26 th Annual Kentucky Professional Engineers in Mining

1. 26th AnnualKentucky Professional Engineers in Mining Lesly A.R. Davis Wyatt, Tarrant & Combs, LLP 250 West Main Street, Suite 1600 Lexington, KY 40507 Phone: (859) 288-7429 ldavis@wyattfirm.com September 6, 2013 Lexington, KY

2. Current Regulatory, Legislative and Enforcement Initiatives Impacting the Coal Industry

3. Overview • Clean Water Act (“CWA”) • Clean Air Act (“CAA”) • Surface Mining Control and Reclamation Act (“SMCRA”) • Resource Conservation and Recovery Act (“RCRA”) • Legislation • Others Issues

4. Clean Water Act • NMA Litigation (Nat’l Mining Assoc. v. McCarthy; 12-5310) • Began in 2009, with New EPA Approach to Reviews of CWA § 402 and 404 Permits • Enhanced Coordination Screening Process • Enhanced Review of § 404 Permits • Increased EPA Role in § 404 Permitting • Resulted in § 404 Delays/Moratorium

5. CWA • Detailed Guidance • Imposed De-Facto Water Quality Standards for Conductivity • Resulted in EPA Objections to State § 402 Permits

6. CWA Litigation U.S. District Court Ruled in Favor of NMA U.S. Court of Appeals for District of Columbia Currently Considering EPA’s Appeal Final Briefs Due September 16, 2013 Issuance of Kentucky § 402 Permits Remain in Legal Limbo

7. CWA • EPA Spruce Mine Permit Revocation • Spruce No. 1 Mine • One of the Largest Authorized Surface Mines in Appalachia • January 2007, Obtained 404 Permits • January 2011, EPA Published a Final Determination to Invalidate Permits (“Veto”)

8. CWA Litigation U.S. District Court (Mingo Logan Coal Co. v. U.S. EPA, No. 10-0541 850 F. Supp. 2d 133 (D.D.C. Mar. 23, 2012)) Ruled in Favor of Mingo Logan Post-Permit Veto Unlawful EPA Exceeded its Authority Under § 404 of the CWA

9. CWA • U.S. Court of Appeals for District of Columbia (Mingo Logan Coal Co. v. U.S. EPA, No. 12-5150, 714 F.3d 608 (D.C. Cir. 2013)) • Reversed in Favor of EPA • EPA has the Statutory Authority Under the CWA to Withdraw a Disposal Site Specification Post-Permit “Whenever” EPA Determines There is an “Unacceptable Adverse Effect” • Remanded Mingo Logan’s Challenge

10. CWA • Next Step – Appeal to U.S. Supreme Court? • Implications • Regulatory Uncertainty • Jobs and Economic Growth at Risk • Elevates EPA as Final Water Regulator • Are Other Industries Next?

11. CWA Guidance on the Scope of Waters of the U.S. April 27, 2011, EPA and Corps Issue Draft Guidance for Determining CWA Jurisdiction Clarifies how EPA/Corps Identify Waters of the U.S. Applies to All CWA Programs

12. CWA EPA and Corps Recently Submitted “Final Guidance” for Interagency Review Speculation that Jurisdiction Will Increase Some Existing Exemptions Should be Maintained Rulemaking Underway

13. CWA • Steam Electric Power Generation Effluent Limitation Guidelines and Regulations • April 19, 2013, EPA Proposed Rulemaking for the Steam Electric Power Generating Point Source Category Key Waste Streams

14. CWA • Establishes National Technology-Based Treatment Standards for Existing and New Sources of Wastewater From Steam Electric Power Generating Facilities • Major Impacts on Coal-Fired Power Plants • May, 2014, Final Rule Expected

15. CWA • Cooling Water Intake Structures Rulemaking • Impacts Industrial and Electric Generation Facilities Using Large Volumes of Water From Lakes and Streams to Cool Plants • CWA Requires that NPDES Permits for Cooling Intake Structures Reflect Best Available Technology

16. CWA • EPA Consulting with Other Agencies • November 2014, Final Rule Extended

17. Clean Air Act • Cross-State Air Pollution Rule (“CSAPR”) • A/K/A “Transport Rule” and “Good Neighbor Rule” • Finalized July 6, 2011 • Required 28 States in Eastern U.S. to Reduce Annual SO2 and NOx Emissions from EGUs that Prevent Neighboring States from Meeting Ambient Air Quality Standards

18. CAA • Litigation • EME Homer City Generation, L.P. v. EPA, No. 11-1302 (D.C. Cir. 2012) • August 21, 2012 – D.C. Circuit Court of Appeals Vacated the Rule • June 24, 2013 – U.S. Supreme Court GrantedCertiorari

19. CAA • Mercury and Air Toxics Standards Rule (“MATs”) • A/K/A Utility MACT Rule • Effective April 16, 2012 • Designed to Reduce Emissions of Hazardous Air Pollutants (“HAPs”) from New and Existing Power Plants • Targets 1,100 Existing Coal Fired Units and 300 Oil Fired Units at 600 Power Plants

20. CAA • Specifically Designed to Reduce: • Mercury Emissions by 90% • Heavy Metals • Requires Maximum Achievable Control Technology (“MACT”)

21. CAA • EPA Recently Updated/Reconsidered/Re-Opened Portions of the Rule • Litigation • Challenged by a Broad Coalition of Trade Groups, States and Associations • U.S. Court of Appeals for District of Columbia (White Stallion Energy Center LLC, et al. v. EPA, (D.C. Cir. 2012)) • Awaiting Decision

22. CAA • President’s Climate Agenda • Announced June 25, 2013 • Targets CO2 Emissions from Both New and Existing Power Plants • Goals • Fall 2013, Promulgate New Source GHG Regulations • June 2014, Promulgate Standards, Regulations or Guidelines for Modified, Reconstructed and Existing Power Plants

23. CAA • June 2015, Finalize Existing Power Plants Rules • End of U.S. Support for Public Financing of New Coal-Fired Plants Abroad • Kentucky Cabinet Unsure of What the Rules Will Be • Impacts

24. Surface Mining Control and Reclamation Act (“SMCRA”) • Stream Protection Rule • Replace 2008 Stream Buffer Zone Rule • First Major Rewrite of SMCRA

25. SMCRA • Expected to Be Broad in Scope, May Include: • Increased Baseline Data Requirements • Definitions • Mining in or Near Stream Limitations • Monitoring Requirements • Corrective Action Thresholds • Limiting AOC Variances • Reforestation Requirements

26. SMCRA • Delayed Repeatedly • Controversial • Significant Impact Expected

27. Resource Conservation and Recovery Act • Coal Combustion Residuals • What are They? • By-Products of Coal Combustion • Include Fly Ash, Bottom Ash, Slag, etc. • Most are Produced at Power Plants • Disposed of • In Liquid Form at Large Surface Coal Impoundments • In Solid Form in Landfills

28. RCRA • EPA Rulemaking Continues with Two Proposed Alternatives: • Regulate as Hazardous Waste Under RCRA Subtitle C • Continue to Treat as Non-Hazardous Under RCRA Subtitle D • August 2, 2013, EPA Notice of Data Availability Issued • Legislation

29. Legislation • Coal Residuals Reuse and Management Act of 2013, H.R. 2218, Introduced June 3, 2013 • Preventing Government Waste and Protecting Coal Mining Jobs in America, H.R. 2824, Introduced July 25, 2013

30. Legislation • Energy Consumers Relief Act, H.R. 1582, Introduced April 16, 2013 • Coal Jobs Protection Act of 2013, H.R. 1829, Introduced May 6, 2013

31. Legislation • Preserve the Waters of the U.S. Act, S. 2245, Introduced March 28, 2012 • House Appropriations Fiscal Year 2014 Interior and Environment Bill, Introduced July 2013

32. Other Issues • Endangered Species Act (“ESA”) • Coal Export Terminals • Sue and Settle • List Goes on and on...

34. Contact Information Lesly A.R. Davis Wyatt, Tarrant & Combs, LLP 250 West Main Street, Suite 1600 Lexington, KY 40507 Phone: (859) 288-7429 ldavis@wyattfirm.com