and salaries are in the 50K range.
Rep. Webb asked what other programs at UK compete internally for UK appropriation. I want some guarantee that the mine engineering school will actually receive those dollars.
Dr. Sweigard stated the money used to come directly to our program from the Energy Cabinet. Now it comes from the Center for Applied Energy Research (CAER) and CAER determines the amount the mine engineering school receives. Industry is now contributing to the mine engineering program through scholarship programs.
Sen. Boswell stated he doesn't have a problem with the regional restrictions on eligibility for the scholarships.
Rep. Westrom asked whether depopulation in the coal producing regions affected recruitment and whether the funding request of $200,000 was sufficient.
Dr. Sweigard stated, UK has trouble recruiting from the coal producing regions because of inadequate primary and secondary preparation. Inadequate math and science preparation is the basic obstacles to students from the coalfields becoming mine engineers. Dr. Sweigard stated that more money would aid in recruiting more students.
Rep. Gooch thanked the members for staying even though the meeting was long. Sen. Boswell in closing stated that over the past 6 years, $235 million dollars was transferred to the general fund from the USTB program. This amounts to 38 percent of the total funds received by the Underground Petroleum Storage Tank Fund. The General Assembly should stop raiding the fund.
There was a motion and a second to adjourn. The motion was approved by voice vote.