Interim Joint Committee on Natural Resources and Environment


Minutes of the<MeetNo1> 6th Meeting

of the 2010 Interim


<MeetMDY1> November 4, 2010


Call to Order and Roll Call

The<MeetNo2> 6th meeting of the Interim Joint Committee on Natural Resources and Environment was held on<Day> Thursday,<MeetMDY2> November 4, 2010, at<MeetTime> 1:00 PM, in<Room> Room 149 of the Capitol Annex. Senator Brandon Smith, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Brandon Smith, Co-Chair; Representative Jim Gooch Jr., Co-Chair; Senators Ray S. Jones II, Bob Leeper, John Schickel, Katie Kratz Stine, Robert Stivers II, Gary Tapp, and Johnny Ray Turner; Representatives Hubert Collins, Tim Couch, Keith Hall, Stan Lee, Marie Rader, Kevin Sinnette, Ancel Smith, Fitz Steele, Jim Stewart III, and Jill York.


Legislative Guests: Representatives Rocky Adkins and Fred Nesler.


Guests: Bruce Scott, Kentucky Department of Environmental Protection; John Lyons, Sean Alteria, Andrea Smith, And Millie Ellis, Division of Air Quality; Larry Arnette, Energy and Environment Cabinet; Allen Luttrell, Division of Mine Permitting; Gene Kitts, International Coal Group; Kim Nelson, Lloyd Cress; John Talbert, Big Rivers Electric; and Dan Geiger, D.J. Geiger & Co.


LRC Staff: Tanya Monsanto, Stefan Kasacavage, and Kelly Blevins.


A quorum was present. After a motion and a second, the minutes from October 7, 2010 were approved.


Update on Air Quality and Implementation of New Greenhouse Gas Rules

Commissioner Bruce Scott, Department of Environmental Protection and John Lyons, Director of the Division of Air Quality provided an update on various federal air quality regulations that will affect the state. In particular, Mr. Lyons discussed the greenhouse gas reporting and tailoring rules, various legal issues affecting the cabinet and the Commonwealth, and amicus briefs and comments issued by the cabinet. The genesis of the greenhouse gas reporting rule was the 2007 United States Supreme Courtís ruling that United States Environmental Protection Agency could make a determination of carbon dioxide as a pollutant for the purposes of regulation. †The United States Senate failed to pass a climate bill, which brought about regulation rather than legislation of carbon dioxide as a pollutant.


Under the current administration, the US EPA issued an endangerment finding and then in September of 2009 the tailoring rule. There are 109 sources impacted and the biggest impact will initially be recordkeeping and reporting. However, the tailoring rule will require a determination of best available control technology (BACT) for controlling emissions of the pollutant and currently the only method is efficiency. Energy efficiency for boilers might include energy audits.


There is litigation pending. Seventeen states have filed in opposition and 20 are in support. There are 13 states that are undecided. Kentucky has joined Alabama in opposition of the tailoring rule and has filed an amicus brief in that case. In response to a question about why Kentucky has waited to join or file a suit against US EPA, Commissioner Scott stated that, in 2008-2009, Kentucky did not act while the Commonwealth considered its position. Mr. Lyons commented that Kentucky filed in March 2010 against the endangerment finding. Adverse comments have been filed with US EPA in response to the tailoring rule because there is uncertainty regarding BACT. New source review (NSR) and prevention of significant deterioration (PSD), two important programs under the Clean Air Act, will be impacted.† Kentucky has its own PSD program and issues its own permits for construction. The Commonwealth has argued that it does not have the authority to regulate greenhouse gases, but a failure to implement the program in accordance with US EPA deadline date of March 31, 2011 will result in a federal implementation plan. That means that the state will lose control over issuance of permits.


In response to a question on how many new laws are coming from US EPA recently, Commissioner Scott replied the cabinet spends a great deal of time commenting on new US EPA rules. Currently the Commonwealth is suing US EPA and that has not been done before. Mr. Lyons commented that the Division of Air Quality spends an unprecedented amount of time on new rules.


In response to a question about how the new rules will impact sources, Mr. Lyons stated that the Division is unsure. Recordkeeping and reporting will be the most impactful at first. There are other rules that have controls and implications and the fear is that these rules open the door to regulating greenhouse gases. There are also questions about what the efficiency measures will be. In terms of other impactful rules, the transportation rule will result in greater reductions of sulfur dioxide and nitrogen oxides. The rule will cause fuel switching and may force shut-downs.


Update on Mine Permit Fee Increases

Deputy Commissioner Larry Arnett and Division Director of Mine Permits Allen Luttrell provided an update on the increase in mine permit fees that the General Assembly passed in 2010. Commissioner Arnett stated that the legislation was a success resulting in fewer delinquent permit applications. In 2009 when discussion between the cabinet and the coal industry, the governor issued an executive order to provide increased fees to hire 19 new staff. It also resulted in new training, reorganization of the department and updates to the mine permitting process. Mr. Luttrell stated that the Division of Mine Permits has roughly 500 pending applications all the time and it takes about 65 days to complete the permitting process. The Division has lost staff. Now there are 102 capped positions. The division will continue to reduce delinquent applications while making solid decisions regarding permitting. Training in blasting, subsidence and additional retraining for existing hires is being done. The goal is that in January 2011 there will be less than 25 delinquent applications. There has been a question about the adequacy of performance bonds for mining operations and the division will also be reviewing those. Commissioner Arnett described the divisionís budget, personnel and identified the new permit fee revenues.


In response to a question regarding the small coal operators group that was very efficient in getting applications through the division, Commissioner Arnett stated that one of the biggest differences between that period and now is the staffing levels. The division has lost staff in key areas and valuable experience too. However, the division is moving towards electronic permitting and that will likely streamline the process.


In response to a question regarding use of courts to stop coal mining, Mr. Luttrell replied that it is not unusual for the division to receive a lands unsuitable petition and the cost associated with it is high. The problem is when a petition such as lands unsuitable comes in the resources are taken away from permit review and redirected to review of the petition. Secretary Peters added that the permits are more complex than before and legal actions slow down the process too. Electronic permitting will allow 3 or 4 desks to examine the same permit adding efficiency in the process. Changes in the Division of Mine Permitís management have made a difference as well.


In response to a question regarding the complexity of the permitting process and whether it is necessary, Mr. Luttrell stated there are strict regulatory guidelines for permits and the cabinet is developing additional guidelines to create consistency of expectations between the reviewers and industry. This should prevent permit withdrawals.


In response to a question regarding staffing, Mr. Arnett stated that new staff in the Division of Mine Permits is integrated into mainstream staff. There are measures taken to improve the bond release process and enforcement division. In response to a question about informing landowners about a petition to stop mining, Mr. Luttrell replied no. There is no individual notice to landowners.


Coal Issues
Mr. Kim Nelson, legislative lobbyist for the Western Kentucky Coal Association and Mr. Bill Bissett, President of the Kentucky Coal Association provided an update on the legal actions taken against US. EPA in response to new guidance documents on conductivity standards for mine permits. In providing examples of both an underground mine, coarse refuse disposal facility and a surface mine, Mr. Bissett stated that all permitting actions from US EPA have slowed.


In response to a question about whether actions by the US Department of Labor are mirroring recent US EPA actions against mining operations, Lloyd Cress, general counsel for the Kentucky Coal Association replied that all of these legal initiatives are bad for Kentucky mining. Mr. Cress stated that since the October meeting, Kentucky has received 11 objection letters from US EPA. On October 18, the Kentucky Coal Association filed suit in Pikeville challenging US EPA actions.


Senator Smith and Representative Gooch asked for a vote to send a letter to the Kentucky Attorney Generalís Office encouraging the OAG to join any current or future actions to stop US EPA from obstructing the Commonwealth from obtaining coal mining permits. The measure was approved.


There being no further business the meeting was adjourned.