CHAPTER 2 COAL ISSUES, INCLUDING CHANGES TO FEDERAL COAL LEASES AND INCENTIVES DIRECTED AT COAL-FIRED GENERATION FACILITIES

• Jurisdiction: United States

The Energy Policy Act of 2005
(Oct 2005)
CHAPTER 2
COAL ISSUES, INCLUDING CHANGES TO FEDERAL COAL LEASES AND INCENTIVES DIRECTED AT COAL-FIRED GENERATION FACILITIES
John S. Kirkham
Stoel Rives LLP
Salt Lake City, Utah
JOHN S. KIRKHAM

John S. Kirkham, an attorney with Stoel Rives LLP, practices energy and natural resources law. He has more than 30 years experience in the representation of clients involved in all aspects of the coal industry. Mr. Kirkham has experience in mining, public land, water, geothermal and environmental law. He has represented clients involved in the development and utilization of wind, oil and gas, precious metals, uranium, potash, limestone, phosphate, synthetic fuels, silica, tungsten, copper and gilsonite. His experience also includes the representation of utilities and pipeline companies. Mr. Kirkham has supervised client representation in connection with litigation, bankruptcy, employment, financing and general corporate law. He has been recognized in the publication "Best Lawyers in America" for more than 10 years in the area of natural resources law, and most recently, energy law.

Mr. Kirkham is the Office Managing Partner for the Stoel Rives Salt Lake City office, a position he has held from the time the office consisted of nine attorneys to its present size of 55 attorneys. He is a member of the Board of Trustees of the Metropolitan Water District of Salt Lake City and Sandy; Co-Chair of the Salt Lake Chamber of Commerce Energy Committee; Member of the Salt Lake Chamber of Commerce Board of Governors; Vice President Legal -- Great Salt Lake Council Boy Scouts of America; a member of the Board of Directors of the Utah Mining Association and has previously been a trustee of the Rocky Mountain Mineral Law Foundation. He has served on the Bureau of Land Management, Utah Statewide Resource Advisory Council (1995-1997) and participates on the Coal Subcommittee of the Royalty Policy Committee, Minerals Management Service.

Mr. Kirkham earned his B.A. with honors, cum laude, and his J.D. from the University of Utah in Salt Lake City. His previous publications include "Force Majeure -- Does it Really Work?" 30 Rocky Mt. Min. LawInst. 6-1 (1984).

National Mining Association
The Energy Bill -- 2005
Summary of Major Coal and Mining Provisions
Non-Tax and Tax
Conference Report as Reported July 26, 2005
( used by permission)

THE CLEAN COAL POWER INITIATIVE	Title IV -- Subtitle A
Funding	Authorizes $200 million annually from 2006 through 2014 to remain
available until expended.
Uses	At least 70% of the funds must be used to fund projects on coal-based
gasification technologies including IGCC, gasification fuel cells and
turbine combined cycle; gasification co-production and hybrid
gasification and combustion. Up to 30% of the funds can be used to fund
"other technologies." Technologies using oxy-combustion will be
considered under the IGCC funding pool.
Federal Funding	Requires at least 50% cost share from private industry, which can be
reduced by the Sec of Energy. Repayment not required.
Project Criteria	Sets financial criteria and increasingly stringent technical criteria for
projects selected under the program.
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Requires technical milestones and performance criteria through 2020 for
gasification projects. The criteria are to be developed in consultation
with industry. By 2020 projects must be able to remove at least 99% of
SO2; must not emit more that 0.05 lbs of NOx.MMbtu; must achieve at
least 95% mercury removal and must achieve a minimum thermal
efficiency according to type of coal.
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"Other technologies" must achieve the following by 2020: 97% removal of
SO2; emit no more than 0.08 lbs of NOx/MMbtu; achieve 90% mercury
removal and achieve a minimum thermal efficiency according to type of
coal. In all cases criteria are adjusted by altitude.
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Provides that efficiency targets are not required for projects that
separate and capture at least 50% of the potential emissions of CO2.
Includes safe harbor provision from CAA requirements.
Schedule	Sec. of Energy sets time in which projects must be completed. Limits
Completion Dates	extensions of time.
Centers of	Establishes Clean Coal Centers of Excellence that would be funded out
Excellence	of the $200 million annual appropriation.
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BASIC COAL RESEARCH AND DEVELOPMENT	Title IX -- Subtitle F Fossil Energy
Authorizations	Authorizes $367 million for FY 2007, $376 million for FY 2008 and
$394 million for FY 2009 (total $1.137 billion) specifically for the Coal
R&D program. This is just over 60% of the total R&D spending
authorized for Fossil Energy.
Program elements	DOE must conduct research programs to facilitate the production and
generation of coal-based power. The program must include:
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• innovations for existing plants (including mercury removal);
• gasification systems;
• advanced combustion systems;
• turbines for synthesis gas from coal;
• carbon capture and sequestration research;
• coal derived transportation fuels and chemicals;
• liquid fuels derived from low rank coal and water slurry;
• solid fuels and feedstocks;
• advanced coal research;
• advanced separation technologies; and
• fuel cells from operation of coal derived syn gas.
Carbon capture	Establishes a 10 year carbon capture R&D program to develop carbon
R&D program	dioxide capture technologies on combustion based systems for use in
both existing and new units. Specifically authorizes $25 million in FY 06,
$30 million in FY 07 and $35 million in FY 08 to carry out the program.
Mercury Removal	Sec. of Energy directed to conduct R&D on technologies to remove
from PRB and	mercury from sub-bituminous (PRB) and lignite (Fort Union) coals and
Lignite Coal	examine effect of technologies when blended with other coals.
Mining Research	Authorizes a research and development program for coal mining
technologies to address priorities identified by the Industry of the Future
effort. Authorizes $75 million over 3 years.
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CLEAN AIR COAL PROGRAM	Title IV Subtitle C
Purpose of program	To promote national energy policy and energy security, diversity and
economic benefits that come from using coal; to mitigate and reduce
financial risks and reduce cost of clean coal generation and increase
marketplace acceptance of clean coal generation and pollution control
equipment and to facilitate environmental performance of clean coal
generation.
Authorization --	Total authorization of $500 million: $300 million in FY 07; $100 million
Phase One	in FY 08; $40 million in FY 09; $30 million in FY 10 and FY 11. This "Air
Quality Enhancement" program must use technologies that have been
demonstrated to meet and exceed relevant Federal or State clean air
requirements. Priority is given to projects that substantially reduce
emission levels of criteria pollutants or mercury; projects that result in
mitigation or collection of more than one pollutant and projects designed
to allow use of waste byproducts from the process.
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This is mainly for advanced pollution control equipment at existing coal
fired electricity plants.
Authorization and	Total authorization of $2.5 billion: $250 million for FY 07; $350 million
description of	for FY 08; $400 million annually for FY 09-12 and $300 million in FY 13.
Phase Two
This program is to facilitate production and generation of coal based
power through deployment of clean coal technologies that improve
energy efficiency or environmental performance when compared with
existing technologies. Eligible technologies include advanced combustion
equipment including gasification, gasification fuel cells, gasification coproduction;
oxidation combustion; ultra super

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