Welshing on Wyoming’s Coal Industry

by Jillian Kay Melchior
Will a new edict from the EPA kill a business that’s made the state wealthy?

Gillette, Wyo. — Gillette, a rural town an hour’s drive from Devil’s Tower, is subject not to the whims of fate alone but to those of the federal government.

Its golden opportunity came nearly 25 years ago, when Congress, with a regulation intended to cut down on acid rain, inadvertently sparked a coal boom in the region. But today, as the Environmental Protection Agency pursues new regulations to cut carbon emissions, Gillette may again see its fortunes change.

Gillette might seem an unlikely center of the American coal industry. Visitors can get there by flying into Denver, then making the 350-mile drive — first on Interstate 25, and then on two-lane highways where I saw more antelope than lights or road signs. Gas stations are sparse along the way, and they all sell Sturgis tchotchkes during the summer. At one, I uneasily watched a grizzled motorcyclist light up his cigarette as he pumped fuel.

The town has become a hotspot for the energy industry in large part due to the 1990 amendments to the Clean Air Act, which disrupted the domestic coal market by creating a regulatory preference for low-sulfur coal — precisely the type found in the mineral-rich Powder River Basin where the town sits. Before the Clean Air Act amendments of the 1990s, Wyoming put out less than 200 million tons of coal a year; since then, production has more than doubled.

Without seeing it firsthand, it’s almost impossible to fathom the colossal scale of coal production in the area. Contrary to the popular impression, Wyoming — not Pennsylvania or West Virginia or Kentucky — dominates the American coal industry, accounting for roughly 40 percent of the nation’s total production and churning out, on average, twelve tons of coal each second. Last year, the state celebrated its ten-billionth ton of coal mined.

Cloud Peak Energy’s Cordero Rojo Mine, an open-surface site about 30 minutes’ drive outside of Gillette, is the third biggest coal producer in the United States. It singlehandedly turns out enough each day to provide 20 minutes of electricity for every man, woman, and child in the United States, its technical-services manager Brian Wenig tells me. Shovels as big as New York City studio hang suspended from machines as large as ships, scooping dirt away from the coal beds beneath. It takes 17 trains daily, carrying 16,000 tons apiece, to keep up with Cordero Rojo’s coal production.

And then there’s the vehicles that carry the extracted coal from the mine to those train-loading stations — they’re so big they dwarf the school buses that carry some miners to work; so big that they have to drive on the left side of the road because the drivers can’t see where the right side ends; so big that as a safety precaution, workers radio in a warning before driving near them. (During my visit, we also radioed to alert them not to run over a raft of ducks that had wandered over from the restored mine land nearby.) To illustrate the perilous might of these gigantic vehicles, the Cordero Rojo Mine administration once drove one over an empty scrap pick-up truck, crushing it. The driver said he didn’t even feel it crumple beneath him, Wenig tells me.

This large-scale coal production has buoyed Gillette’s economy. Abandoning its red-neck and rough-edged reputation from the 1970s and ’80s, the town of about 32,000 finds itself moneyed and increasingly swanky. Between 2008 and 2012, the median household in Campbell County earned $77,090 — more than $20,000 above the state’s median income — in a state where a dollar still buys a decent amount. The average worker at a Cloud Peak mine earns $69,000 a year, not including benefits.

Though energy is the economic driver, other sectors have also prospered. Today, restaurants stay open past 10 p.m. — that’s huge in Wyoming. And there are no slow nights for waiters in Gillette — the mines’ irregular schedules mean every night is a weekend for somebody. A hundred miles from anywhere, you can get good sushi or a steak, and hotel prices compare to those in downtown Denver. Shopping options remain limited, one resident complained to me, but that’s because stores can’t compete in Gillette’s employment market if they offer only minimum wage.

The success of coal in Gillette and the surrounding area have greatly benefitted the state as a whole. Mining companies paid more than $1 billion in taxes, leases, royalties and other payments to Wyoming in 2012, a 10 percent increase over the previous year. Much of that money goes to education, including the construction of new schools.

But as the Environmental Protection Agency eyes new carbon regulations, it may once again reverse Gillette’s fortunes. The Obama administration is seeking to reduce carbon emissions from electric plants by 30 percent between 2005 and 2030. It has suggested to states a range of means to this end, but the practical effect will be to penalize coal-fired power plants while artificially boosting demand for other energy sources.

“When we see what [the EPA] is trying to do with the new regulations, it looks to us [that] what that’s really about is targeting coal and putting a stop to coal,” Wyoming governor Matt Mead tells National Review Online. “Now, the administration says coal will still be part of the portfolio, but when you look at the combination of the new [proposed] regulations, plus what they have done over the last several years, it looks like it’s sort of a death by rules and regulations. . . . Obviously, it’d be very damaging to Wyoming.”

The extent of that damage remains debated. Some Wyoming experts say if the proposed regulations are implemented, they will devastate the state’s economy. Already, sources in Wyoming’s legislature tell me, the uncertainty introduced by the much-anticipated proposed regulations has helped explain why no new coal leases were completed within the last year.

“This is all fine on paper, but in reality, it’s completely unrealistic,” Travis Deti, assistant director of the Wyoming Mining Association, says of the EPA’s 645-page proposed regulations. “If and when this takes, and the coal industry starts contracting, you’re going to see jobs lost, absolutely. It’s also going to cause a full ripple effect in this state. State employees won’t get raises because of coal. Energy prices will rise. But the people in D.C. just don’t give a rip.”

Others say the regulations could be much worse, and that as currently proposed, they may actually give Wyoming’s lower-sulfur coal mines another temporary boost at the expense of their competitors out east. Others point out that nearly 40 percent of all energy generated in the United States comes from coal, suggesting that the EPA simply won’t be able to restrict its use too aggressively yet.

Nevertheless, even among those who consider the regulations unrealistic, many agree that if the EPA can impose these restrictions targeting coal, even harsher edicts from the agency will be forthcoming eventually.

The current proposed regulations “have certainly been one without any participation from the democratic institutions — namely Congress,” says Tim Stubson, a state representative from Casper. “So if the EPA can unilaterally move forward with these types of regulations, they certainly could do so on other fuel sources as well. On a slippery slope, we’re way down the hill.”

The EPA’s proposed regulations would establish standards, then require each state government to figure out a way to implement them. But many Wyoming legislators, even Democrats, support the state’s energy sector, so this puts them in an awkward position. There’s also precedent for what many Wyoming legislators see as bad faith: The EPA tried a similar approach with its haze rules, only to shoot down state-house plans they viewed as too modest.

Gillette’s Tom Lubnau, who is wrapping up his final term as the speaker of the Wyoming state house before retiring from the legislature, explains lawmakers’ dilemma to NRO: “We’re obligated to comply with the law, but when the law is a moving target, aimed at shutting down part of the economy, I am not sure you can meet that target. If you do, they’ll just move it again.”

The state is stewarding its resources and environment just fine, he says. “All these fancy-pants bureaucrats should just butt out. We do a heck of a job taking care of our own.”

— Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a Senior Fellow at the Independent Women’s Forum.

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