The following article by Glenn Kessler was posted on the Washington Post website February 27, 2017:
“If we had not overturned this rule, we were looking at nearly 70,000 jobs across the country.”
— Unidentified participant in President Trump’s signing of H.J. Resolution 38, eliminating the Stream Protection Rule, Feb. 16, 2017
“I’m really pleased that we repealed a regulation that was going to be very, very damaging to my state. I went to the White House this week to see him sign. The repeal would have cost 77,000 jobs in the coal industry.”
— Sen. Rand Paul (R-Ky.), interview on ABC’s “This Week,” Feb. 19
The Stream Protection Rule (SPR) is one of those complex federal regulations that can have an important impact on particular communities but may mean little to the rest of the country.
The regulations, formulated late during the Obama administration, aimed to reduce the effect of coal mining on surface water, groundwater, fish and wildlife. The rule would have required companies to avoid mining practices that permanently pollute streams and destroy drinking water sources; companies would have needed to test and monitor the condition of streams before, during and after mining as well as restore streams after mining activities are completed.
That brief description barely scratches the complexity of the rule, which when it was proposed in 2015 took up 262 pages in the Federal Register, consisting of 150 pages of explanatory preamble and 112 pages of regulatory text. The mining industry fought fiercely against it, saying it was unnecessary. Surrounded by lawmakers and miners, President Trump on Feb. 16 blocked its implementation — a reward to a community that had overwhelmingly supported him in the 2016 election.
But did the president really save 77,000 jobs?
The 77,000 number comes from an 82-page report on the proposed rule prepared in 2015 for the National Mining Association (NMA) by Ramboll Environ, an environmental, safety and health sciences consulting firm. So, already caveat emptor, given that the report was released by one of the leading foes of the rule.
The 77,000 number is the high-end estimate of direct mining jobs that the firm said would be lost as a result of the rule. The low-end estimate was about 40,000 jobs. The report does not specify a time period for the job loss, but Luke Popovich, a NMA spokesman, said most of the jobs would be lost over a 10-year period.
So, in effect, the report concluded that at least 27 percent of the mining jobs would be lost as a result of the rule. The report used as its base a total of 103,312 employees, including 80,396 operator employees and 22,916 contractors. (The report says that is a 2013 figure, but Popovich said that was a typo and should have said 2015.)
Now here’s the funny thing: The Interior Department, which crafted the rule, in its own analysis prepared by Industrial Economics, claimed that the final rule would result in a net increase in employment. Although some jobs would be lost — just an average of 124 a year — the agency concluded that enough people would be hired for compliance that it would make up the difference. (Initially, in the early years, about 500 jobs a year would be lost, but the hiring of compliance staff over time would help make up the difference, the report said.)
Yet Interior also concluded that the compliance costs would be about $80 million a year, but the costs would be passed onto consumers. The agency said coal production would decline slightly, but it was already due to decline anyway because of market forces. (For smaller mines, the agency proposed financial assistance to comply with the rule.)
So what you have are two dueling reports, produced by two different consulting firms, reaching completely opposite conclusions. The Interior report is based on a “model mine” approach, on the theory that the 853 coal mines in the United States make a mine-by-mine analysis impracticable. So the consultants tried to mimic mining in different regions. The NMA report, by contrast, was based on data collected from 36 individual coal mines, from firms said to represent more than 66 percent of the coal production in the United States.
One can see the pitfalls in either approach. The Interior analysis may not reflect the real world. (We find it highly unusual that a complex rule, reflecting at least $80 million in regulatory costs, would result in little or no job loss.) But the NMA approach relies on the testimony of mine operators that may not be reliable, as the report concedes: “Because the SPR as proposed is not final and does [sic] is subject to much interpretation, many of the respondents struggled to complete the analysis. In some cases, respondents concluded that they would have to shut down operations in order to comply with the rule.” Mine operators would be more likely to offer the most extreme interpretation of the impact of the rule, which probably accounts for the high estimate that as many as 64 percent of coal jobs would be eliminated.
It’s also important to put these numbers in context. Mining jobs have been declining at a rapid pace in recent years, mainly because of a decline in demand due to competition from lower-cost natural gas. According to the NMA, this is the total employment in the coal industry in recent years, based on an analysis of Labor Department data.
2016: 81,406 (preliminary)
In other words, since 2011, coal jobs have declined by more than 40 percent, or 62,000 jobs. There’s little wonder that Trump’s frequent (and unrealistic) promise to restore these coal mining jobs resonated in coal country.
The NMA report also appears to have assumed that coal jobs would remain steady at the 2015 level. But the Energy Department forecasts a continuing decline in coal production as coal-fired plants are replaced by natural gas plants, as well as solar and wind power. Coal production is projected to decline about 26 percent by 2040, though that loss could be mitigated if the Obama administration’s Clean Power Plan is put on hold.
The steep decline in coal jobs since 2015 has already made the figures in the NMA report out of date. Even if one accepted the estimates in the NMA report, the projected job losses, adjusted for 2016 data, indicate that a low of 22,000 jobs and a high of 52,000 jobs would have been affected by the regulation.
The Pinocchio Test
All too often in Washington, numbers of dubious provenance are cited with certitude. The 77,000 figure was a high estimate in a projection with a substantial range. Moreover, it was based on reports from a relatively small sample of coal operators — with a vested interest in negative results — and reflected an outdated figure for coal employment. (The Interior Department estimate suggesting an overall job gain is equally dubious.)
Lawmakers and coal industry officials would have been on firmer ground if they had cited the lower estimate and used a percentage, rather than a raw job number based on the high estimate. (In other words, one could say that one study found that the rule was projected to reduce coal jobs by 25 percent.) The 77,000 figure, at this point, is simply not credible.