National Mining Association

Coal: Once Ignored in Policy, Due Now for Resurrection
Washington, D.C. March 14, 2001

Remarks by Jack N. Gerard President & Chief Executive Officer
National Mining Association
To The Washington Coal Club

Thank you, Carl Bauer.

And thank you ladies and gentlemen of the Washington Coal Club.

The world has a name for people like you – for people who:

Go out of their way to make networks of mutual support and motivation;
Who meet for years in small groups in out of the way rooms to share esoteric information;
Who inconvenience themselves in the furtherance of ideas;
Who labor on with those ideas even when the most acclaimed of popular thinkers scorn them as obsolete and old-fashioned;
And who are steadfast in the face of government policies that are contrary to their views.

The world, when it needs what they have, calls them overnight successes.

For at least the last eight years, coal was treated the same way in the administration of federal policies that affected energy: Almost everybody in power professed a respect for coal, but few were willing to give it a try.

But now the shared realization of serious thinkers is:

That the former administration, in catering to the most fashionable in popular thought, changed the emphasis of regulatory practice;
That this change forced into the nation’s power supply the same inflexibility and lack of diversity that brought on the current distress in California;
And that the United States is on the verge of an energy crisis California-style.

Now President Bush himself has underscored the situation. In remarks last month in Charleston, West Virginia, that went largely unreported, he said:

"…we need a national energy policy…coal needs to be an integral part…

"Coal is in abundant supply…

"It is important to remind people that we can safely mine coal…can cleanly burn it…"

Today coal is poised to be an overnight success and, once again, a source of relief for our country.

A foremost reason is the technologies that you here from the energy laboratories and from industry and from congressional staffs have worked to support so steadfastly through hard times and challenges.

Nevertheless, the most difficult steps in life are those between winning the promise of success and the achievement of success itself.

Today I want you to join me in thinking about the next steps for coal.

Some here know me but others do not. And so, Carl asked that I take some time to introduce myself since we’re about to embark together on an important venture in policy making.

I propose to begin by introducing you in greater detail to the ways I shall think and act as we move forward. I’ll touch on some experiences that have influenced my approach to life and annotate them specifically for the job at hand.

Nine months ago I was sure I had settled into the comfortable life of founding partner in a Capitol Hill consulting firm.

However, my best-made plans were soon to go the way of many other best-made plans for reasons and experiences that run all the way back to my hometown – Mud Lake, Idaho, population 190, a family community not unlike those from which many of you came to Washington.

My first job was with Gerard Brothers Dairy. I did not work for my father. The Gerards behind this operation were my brothers and I.

Idaho winters are rigorous, and Dad always had the heater going in the barn by 5 a.m. If every brother wasn’t on the job by 5:30, the heater went off; and we were left to finish the day’s chores on our own.

Dad called this incentive to pull together – no double meaning intended. It caused us to keep track of one another, to check with one another frequently, and to pick up slack when we saw it.

In a few years we diversified. Dad gave us the use of a grain combine from his John Deere dealership and we began to harvest grain for the neighbors. We found the working conditions much better than in the dairy.

And so – in an outburst of business acumen – we sold the dairy and made the combine our core enterprise. We were happy to exchange the shovels and the duties of the barn for the tools of the harvest.

Following my first year of college, I accepted a two-year missionary assignment where I served as an assistant to the Mission President in Sydney, Australia. My responsibilities involved the coordination, motivation and management of 200 young men and women volunteers.

As you can imagine, this was an interesting challenge – 200 young people, all 19-to-21 years old, in a foreign land, paying their own way, conforming to strict standards far different than those of others their age.

When I came home there were short stints in the Governor’s Office of Idaho and as a lobbyist for higher education.

But curiosity about the federal government soon brought me to Washington.

It was at the outset of the Reagan administration: And I signed on as an intern with Congressman George Hanson, of Idaho.

In the welcome interview, he asked me to find him ways to save tax dollars and cut the federal budget. The inference I took was: Don’t come back until you have something to report.

He never mentioned it again. But I was too dumb to be intimidated by the magnitude of the budget and too determined to quit.

At what I thought was my exit interview, we shook hands; and then I produced my thick notebook of findings, offering it to him.

What’s this? he said.

Over $40 billion you can save the taxpayers, I answered.

Where’d you find it? he asked.

I documented it for him, beginning with the reports of the General Accounting Office and working on through the items gathered from oversight testimony, from the reports of House and Senate committees and by following my nose.

Congressman Hansen immediately called the White House and on the next day dispatched me to the Old Executive Office Building next door to the West Wing to meet with the then-Budget Director David Stockman.

I took along my tattered, dog-eared report and gave it to Director Stockman. Mr. Stockman appeared appreciative and thanked me for my work.

Shortly thereafter, the Congressman received a personal note from Ronald Reagan. It thanked him for his work and went on to list items from my research that would be included in the first Reagan budget.

The Congressman offered me a full time job. And I took it.

Even today one of my brothers swears that I owe my professional start to a work habit I developed behind a shovel at the Gerard Dairy.

It was as Congressman Hanson’s legislative assistant that my deep appreciation of the culture and values behind America’s resource industries began to develop.

Later I was invited to join the staff of U.S. Senator James McClure who was:

Chairman of the Committee on Energy and Natural Resources;
And Chairman of the Appropriations Subcommittee on the Interior;
And thus presided at important junctions from which to specify policy and direct its administration.

As the Senator’s director of legislation I experienced:

A full immersion in the details and inter-relations of legislation, policy, budgets and administration;
And widening of my understanding of the importance of material resources and energy to the economic well being of the United States.

During the years on Capitol Hill, I completed an undergraduate degree and a law degree in night classes at George Washington University.

After Senator McClure decided to retire, I wrote and proposed the business plan for what was to become the consulting firm of McClure, Gerard and Neuenschwander Inc.

McClure, Gerard and Neuenschwander achieved success over the last 10 years. And I began to make plans to spend more time with my wife Claudette and our six children.

Little did I know.

Approached early in the search to find a successor upon General Lawson’s retirement, I demurred, citing my family and my plans.

When approached again late in the search, I agreed to consider the committee’s assessment of requirements and challenges. It was a comment from Claudette about my experience and my beliefs that brought on the sunset of complacency.

As I read, the thoughts welled up:

Thoughts of the get-it-done traditions and culture of mining;
Of the political movements and cultural trends that are dedicated to eradicating the industry and the traditions;
And of how deeply the modern life of this nation depends on the material resources and electric power that can only come from mining.

Soon all was clear. This was not a job: It was a way of life, a passion!

I knew then that no matter how comfortable, I could not turn my back on my beliefs or my experience.

And so, here I am today.

From the sum of my experience, the principles that will guide my conduct of the National Mining Association’s activities in policy include these:

The day’s not over until the work’s done;
We will coordinate and harmonize our capabilities, our strengths, our diverse membership and our coalition efforts across the range of activities;
We will pursue objectives down all avenues and at all junctions open to representation – junctions of legislation, policy, budget, administration and, if necessary, judicial action;
And we will strive to make new friends for mining – new friends in elective office, in appointive office, in the career service, among other industries, and among the public at large.

My mission is not to reinvent the National Mining Association. It is to build on the tradition and extend the achievement.

Our principle in moving forward will be this: NMA may not have all the answers right away; but we will do what it takes to get the job done. We’ll undertake to seize opportunities where they exist and make them where they are scarce.

Getting the job done in energy is a matter of increasing domestic supply without doing harm – unintended or otherwise – elsewhere in the economy. This makes energy policy a challenge of many parts.

Before we think about the details of policy, let’s think about supply.

It isn’t good policy to fish for tuna in the desert. If you want to catch fish, you go where the fish are.

If you want to increase energy supply, you’ll do best by going where the Btus are. It happens that one Btu of every six Btus in the world is in American coal. The U.S. coal reserve is one-sixth of the world’s proved fossil energy.

The U.S. reserve of recoverable coal is 275 billion tons and this in turn is:

About the equal of world oil in energy content, all of the Persian Gulf and all of OPEC included;
One-fifth again larger than the world’s proved reserve of natural gas, Canada and Mexico included;
36 times larger than the domestic reserve of natural gas;
46 times larger than the domestic reserve of oil;
And as much as 95 percent of America’s proved reserves of all fossil fuels.

Behind the convulsions in California are turns and twists of policy that make power inflexibly dependent on natural gas. Rising demand for power has raised the demand for gas. Higher demand for gas has in turn raised the price of power and of gas.

Concerns about kindred convolutions and convulsions in the national power supply are behind President Bush’s comments about coal, and behind early activities in the U.S. Senate toward a new energy policy.

America’s coal represents 495-trillion kilowatt-hours of electric power that is on standby – 495-trillion reliable, abundant and low-cost kilowatt-hours.

If the object of policy is durable and reliable electric power, American coal is a whale among minnows in the ocean of fossil fuel.

An American energy policy that ignores this fact about coal is like OPEC ignoring oil.

With the commercial deployment of the more-efficient advanced generating technologies, the coal amount of electric power available from the coal reserve will grow.

Keeping up the advance of technology with on-going research and development is important. The next generation of advanced technology zero-emissions goals of the Vision 21 Program will further extend the durability of the reserve.

Present objectives for deployment of advanced technology are expressed in Senator Robert Byrd’s new bill the National Electricity and Environmental Technology Act, also called the NEET bill, or simply S. 60.

The provisions of NEET are, in turn, the heart of the coal section in the National Energy Policy Act introduced last month by the majority leadership of the United States Senate.

NEET begins with bi-partisan sponsorship, and it features a strategy for mining that we want to develop and expand. There are 19 co-sponsors already, but I won’t name them all. I will mention just enough to illustrate what we hope to achieve.

In early bi-partisan sponsorship with Senator Byrd is Senator Mitch McConnell, of Kentucky, another leading coal state.

Thanks to NMA members, there is added sponsorship from hardrock mining states of the West that includes the likes of:

Harry Reid of Nevada, the Senate’s second-ranking Democrat and Whip, also the ranking Democrat on Environment and Public Works;
And Jeff Bingaman, of New Mexico, the ranking Democrat on the Energy and Natural Resource Committee.

With NEET we want to begin developing the strength of mining’s diversity. Here’s where mining sits on the landscape of federal politics:

From the coal-producing states of the East, many members of House and Senate sit at junctions of responsibility and influence over general policy;
From the hardrock and coal states of the West, the same is true;
And, in the array of diverse states influenced by the presence of our manufacturers and suppliers, the same is true.

In a few days the National Mining Association will cover Capitol Hill with three member teams of CEOs – one coal, one hardrock, one manufacturer. There’ll be over 60 CEOs comprising more than 20 teams making close to 100 visits. They’ll cover mining’s political landscape – East, West and middle, Senate and House.

The members from hardrock states will be introduced to coal’s concerns with hardrock sponsorship, the coal-state members to hardrock concerns with coal sponsorship, and both to the manufacturers’ members under manufacturing sponsorship.

One of their priority items will be to seek support for NEET and energy policy.

Mining has the combined strength and standing to win the attention of most of the Congress at critical times and places. We intend to develop that strength and to perfect our techniques.

NEET is backed by a coalition that includes:

The nation’s principal coal companies;
The principal railroads;
The principal power producers;
And the trade associations that represent them;
Plus labor, other basic industry and agriculture.

NEET itself is meant to guarantee reliability and flexibility to America’s power supply – to forestall and prevent a California-style lack of diversity that the former administration seemed bent on imposing through regulation.

The bill fosters the introduction of the clean-coal technologies into commercial use:

To upgrade existing capacity in ways that raise output;
To repower existing sites;
And to build greenfield capacity.

The bill offers incentives for commercialization as follows:

A period of "safe harbor" from added, imaginative regulation in the style of the former administration – this an assurance to investors;
An investment tax credit – this an inducement;
And a production tax credit of about three mills – a credit that is 80 percent less than the 1.5 cents per kilowatt-hour now accorded wind power.

In addition, NEET would provide for cost-shared and enhanced research and development in power-plant combustion technology for subsequent increments of the 495-trillion kilowatt hour reserve of fuel.

NEET’s principal provisions comprise the coal section of the National Energy Policy Act recently introduced in the Senate, and NMA is part of the large coalition of energy-producing and energy-using industries in support of the bill.

We also are working with the administration’s Energy Task Force chaired by Vice President Cheney.

Much has been written and said in speculation about infighting and positioning on carbon dioxide inside the administration, and among some involved with the administration’s energy task force.

I won’t join in the speculation except to say that the President’s letter of yesterday demonstrates the White House commitment to seeking balance in developing a national energy policy.

We expect the policy on electric power to be fuel-neutral – that is, it will endeavor to deal with any existing preferences and to create no new ones. We’ve registered the industry’s position on CO^2.

We are confident the Bush administration will work with Congress – that it will accept the energy policy that Congress delivers and will not attempt to amend it by regulation.

It is, after all, just as the President said in Charleston: "Coal is in abundant supply…"

If you want tuna for supper, you don’t fish in the desert. If you want more electric power you go where the Btus and the kilowatt-hours are. You make it possible to use coal while resolving other concerns.

America’s coal reserve contains 36 times the energy of the gas reserve and 46 times that of the oil reserve.

Coal gives Americans more kilowatt-hours for the buck.

Good policy can neither neglect nor penalize coal the resource or coal the industry – not if Americans are to have a hope of energy that is stable in price, reliable in availability and adequate to their aspirations.

Coal is secure energy with which America can underwrite the economic and energy security of all Americans.