National Coal Association: APPENDIX-Continued 1. Letter to Hon. Jimmy Carter, President of the United States, from Carl Bagge, dated January 12, 1978, concerning the President's goal of doubling coal production and use by 1985 Page 329 2. Enclosure 1: Proposal to the President for an evaluation of existing and proposed Governmental requirements-to determine if they will interfere unnecessarily in meeting the President's coal goals 3. Enclosure 2: Listing of new coal-fired steam electric generating units planned for the period from 1977 to 1986... 4. Enclosure 3: State-by-State listing of 332 planned new coal mines and expansions of existing mines.... 5. Letter to NCA members from Carl Bagge, dated May 17, 1978, referring to Mr. Bagge's letter of January 12, 1978, to President Carter... 6. Letter to Carl Bagge, from Hon. Phillip S. Hughes, Assistant Secretary for Intergovernmental and Institutional Relations, U.S. Department of Energy, dated May 8, 1978, transmitting information on the scope of the work of the three interagency task forces assigned specific responsibilities with respect to coal development and utilization American Gas Association: 1. Attachment 1: "The Future for Gas Energy in the United States," January 1978 331 337 343 358 359 375 2. Attachment 2: "A Comparison of Coal Use for Gasification Versus Electrification," April 1977 402 3. Attachment 3: "Evaluation of the President's Proposed Supply-Side Energy Strategy," August 26, 1977, revised September 6, 1977. 413 4. Attachment 4: "Carbon Dioxide Emissions from Fossil Fuel Combustion and from Coal Gasification," September 2, 1977 422 5. Attachment 5: "An Analysis of the Constraints on Converting Large Industrial and Utility Boilers from Natural Gas to Coal," November 23, 1977. 6. Attachment 6: "A Comparison of Capital Investment Requirements for Alternative Domestic Energy Supplies," May 18, 1978 City of Gillette, Wyo.: Letter to Hon. Abraham Kazen, Jr., chairman, Subcommittee on Mines and Mining, from Michael B. Enzi, mayor of Gillette, dated May 30, 1978, responding to comments made about the city of Gillette regarding additional coal leasing in the Powder River Basin, in hearing of May 18, 1978 U.S. Environmental Protection Agency: 1. Attachment 1: Table I.-1990 regional coal production (million tons) 4. Attachment 4: Letter to Hon. Douglas C. Costle, Administrator, from 6. Attachment 6: Letter to Joseph A. McElwain, president, Montana Power 7. Attachment 7: "Regulations Implementing 1977 Clean Air Act Amendments-A Review of EPA's Draft SO2 Emission Standards and Proposed Alternatives," from Rocky Mountain Energy Co., Denver, Colo., May 1, 1978... 430 455 482 516 517 518 543 570 573 595 U.S. COAL PRODUCTION AND UTILIZATION TUESDAY, MAY 16, 1978 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MINES AND MINING, COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, Washington, D.C. The committee met, pursuant to notice, at 10 a.m., in room 1324, Longworth House Office Building, Hon. Abraham Kazen, Jr. (chairman of the subcommittee) presiding. Mr. KAZEN. The subcommittee will come to order. Today and on Thursday, the Subcommittee on Mines and Mining will hold hearings on U.S. coal production and use goals. Specifically, we want to know whether or not the goal established by the administration will be met. That is, to increase coal production and usage to between 1.2 and 1.3 billion tons annually by 1985, an increase of between 500 and 600 million tons over the 673 million tons produced in 1977. If the production and use goals of the administration can be met, our need for import oil could be greatly reduced, along with a decrease in our balance-of-payments deficit. It has been estimated that the increased coal utilization contemplated by the administration plan could save the Nation 3.3 million barrels of oil per day. Last year oil imports cost $45 billion and accounted for approximately 45 percent of all of the oil consumed in the United States. For each 100 million tons of coal which can be used in place of imported oil, the United States can avoid importing almost 400 million barrels of oil and can save an outflow of more than $5 billion. It is generally agreed that the United States has an abundance of coal. Much of this coal, however, may never be produced. How much will be produced and the real contribution it will make to our future energy needs depends upon a number of factors. There must, of course, be a market for the coal which means that the consuming industries must be encouraged to use coal in place of other fuels and that the coal must be available at reasonable cost. Some experts have concluded that the production goals established for 1985 will not be met. They point to a number of constraints which will impede the conversion to coal in existing industrial plants and a reluctance to depend upon it for new plants. Among these are: environmental constraints which would add to the cost of converting to coal, lack of adequate transportation facilities to move the expected increased production, and the availability of low-sulfur coal which might be produced in the Western States. The subcommittee has a particular interest in the contribution to the future production of coal which can be expected from the Western States. It is estimated that more than half of the Nation's coal reserve base is located in these States and that, of this amount, almost 80 percent lies under federally owned lands. Yet, at present, Western production accounts for only 14 percent of the total U.S. production. Some of our members have expressed a concern about the effect of new regulations implementing the Clean Air Act Amendments of 1977 on the use of Western coal. Others are particularly concerned about the leasing policies for Federal coal lands in the West. While the policy of the administration is to increase coal production and use, industry has charged that the Government's own regulatory policies will prevent the level of increase the administration itself sees as necessary. The subcommittee is particularly interested in the extent to which the policies of the various agencies having responsibilities for programs which might affect coal production are coordinating policy in an effort to meet the 1985 production and use goals. The subcommittee is also interested in the need for any legislative initiatives which might serve to encourage increased coal production and use. Since 1971, there has been a freeze on the issuance of new leases for federally owned coal. In August 1976, the Federal Coal Leasing Amendments Act of 1975 became law. The purpose of this legislation, which was initially handled by this subcommittee, was to assure the development of coal owned by the United States in a manner compatible with the public interest. There are indications that it will be several years before any new leases are issued for Federal lands. Some members of the subcommittee may feel, understandably, that their legislative efforts are being frustrated by unnecessary and needless delays both in the courts and administering agencies. The goals of the administration for future coal production and use are commendable. If they can be achieved, they will go far toward a solution to the problem of this Nation's future energy needs, although we must recognize that coal alone is not the answer to the problem. But, as I have indicated, we are concerned that the goals will not be met and that the reasons for nonachievement may not all be valid. Accordingly, we have invited representatives of the Federal agencies most directly concerned with the problems of coal production to give us their assessment of the present situation and of the outlook for increased coal production and use. We have also invited representatives of industry and of concerned environmental groups to give us the benefit of their experience and advice. In addition, we will have an opportunity to hear from the Governor of one of the largest public land States in the West. Before we start the testimony I am going to call on the ranking minority member, Mr. Ruppe, for his statement, which I wish to have included in the record. [The prepared statement of Hon. Philip Ruppe may be found in the appendix.] Mr. RUPPE. Thank you very much, Mr. Chairman. I do have a statement which I would like to have included in the record, if I might. I would also like to say I appreciate your holding these hearings. I think a knowledge and understanding of our coal policy, whatever it may be, is vitally important to this country. We anticipate relying on coal for an ever-growing percentage of our energy requirements, and I think it is important that this Congress understand the policies of the administration and understand and have full knowledge as to whether, indeed, that policy will permit us to meet the production requirements and production goals that we have set for the mid-1980's. I want to thank you, and I am sorry we have lost several of my colleagues. We have run into a Republican conference and there is a bit of conflict there. Mr. KAZEN. Thank you, Mr. Ruppe. I know there is a Republican conference and several of our colleagues on our Democratic side of the subcommittee have conflicts this morning. But they will be coming in during the morning, and certainly most of them will be here on Thursday morning. The first witness to appear before us is the Deputy Secretary of the Department of Energy, Hon. John F. O'Leary, I think one of the most knowledgeable people in Government on energy in the United States. Mr. Secretary, if you please, we await your testimony. [Prepared statement of John F. O'Leary found in the appendix.] STATEMENT OF JOHN F. O'LEARY, DEPUTY SECRETARY, DEPARTMENT OF ENERGY Mr. O'LEARY. Mr. Chairman, I was thinking just a moment ago, when I first started here and was a witness we did not have a public address system, and as a consequence, the witnesses sounded like mumble, mumble, mumble, and I wonder if that was not a better day. Mr. KAZEN. I do not think we ever heard any mumbles from you, Mr. Secretary. You were always very forthright, articulate and you could be heard and understood by all. Mr. O'LEARY. Mr. Chairman, I am pleased to be before you this morning representing the Department of Energy. I have a prepared statement, and perhaps the most convenient process would be for me to introduce that for the record and then proceed to summarize it. Mr. KAZEN. Without objection, your entire statement will be placed in the record and you may summarize as you wish. Mr. O'LEARY. Mr. Chairman, I am delighted that you are holding this hearing. As I look over the horizon of coal use in this country and the whole energy horizon, we have some serious problems we will have to deal with in the next 4 or 5 years in order to bring this country to the point where we have a respectable energy future. Taking a look now at the backbone of our energy economy, oil, gas, domestically produced oil and gas, they are not dependable for the growth. I think the optimistic prediction is by 1985 oil production, including substantial increases from Alaska, will be about where it is today. Gas production will be down almost certainly today. We are producing close to 19 trillion cubic feet now, and an optimistic assessment of 1985 will be 17 trillion cubic feet. You take a look at the future of nuclear energy and orders have essentially ceased, and unless we are successful in putting through licensing reform and moving toward a conclusion of the long debate on waste disposal and on proliferation, we will not find nuclear energy making any significant contribution during the remainder of the century above the orders already on the books. You look, then, at coal and coal is beset with problems that you will be hearing about in the course of this hearing and its successors in the days to come, and you think about the enormous problems that are associated with mining the tremendous volumes that are going to be required, the environmental resistance to that, the resistance on the whole of States of having that kind of activity conducted in areas now regarded as pristine, the social and economic impact on those States, the transportation difficulties associated with this, recruiting the labor force that will be necessary, and you just have to say to yourself, this will be an enormously difficult job and enormously compounded on this country's future if we are not able to pull it off. The fact of the matter is that I have just run through the four domestic systems that will have to get us through the remainder of the century: domestic oil and gas, nuclear energy, and coal. And on the basis of what we know now, the main one is coal, and if we are unable to bring that off and find the national will to expand production of coal and usage of coal in very, very large volumes over these next few years and in ways acceptable, Mr. Chairman, acceptable to the local communities, acceptable to the most of us who are so concerned with clear air, acceptable to those of us concerned with water usage in the West, acceptable to those of us who are concerned about long transportation systems, that will be heavily impacted by this, and those of us who live in the communities where the air will be affected for good or ill by the burning of additional coal; unless we find ways to do this acceptably, Mr. Chairman, I really have the most serious doubt about the capacity of this country to get through this energy crisis without very serious disruptions in the mid to late 1980's. This is an important subject that you have embarked on examining this morning, and I think that you will want to probably extend these hearings into continued oversight over this vital problem over the next years. Let me address one or two special problems. First of all, we must understand clearly the relationship of the Department of Energy to the Department of the Interior's leasing programs. We have by statute a clear responsibility to set production goals for production of coal and other minerals, other energy fuels, on the public domain. The first step of meeting that responsibility will be in the form of a transfer to the Department of the Interior of some estimates and projections we have made that will occur in June of this year of taking a look at 1985 goals. We do not need additional leasing necessarily. There is, as you know, an enormous amount of coal on public land now outstanding under Federal leases. |