Kentucky Coal Industry
Over 94 percent of Kentucky's electricity comes from coal generated power plants. Kentucky is third in the nation in coal production, generating over $3 billion in sales and hundreds of millions in tax revenue. The Kentucky coal industry employs more than 18,000 people.
The "cap and trade" provision will not only devastate the coalfield communities in eastern and western Kentucky, it will destroy large segments of Kentucky's manufacturing base, particularly energy intensive industries like steel and aluminum.
Kentucky currently produces 30 percent of our nation's steel and aluminum. Together, these industries employ thousands of Kentuckians in communities like Ashland, Russellville, Sebree, Hawesville and Lewisport. The energy tax in the "cap and trade" provision will significantly increase the cost of producing steel and aluminum, putting our companies at a severe competitive disadvantage compared to their competitors in other countries.
High-end estimates suggest that cap and trade will cost the average Kentuckian an extra $1000 a year on their utility bills. This increase in cost may come to Kentuckians when they are already boiling over with the consequences of a weak economy and are least able to condone an attack on the Coal industry, the state's backbone.
While a cap and trade battle in Congress may or may not materialize, the EPA has reported that they may consider going around Congress via regulatory statute in the Clean Air Act.
The Intrastate Coal and Use Act
The Bluegrass Institute-sponsored Intrastate Coal and Use Act was unanimously approved by both the American Legislative Exchange Council's Energy, Environment and Agriculture Task Force and the organization's board of directors as model legislation for states to consider in 2013.
Read the two-page model bill here.
The bill offers one potential solution to state sovereignty involving natural resources and serves as a pushback measure to the Environmental Protection Agency's assault on the coal industry. It limits the EPA's regulatory reach by placing oversight of coal mined and used within a state's borders to that state's Department of Environmental Protection. This is done by crystallizing as it relates to the coal industry the concept contained in the Ninth and Tenth Amendments that enumerate the federal government's powers, including limiting its commerce-regulating power to interstate commerce only. It recognizes that the federal constitution gives regulatory power only over interstate commerce, not intrastate activity. Interstate versus intrastate is a very important distinction. This bill recognizes that there is absolutely no constitutional authority for federal regulation of coal that is mined and used within a state's borders -- and never leaves the state.
Kentucky and other coal-producing states would greatly benefit from legislation based on this model bill -- not only because they have an abundance of "black rock," but also because states with a large supply of coal tend to use more of it to keep their energy costs low. One-third of the coal mined in the Bluegrass State remains within the commonwealth's borders and is used to help keep electricity rates among the lowest in the nation. Currently, nearly 94 percent of Kentucky's electricity was supplied by coal, most of which was produced within our borders.
Limiting federal regulatory intrusion into coal would also protect Kentuckians who work in industries that have high energy demands met by the plentiful supply and low cost of coal. If the manufacturers of aluminum and stainless steel, for example, did not have access to such plentiful, low-cost energy, they likely would move their operations to other countries with the access to that type of efficient energy. Considering that Kentucky produces more than one-third of the nation's total aluminum supply, such manufacturing losses could have a significant negative impact on the commonwealth's economy that continues to have higher state unemployment rates than the nation's jobless rate.
Left unchecked, the ripple of EPA's assault against Kentucky's coal industry will be felt beyond the coal mines, aluminum smelters and stainless steel factories themselves. Considering that there each coal-mining job in Kentucky fuels three additional jobs in non-coal industries in the Bluegrass State, the EPA's war on coal offers some potentially sobering consequences for the commonwealth's economic security and future. The low electricity rates coupled with the abundant supply of energy is often the most attractive economic incentive that the Bluegrass State can offer to firms looking to expand or relocate.
An important note: This is not a bill that encourages environmental irresponsibility. Federal bureaucrats would have us believe that allowing states to regulate their coal industries would result in increased pollution and lax enforcement. To the contrary, it's much easier for citizens to hold state and local officials accountable than it is to try and contain a regulatory monster in far-away Washington, D.C.
October 2010-Kentucky Files Suit Against Environmental Protection Agency
On October 6, 2010, the Environmental Protection Agency (EPA) blocked 11 water discharge permits in eastern Kentucky claiming the permits did not do enough to prevent water pollution. The EPA's action laid the groundwork for federal involvement in Kentucky's issuance of water permits and was the most intrusive act by this federal agency in Kentucky in 20 years. On October 18, 2010, the Kentucky Coal Association (KCA) and the state government filed suit against the EPA in a federal court in Pikeville.
Kentucky Coal Association President Bill Bissett cited the EPA's encroachment on the state's coal industry as necessary cause for the suit. Governor Beshear echoed this sentiment and stated that past attempts to find common ground with the EPA had failed. Beshear said, "The EPA's recent arbitrary and unreasonable actions could well have a devastating impact to Kentucky's economy."
View the complaint here
- Bluegrass Energy Report: The EPA's Economic Impact on Kentucky
- Bluegrass Policy Blog: Beshear joins coal industry to fight EPA
- Cap and Trade
- Kentucky Climate Action Panel
- Federation for American Coal, Energy and Security
- Friends of Coal, KY
- BIPPS-supported ALEC model bill seeks to protect Kentucky coal from EPA overreach
- What happens in coal country should stay in coal country